Outlook for Iran's construction sector brightens

25 November 2013

Cost of construction materials to fall in wake of nuclear deal

Iran’s construction market has suffered in recent years as economic sanctions have dampened enthusiasm for investment in real estate. While it is unlikely that the agreement Tehran signed with Western powers to curb its nuclear programme will lead to a major turnaround in the sector, the deal does offer room for optimism that the market could return to growth.

One immediate impact of the deal is that the country’s currency has jumped more than 3 per cent against the US dollar, which should lead to a drop in the cost of importing construction materials.

The loosening of sanctions will also make it easier for the country to obtain supplies from abroad, which should also help lower the cost of construction materials.

The Geneva pact is likely to curb capital flight and encourage a rebound in domestic investment, which would bode well for the construction sector. One of the factors that has led to the boom in Dubai’s real estate sector is that many Iranians have been buying homes in the emirate, believing that Dubai offers a safe haven in which to invest their money.

If Iran is able to pull itself out of its recession, an increasing number of Iranians are likely to consider buying property in their homeland rather than abroad. However, time will tell if the country will be able to gain the stronger economic footing and improved political stability that are needed to spark a major return in investment.  

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