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Isfahan's rental market delivers solid returns with average gross rental yields between 7-8% for apartments.
As of September 2025, Isfahan stands out among Iran's major cities for rental yields, offering better returns than Tehran at 6.6% or Shiraz at 5.2%. Central apartments near tourist attractions generate the highest yields, while commercial properties provide stable returns between 7-9%.
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Isfahan offers rental yields of 7-8% for apartments, with commercial properties reaching 7-9% and student housing achieving 8.5-12.5%.
Central neighborhoods like Chaharbagh Abbasi provide highest returns, while luxury villa areas offer lower yields of 4.5-6.5%.
| Property Type | Average Yield | Best Locations |
|---|---|---|
| Apartments | 7-8% | City center, tourist areas |
| Commercial Retail | 7-9% | Central business district |
| Student Housing | 8.5-12.5% | Near universities |
| Villas | 4.5-6.5% | Suburban areas |
| Office Buildings | 6-8% | Business districts |
| Small Apartments | 8-8.5% | Transit-connected areas |
| Suburban Properties | 6.5-7.5% | Growing neighborhoods |
What's the current average rental yield in Isfahan?
Isfahan's gross rental yield averages 7-8% for apartments as of September 2025.
The yields vary significantly by location, with properties outside the city center achieving up to 8.44% while downtown properties typically generate around 7.5%. This performance positions Isfahan favorably compared to other major Iranian cities like Tehran at 6.6% or Shiraz at 5.2%.
These figures represent gross yields before accounting for taxes, maintenance costs, and vacancy periods. The Isfahan rental market benefits from strong tourist demand, a growing student population, and relatively affordable property prices compared to Tehran.
Current market conditions show stable occupancy rates around 75% citywide, supporting consistent rental income for property investors.
How do yields vary between apartments, villas, and commercial properties?
| Property Type | Rental Yield Range | Market Commentary |
|---|---|---|
| Apartments | 6-8% | Highest demand in central/tourist areas |
| Villas | 4.5-6.5% | Premium market with lower yields |
| Commercial Retail | 7-9% | Most stable returns, highest yields |
| Office Buildings | 6-8% | Similar performance to apartments |
| Student Housing | 8.5-12.5% | Highest yields due to university demand |
Which neighborhoods in Isfahan give the highest and lowest returns?
Chaharbagh Abbasi in the city center delivers the highest rental returns due to its proximity to tourist attractions and strong short-term rental demand.
Sepahan Shahr, an affordable and growing suburb, also provides attractive yields for investors seeking entry-level opportunities with future appreciation potential. Central historic zones maintain high occupancy rates and premium rental rates due to tourism and cultural significance.
The lowest returns come from luxury districts like Kuy-e-Velenjak, where villa-dominated neighborhoods face limited rental demand. Detached suburban homes in outlying areas also generate lower yields due to reduced tenant interest and longer vacancy periods.
Outskirt properties can still offer higher percentage returns when purchased below market value, but these require careful location selection and tenant screening.
How does the surface area of a property affect its yield potential?
Smaller units of 1-2 bedrooms typically generate higher percentage yields due to stronger rental demand and lower absolute purchase prices.
These compact properties appeal to students, young professionals, and tourists who prioritize location over space. The lower entry cost means a higher yield percentage when rental income is calculated against the total investment.
Larger units and villas tend to produce lower yield percentages because their purchase prices appreciate faster relative to rental rates. However, they can generate higher absolute rental income, which may suit investors seeking steady cash flow over percentage returns.
Properties under 100 square meters near transit connections and historic sites command premium rents while benefiting from tax exemptions on residential rental income.
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What's the average purchase price with all fees included for different property types?
| Property Type | City Center Price ($/m²) | Suburbs Price ($/m²) |
|---|---|---|
| Apartments | $1,187 | $676 |
| Villas/Luxury | $1,500+ | $900-1,200 |
| Commercial Retail | $2,500+ | $1,500+ |
| Student Housing | $1,100 | $700 |
| Office Space | $2,000 | $1,300 |
Additional fees include a 5% transfer tax on existing properties and 15% for new buildings, plus agent fees of 2-3% and legal costs around 2% of the purchase price.
What taxes and other ownership costs do I need to factor into the net yield?
Iran eliminated annual property taxes in 2002, reducing ongoing ownership costs significantly.
Transfer taxes apply at purchase: 5% of transaction value for existing properties and 15% for new buildings. Agent commissions range from 2-3% while legal fees add approximately 2% to the total acquisition cost.
Rental income taxation follows a 25% fixed deduction for expenses, with the remaining 75% of rental income taxed at 15-25% depending on your total income bracket. Residential units under 200 square meters outside Tehran benefit from rental income tax exemptions.
Additional costs include utility setup, registration fees, and ongoing maintenance expenses that vary by property type and condition.
How does financing with a mortgage impact profitability compared to buying in cash?
Mortgage rates in Iran average 6.5-7% as of September 2025, making leverage attractive when property appreciation exceeds borrowing costs.
Isfahan property prices have risen 10-15% annually in recent years, potentially exceeding mortgage interest rates and creating positive leverage for financed purchases. However, this increases risk during market downturns and adds monthly payment obligations.
Cash buyers avoid interest costs and payment obligations but miss leverage benefits during strong appreciation periods. For a $120,000 property renting at $800 monthly, mortgage buyers might net $20 after payments while cash buyers net $140.
The decision depends on your risk tolerance, available capital, and market timing expectations.
What are the typical rental rates today for different types of properties?
| Property Type | City Center Monthly Rent | Suburbs Monthly Rent |
|---|---|---|
| 1-bedroom Apartment | $190-285 | $100-214 |
| 3-bedroom Apartment | $656 | $420 |
| Villa | $900-2,000 | $600-1,200 |
| Commercial Retail | $1,200+ | $800+ |
| Student Housing | $200-350 | $120-250 |
| Office Space | $800-1,500 | $500-1,000 |
We did some research and made this infographic to help you quickly compare rental yields of the major cities in Iran versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you're planning to invest there.
What's the difference in returns between short-term rentals and long-term leases?
Short-term rentals through platforms like Airbnb generate 15-25% higher gross yields in central neighborhoods, especially near historical attractions.
Properties in tourist zones like Chaharbagh Abbasi benefit significantly from short-term rental demand, commanding premium rates during peak seasons. However, this strategy requires active management, higher turnover costs, and market fluctuations based on tourism patterns.
Long-term leases provide more stable income with lower management requirements but typically yield less than short-term alternatives. They offer predictable monthly income and reduced vacancy risk, making them suitable for passive investors.
The choice depends on your involvement level, property location, and local tourism demand patterns in your specific neighborhood.
Who are the main renter profiles in Isfahan, and what are their preferences?
Isfahan's rental market serves four main tenant groups: domestic families, university students, expatriate workers, and tourists.
1. **Domestic families** - Seek 2-3 bedroom apartments with modern amenities, prefer central locations near schools and shopping2. **University students** - Demand affordable 1-2 bedroom units, prioritize proximity to campuses and public transport3. **Expatriate workers** - NGO staff and business professionals wanting furnished properties with reliable internet and security4. **Tourists** - Short-term visitors preferring central historic locations with cultural attractions nearby5. **Young professionals** - Local workers seeking modern apartments with air conditioning and parking facilitiesAll tenant groups prioritize properties with air conditioning, security features, reliable internet, and proximity to transportation networks.
It's something we develop in our Iran property pack.
What are the current vacancy rates across property types and areas?
Isfahan maintains a citywide occupancy rate of approximately 75% as of September 2025.
Central apartments and university-area properties experience the lowest vacancy rates due to consistent demand from students and tourists. These prime locations often maintain occupancy above 80-85% throughout the year.
The highest vacancy rates occur in outlying luxury villas and older large houses that appeal to a limited tenant pool. Suburban properties farther from city centers also face longer vacancy periods between tenants.
Commercial properties in central business districts maintain steady occupancy, while retail spaces in developing areas may experience higher vacancy rates during economic uncertainty.
How have rents and yields changed compared to five years ago and one year ago, and what's the forecast?
Over the past five years, Isfahan property prices have increased more than 300%, significantly outpacing inflation and creating affordability challenges.
Rental rates have risen 150-180% during the same period, meaning yields have remained relatively stable with slight compression as purchase prices outpaced rental growth. This trend reflects broader economic pressures and currency devaluation affecting the Iranian market.
In the past year, property prices have increased 10-15% while rents have grown at a slightly higher rate, maintaining yield stability. Looking ahead to 2026, forecasts suggest nominal price and rent growth of 6-7% annually.
The five-year outlook anticipates moderate price appreciation with persistent affordability challenges, while the ten-year forecast depends heavily on economic reforms and structural changes in Iran's economy.
How does Isfahan compare with other large, similar cities for rental yields?
| City | Rental Yield (%) | Price per m² (USD) |
|---|---|---|
| Isfahan | 7.5 | $1,187/$676 |
| Tehran | 6.6 | $1,500-2,000+ |
| Shiraz | 5.2 | $1,218/$1,406 |
| Mashhad | 4.2-7.9 | $1,000/$800 |
| Tabriz | 6.1 | $950/$700 |
| Karaj | 6.8 | $1,100/$800 |
Isfahan consistently offers higher yields, better affordability, and stronger tourism and student demand compared to other major Iranian cities.
What are the smartest property investment choices in Isfahan right now?
Central apartments near tourist attractions represent the smartest investment choice for maximum returns in Isfahan's current market.
1. **Small to medium apartments in city center** - Strong tourist and student demand, highest yields, good for both short and long-term rentals2. **Suburban affordable units in Sepahan Shahr** - Best entry prices with future appreciation potential and solid rental growth3. **Commercial retail spaces downtown** - Stable returns of 7-9%, longer lease terms, lower vacancy risk4. **Student housing near universities** - Exceptional yields of 8.5-12.5% with consistent demand5. **Transit-connected properties under 100m²** - Premium rental rates, tax exemptions, strong occupancyFocus on fully legal properties with clear documentation, prioritizing locations with established infrastructure and growth potential. These investment choices balance current yield generation with long-term appreciation prospects.
It's something we develop in our Iran property pack.
Conclusion
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.
Isfahan's rental market offers compelling opportunities for property investors seeking yields above 7% in a historic and culturally rich city.
Success in this market requires careful neighborhood selection, understanding local tenant preferences, and choosing the right property type for your investment strategy and risk tolerance.
Sources
- Sands of Wealth - Isfahan Property Market
- Sands of Wealth - Isfahan Price Forecasts
- Numbeo - Property Investment Isfahan
- Sands of Wealth - Iran Real Estate Trends
- Sands of Wealth - Isfahan Best Areas
- Sands of Wealth - Iran House Prices
- Global Property Guide - Iran Taxes
- Wikipedia - Taxation in Iran
- Azat TV - Mortgage Rates 2025
- Sands of Wealth - Iran Housing Forecast