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Everything you need to know is included in our Iran Property Pack
Are you considering buying real estate in the land of Persia? Are you questioning if it's a good time to invest?
Everyone has their own viewpoint when it comes to market timing. Your Iranian colleague might suggest that now is a perfect time to invest in property, whereas your spouse, who is originally from Tehran, might have a different view and recommend waiting for more stability.
At SandsOfWealth, when we create articles or update our pack of documents related to the real estate market in Iran, we base our work on facts and data we can trust, not opinions or rumors.
We have collected and examined all the official reports and statistics from government websites. Based on this extensive research, we have compiled a complete and reliable database. Here's what we discovered, which can assist you in deciding whether now is the right time to purchase real estate in Iran.
Happy reading time!
How is the property market in Iran these days?
Iran is, today, not a stable country
Negative
If you want to invest in properties, prioritize stability as it fosters consistent performance and long-term wealth building. It is an information you need as a foreigner buying a property in Iran.
Regrettably, Iran is currently in an unstable state. The last Fragile State Index reported for this country is 82.9, which puts it in the bottom 20 globally.
Iran's instability today is largely driven by internal political tensions, including widespread protests against the government due to economic hardships, human rights abuses, and dissatisfaction with theocratic rule. Additionally, international sanctions and geopolitical tensions, particularly with Western countries, exacerbate economic challenges and contribute to domestic unrest.
First check is not great. Let's review more data.
Iran is poised for strong growth
Positive
Second thing to do before investing in Real Estate: evaluate the economic situation of the country.
As per the IMF's forecasts, Iran will, in 2024, grow by 3.3%, which indicates the country is heaidng in the right direction. Regarding 2025, the figure we're looking at is 3.1%.
Besides that, the economy will keep growing since Iran's economy is expected to increase by 13% during the next 5 years, resulting in an average GDP growth rate of 2.6%.
The expected sustainable growth rate in Iran indicates a stable and improving economy, which can lead to increased property values and rental demand. For real estate investors, this means potential for higher returns and reduced risk over time.
However, there are other indicators to watch.
Iran's population is growing and getting (a bit) richer
Positive
When searching for real estate opportunities, population growth and GDP per capita merit close examination because:
- a growing population means more people needing homes
- a higher GDP per person means people have more money to spend on housing (which can lead to increased property value over time)
In Iran, the average GDP per capita has changed by 4.6% over the last 5 years. The growth, although minimal, is still present. Furthermore, the Iranian population is growing (+7% in 5 years).
This means that, if you purchase a traditional house in Isfahan and rent it out, you will find that each year, you'll attract more tenants with sufficient funds to cover the rent.
If you're considering purchasing and renting it out, this trend is a good thing. Then, there might be a rise in rental demand in Iranian cities like Tehran, Isfahan, or Shiraz in 2025.
Rental yields are attractive in Iran
Positive
Shifting gears, let's assess the rental yield.
It represents the annual rental income generated by a property divided by its purchase price or market value. For instance, if a property in Iran is purchased for 1,000,000,000 IRR and generates 60,000,000 IRR in annual rental income, the rental yield would be 6%.
According to Numbeo, rental properties in Iran offer gross rental yields ranging from 4.3% and 7.0%. You can find a more detailed analysis (by property and areas) in our pack of documents related to the real estate market in Iran.
It means that a real estate purchase will provide a satisfactory return on investment.
Everything you need to know is included in our Iran Property Pack
In Iran, inflation is expected to be minimal
Neutral
In two words, inflation is when currency devalues.
It's when your favorite plate of kebab koobideh costs 200,000 Iranian rials instead of 150,000 Iranian rials a couple of years ago.
If you're planning to invest in a property, high inflation can offer several benefits:
- Property values often increase over time, leading to potential capital appreciation.
- Inflation can lead to higher rental rates, thereby increasing the cash flow from the property.
- Inflation decreases the real value of debt, making mortgage payments more affordable.
- Real estate can serve as a hedge against inflation, safeguarding the value of the investment.
- Diversifying into real estate provides stability during periods of inflation.
In accordance with IMF projections, over the next 5 years, Iran will have an inflation rate of 1.0%, which gives us an average yearly increase of 0.2%.
It means that Iran will likely experience almost no inflation. If you buy a property now, you may experience lower appreciation potential and reduced returns on investment.
Is it a good time to buy real estate in Iran then?
Now it's time to draw our conclusions.
While Iran's economy is projected to grow by 13% over the next five years, leading to an average GDP growth rate of 2.6%, the country is currently not stable. Political and social unrest can create uncertainty, which might deter potential property buyers. Even with economic growth, the instability could lead to unpredictable changes in property laws or market conditions, making it a risky time to invest in real estate.
On the flip side, this economic growth suggests a stable and improving economy, which could increase property values and rental demand. For real estate investors, this might mean higher returns and reduced risk over time. However, the current instability could overshadow these potential benefits, as the market might not respond predictably to economic improvements.
Iran's growing and slightly wealthier population could drive demand for housing, potentially increasing property values. This demographic shift might make the real estate market more attractive in the long run. However, the current instability could impact the ability of the population to invest in or rent properties, which might limit the immediate benefits of this growth.
According to Numbeo, rental properties in Iran offer gross rental yields ranging from 4.3% to 7.0%, which is quite appealing. Additionally, minimal inflation is expected, which could preserve the value of investments. Despite these positive indicators, the overarching instability in the country could still pose significant risks, making 2025 potentially not the best time to buy property in Iran.
We genuinely hope this article has been helpful and informative to you!. If you need to know more, you can check our our pack of documents related to the real estate market in Iran.
-Will real estate prices go up in Iran?
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.