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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 84.1, which puts it in the bottom 20 globally.
Iran is facing a number of internal and external pressures, including a weak economy, sanctions, and a lack of political freedom, which have all contributed to instability in the country. Additionally, Iran's regional ambitions and support for militant groups have caused tensions with other countries in the Middle East, further destabilizing the country.
First check is not great. Let's review more data.
Iran will grow at a moderate pace
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 2023, grow by 2.1%, which indicates the country is heaidng in the right direction. Concerning 2024, the figure we're looking at is 2.1%.
On the longer term, the growth will still be there since Iran's economy is expected to increase by 9.5% during the next 5 years, resulting in an average GDP growth rate of 1.9%.
Projected moderate growth in Iran indicates that the economy is stable and investors can expect a reliable return on their investments. Additionally, moderate growth provides a safer investment environment compared to higher growth rates that can be more volatile.
However, there are other indicators to watch.
Iran's population is 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.
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 2024.
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 anticipated to be exploding
Positive
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 164.9%, which gives us an average yearly increase of 33.0%.
It means that Iran is likely to witness substantial inflation. In light of this, it may be a strategic move to invest in property now.
Is it a good time to buy real estate in Iran then?
Now it's time to draw our conclusions.
Considering a mix of signals, 2024 might not be the most opportune time for property investment in Iran due to several significant concerns arising from the negative signals. While the country's projected moderate growth and improving population wealth are favorable aspects, they must be weighed against the overarching instability present in Iran's current environment.
The anticipation of Iran's moderate growth, although a positive signal, must be considered in light of the prevailing instability. Political unrest and geopolitical tensions can undermine the projected economic growth, impacting the potential for property investments to yield anticipated returns.
While attractive rental yields are enticing, they may be overshadowed by the potential negative effects of exploding inflation. High inflation can erode the purchasing power of both landlords and tenants, affecting rental income potential and the overall profitability of property investments.
Undoubtedly, one of the most significant concerns is the current lack of stability in Iran. This negative signal casts a shadow over the investment climate, as political and social volatility can lead to unpredictable economic outcomes, hindering the prospects for sustainable property investments.
In summary, the prevailing instability in Iran's political and economic landscape poses considerable risks that outweigh the favorable signals. While the potential for growth, increasing wealth, and attractive rental yields are factors to consider, the overarching concern of instability makes 2024 a challenging time to confidently explore property investment 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.
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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.
Buying real estate in Iran can be risky
An increasing number of foreign investors are showing interest in Iran. However, 90% of them will make mistakes. Avoid the pitfalls with our comprehensive guide.
