Construction Industry in Iran

15 Feb 2016

Since easing of sanctions against Iran, the construction industry, which has been struggling in recent years around the world, is quickly paving their way to potential joint ventures here, in the hope of establishing new business opportunities in Iran’s building industry that is set to really build momentum in coming months. 

Project Iran[D1] , a construction Trade Fair in Tehran has been adding cement to important relationships between Iranian companies and overseas partners in the industry since last year.  The trade fair is adopting the theme of ‘Project Iran’, demonstrating the country opening its gates for international business to connect with Iran’s construction sector and property developers. Project Iran 2016 will host exhibits of construction materials, equipment, environmental technologies and will be a showcase for international expertise for companies seeking new business expansion areas in the Iranian market.

Given the release of billions of dollars bound up during sanctions, this event promises to be packed to capacity as businesses such as our own seek to remain at the forefront of safer and more modern building technologies that make places more attractive to our increasingly sophisticated public tastes.

Iran’s construction sector has also struggled in recent years, but we fully expect business deals amongst developers, technology providers and associated professions to go through the roof in the near future, meaning thousands more jobs for Iranian people.

Organisers of the trade fair expect thousands of big name manufacturers, exporters from around the world and industry professionals to sign contracts and share expertise during the exposition.  Iran’s place as a business development preference looks set to really be turning a corner and future visitors can expect surprises on Iran’s horizons as we watch our city-scapes change in the coming years. 

The Watch Tower

The construction industry is often a key indicator of business sentiment in an economy and there will be an injection of real optimism for companies involved either directly in construction or the supply chain.  Iran is likely to become a regional economic giant in the coming decade of redevelopment and reconstruction as the country steadily re-establishes business ties with the wider world.  Investors now have access to Iran’s multibillion dollar construction market, which will offer a much needed boost for companies who have struggled to find a thriving industry elsewhere.

Iran is now the highlight of the Middle East for construction.  With one of the world´s largest oil and natural gas reserves, despite the drops in global oil prices, revenues within the country will take a notable uptick.

Looking back to 2011, when Iran's GDP was at a peak of US$ 528.43 billion, even during sanctions revenues were still trending upwards.  In 2014, GDP had risen by 10% over one year to US$ 405 billion, according to some industry commentators. Our population growth is at 1.22%, with more people relocating to cities.  10% of the population lives in Tehran, for instance and growing.

Estimates for growth in Iran's construction sector will follow the demographics, so unsurprisingly, construction industry has been benefiting from an annual growth of 4.2%.  Given the release of frozen assets in recent years, we can expect to see a massive growth spurt in our urban centres, in particular.  2016 is projected to see a market size in construction of USD 154.4 billion, if IFP are correct.   

An indicator of the potential scope of this sector can be deduced from the 475 construction tenders valued USD 88.3 billion which were awarded during 2014 alone.  More key figures for the building and construction sector in Iran are as follows:

• USD 143 billion could be allocated in the next decade to restore and refurbish an estimated 14,000 meters of buildings in serious decay.
• 1.5 million housing units are needed each year to address a crippling shortage of homes.  At present, a mere 700,000 units are annually successfully completed.
• Over 5,000 megawatts of electricity need to be generated from renewable energy to reduce our dependence on fossil fuels. Zahedan’s photovoltaic power plant – the first and largest in Iran and the Middle East - will generate 20 megawatts. 
• USD 23 billion needs to be allocated to complete the Gorgan-Inche Boroun railway
• Road freight infrastructure is another area we will be keeping our eye on for opportunities. Estimates put Iran’s road requirements at: 745 km of freeways, 5,626 km of highways and 2,970 km of main roads
• USD 2.5 billion for air freight expansion will be needed to create extra transit terminals at the Imam Khomeini International Airport

Overall, the White Rose Group sees a busy time ahead in 2016 for ourselves and partner companies planning to build on previous successes in the construction sector.  Watch this skyline and get in touch with us if you are looking to look for the right connections in advance of the 2016 industry expo!