Iran's elite paper over the economic cracks
By Anna Fifield in Tehran
Published: March 14 2008 02:00 | Last updated: March 14 2008 02:00
In the upmarket neighbourhoods of northern Tehran, where women in Hermes headscarves can be seen driving their Mercedes past high-walled mansions, one would hardly guess that Iran's economy is in trouble.
But growth is slowing, inflation has spiralled beyond 20 per cent and unemployment remains a problem. These challenges, and the difficulties they are creating for ordinary -Iranians, will be at the forefront of many voters' minds as they head to the polls today for parliamentary elections.
However, the happy coincidence of a sharp rise in house prices - estate agents say prices at the top end of the market have doubled in the past two years - and record oil prices has created a feeling of new-found prosperity among Iran's elite.
Iran has seen several tides of new money over the course of its turbulent modern history, most starkly during the years of the Shah but also after the Islamic revolution of 1979.
The new generation of nouveaux riches are flourishing thanks to timely investments in real estate - and to the new business opportunities, legal or otherwise, that are opening up in the commercial environment created partly by the US-led crackdown on Iranian trade.
"The contractors who own these properties build the apartments and sell them immediately," says Sina Shafie, an estate agent in Farmaniyeh, one of Tehran's smartest suburbs.
In northern Tehran, it seems that every second block contains the skeleton of a new apartment tower or the sound of an old one being modernised. Mr Shafie just sold a four-bedroom, three-bathroom apartment for $2.6m (£1.3m).
Property prices in the capital, home to 12m people, have rocketed over the past couple of years, partly due to the general reluctance to invest in the Tehran stock exchange at a time of such political turbulence, and partly because of rising oil prices. This has led to a general increase in liquidity as well as increased profits for those with contracts linked to the state-run oil industry.
"We've sold three-quarters of these apartments already," says Navid Shoghi, a sales consultant at the almost-completed Tehran Tower, where the average flat costs about $2m.
"Most of the people who are buying here are businessmen who do business in other countries."
Copyright The Financial Times Limited 2008
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