Money printing fuels property bubble in Iran

May 30, 2008 (AFP) – As Iran’s economy is buffeted by inflation, the country’s homeowners are fast becoming richer in a real estate bubble that is driving affordable housing beyond the reach of ordinary citizens. Prices have doubled within a few months in satellite town of Parand and Hashtgerd, 50 kilometres (30 miles) from Tehran, while in Isfahan, Mashhad and Tabriz property values have doubled in a year.

“Property has become the only profitable investment,” says Meshkini. “Prices have risen by over 100 percent within a year and they will continue to go up. No other sector makes such profit.”

Several entrepreneurs echo the same view including the owner of a popular fast-food place in Tehran who complained he had made only “six percent net profit in the busy months of January and February, when sales were surprisingly high.”

For an Iranian industrialist, who had to shut down two chemical import companies mainly due to unsteady prices, property investment proved a successful way to save his business.

“We had lost about 800,000 dollars over a year,” he said. “We invested in land around Tehran and in two months we made a profit equal to our losses.”

Many industrialists now prefer to place p