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WEEKLY NEWSLETTER
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Iran
Index
The economic prosperity fueled by the growing oil revenues of
the mid- 1970s encouraged a construction boom. The expansion of the
construction industry slowed, however, and all but stopped after
the Revolution. Construction continued to decline until 1984. The
domestic recession, created by deliberate government reductions in
oil production in 1979, caused a drop in new construction starts,
fewer buyers, and a decreased demand for materials.
In FY 1983, the government decided once again to encourage
private sector participation in construction. The subsequent
increase in loans to private industries by commercial banks revived
the construction industry by 1984, although it could not keep pace
with housing needs in urban areas.
The housing shortage became severe by 1986. Exacerbated by
population pressures, the shortage was an especially serious
problem in Tehran. The allocation of credit for building
construction accounted for 7 to 8 percent of the GNP. Half of all
the 900,000 housing applicants countrywide were in Tehran, yet only
half of these received housing. Tehran issued 25 percent of the
country's housing permits, with fixed construction investment
accounting for 2 percent of the GNP. The government deliberately
discouraged further expansion in Tehran, and new building
construction regulations in 1986 tied construction permits to the
ownership of land through an earlier order from a religious
magistrate. According to the director of the Urban Land
Organization, a government body created in June 1979 to administer
the transfer of nationalized land to deserving families for housing
purposes, the housing sector in early 1986 needed about US$10
billion to alleviate the shortage. The banks could only provide
about US$4 billion of this total.
Data as of December 1987
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