Identifying land for leasing activity in the capital – Tejaratnews

According to Tejarat News, Bard-Bard land was identified for leasing activity in the capital. Examining the rental income in different areas of Tehran and comparing them with each other shows that if the property is purchased with the intention of investing in the southern areas of the city, it not only gives them more income than the total value of the capital by handing it over to the tenant, but also The benefit of the tenants living in the capital, who recently passed the worst historical year in the rental market and are facing the continuation of inflammation in this market this year, will end.

According to the economic world, this win-win game in the housing market, which can be beneficial to both groups of rental market stakeholders, i.e. landlords and tenants, is based on directing the capital demand of property purchase and is dependent on this group playing in It is a land that will benefit the tenants while providing their interests.

The bipolar domino in the capital, which has been formed due to the significant distance between the facilities, services and benefits of the citizens living in the north and south of the city and has been rooted over the years, has its impact on the housing market not only in the form of the north of the city being the leader in the price jump and even the distance Real estate inflation has shown a jump in time, but its manifestation can even be observed in the rental market.

The significant difference in rental income in the capital between luxury and expensive neighborhoods in the north of the city, medium to high neighborhoods such as four and five, as well as the central and southern half of the city is the result of this bipolarity of services in the capital. Currently, the rental income in the housing market in the south of the city has reached twice that of the city.

The definitive statistics of the amount of housing rental income in different areas of Tehran, which is also reflected in the graph of this report and is related to about seven months ago (the time of publication of the latest official statistics on the state of Tehran’s housing market), shows that at the end of 1400, the total rental income Tehran city has averaged 3.5%; This means that the income from one year of renting in the capital for landlords in different regions was on average equal to 3.5% of the price of their property.

Also, at that point in time, in three areas located in the north of Tehran including luxury areas one to three, the annual rental income reached 1.3%, in medium and demanding areas of the housing market including four and five equal to 3.4% and in the southern half of Tehran ( 9 to 20) averaged 4%.

Statistics Center has not yet published a new documentary report on the state of the housing market in Tehran this year; However, based on the estimate from the available documents of housing inflation until October of this year, the income of the rental market in the south of the city has increased since the winter of last year and has reached twice as much as in the north of the city.

The estimation of the current situation of the housing market indicates that the average rental income in the north of Tehran is about 3.5%, but in the south of the city it is between 5.5 and 6.5%. The meaning of income is the amount of income obtained from renting during a year compared to the value of each property unit, and it can even be referred to as “rental profit”.

The answer to the paradox of lessors’ income

Surveys show that, contrary to the public’s opinion, when they hear the amazing rental rates, they think that renting is a profitable business, not only in the capital, but also in the entire housing rental market of the country, the amount of rental income is currently minimal and compared to common and conventional formulas, it cannot be He evaluated it as significant and satisfactory.

Earnings in an investment market should be such that its profits not only cover the general inflation, but even a little more than it. In this case, the investment is considered economical and is met with good fortune. But what is happening in the rental market of the country and especially in the rental market of Tehran?

The average general inflation in the last few years is slightly more than 20%, and based on this, the lessor gets a satisfactory income when the income from the one-year rental of his property is at least in the same range and even higher than this amount.

Meanwhile, the historical rate of average rental income in the entire capital was between 2.5 and 6.5 percent. Naturally, these rates lack the minimum attractiveness for investors and cannot encourage them to purchase property capital and sell it in the rental market. Nevertheless, the housing market, especially in Tehran, has never been free of the presence of capital actors, and this point is thought-provoking and in a way indicates the existence of an apparent paradox in the housing rental market.

What factor has caused investors not to be disappointed in the housing market of the capital and to continue to be present as landlords in the housing market of Tehran despite all the ups and downs and troubles that come with renting? It illuminates the housing market.

Capital housing market activists focus on the long-term income of this asset instead of focusing on the rental income when buying the property and offering it in the housing rental market.

In fact, they have opened a special account on housing inflation rather than looking for profit from the rental income of their residential units, and it is the almost constant upward trend of housing prices in Tehran that has called them to participate in the housing market, not 4 or 5% annual profit or slightly more and less than this amount that they get by renting the property.

The experience of different periods of housing boom and recession has shown that housing inflation in Tehran during boom years is even higher than general inflation, and it is enough for landlords to go through a boom period to get what they expect as income.

If the state of macroeconomic variables is stable and there is no inflationary turbulence, landlords will only be willing to participate in the housing rental market if the rental income is at least twice the general inflation rate; Although in America, based on the historical ratio of housing price to rent (P/R), the average rental income is about 9%, but the general inflation rate is less than half of this figure; But in Tehran, due to the consumer nature of real estate demand in the rental market and the special importance of “affordability” which plays a decisive role in the rate of rent growth, the expected income of real estate investors is compensated by the housing inflation. In fact, the profit of landlords is doping with housing inflation.

The reason for the income gap in different areas of the rental market

In general, rental income fluctuates in two periods of time; One coincides with the peak of the housing price jump and the other after the peak of recession in this market. Therefore, in recent months, when the housing market has been affected by recession, it is one of the periods when the amount of rental income is going through a fluctuating season, and knowing the direction of this fluctuation in the future, by region, contains information that can bring the land of Tehran’s housing market to a level. – Win for tenants and real estate investors.

While according to official statistics at the end of 1400, the average annual rental income in the capital was about 3.5%, now it is possible to estimate the income around 4.4% based on the data related to the average housing price and estimated rent changes. In fact, the average income from renting each residential unit in Tehran this year is equivalent to 4.4% of the price of that property.

The interesting thing about the increasing changes in rental income in recent months is that such fluctuations are one of the main signs of the approaching end of the inflation era in the housing market.

In fact, as we get closer to establishing stable stability in the housing market and we move away from the age of leaps and bounds, the amount of rental income will gradually increase. However, this variable cannot be a definitive descriptor of what will happen in the future of the housing market; But at least it can be seen as a promising sign for the housing market activists, which indicates that stable stability will prevail in the housing market in the coming months (of course, if there is an unpredictable and unpleasant event about the fate of other key variables affecting the markets, including the exogenous variable of the housing market, i.e. the fate of negotiations to lift sanctions do not take place).

On the other hand, it is important for real estate market activists to know the reason for the difference between the north and south of the city. Knowing this will help them make the best decision for their activities in this market.

The fact is that the large gap between rental income in the north and south of the city, and in fact the higher profit rate that real estate investors get from renting residential units located in the south of the city, is caused by the deep price gap between the upper and lower parts of Tehran.

According to the latest official statistics, the average price of housing in five areas located in the northern half of Tehran, including the luxury areas 1 and 3 and the average areas 2, 4 and 5 of Tehran, is almost three times the average price per square meter of a residential apartment in areas 9 to 20 located in the southern half. is a city Meanwhile, the average rent in the expensive areas of the housing market located in the north of Tehran is about twice as much as the southern areas of the city.

Since in the north of the city, especially in areas 1, 3 and the luxury neighborhoods of area 2, the demand for property purchase is much higher than the demand for rent, the property inflation in the north of the city is also slightly higher than the rent price inflation, which is derived from the amount of demand. Especially considering that the purchasing power of both the consumer demand and the capital of those who apply to buy property in the northern areas is much higher than other applicants to buy housing in other areas, and this issue affects the property price variable and the rate of property inflation in the north of the city.

On the other hand, the housing rental market is a completely “consumer” market without the presence of capital demand, and therefore it is considered a less volatile area of ​​the housing market complex. The fact that no investment is present in the housing rental market, practically causes the affordability of tenants to play a key role in determining the rate of rent inflation, and since this affordability is a function of general inflation, in general, the rate of rent inflation is a function of the general inflation rate.

At the same time, the claim that rent inflation has no relationship with housing inflation is not a correct claim, and the role of housing inflation on rent inflation in different historical periods cannot be denied. Usually, one year after the housing boom, the growth rate of real estate rent increases and in some way real estate inflation spreads to the rental market.

However, the conditions of the real estate market in the capital have changed in such a way that due to the large volume of housing rental demand flowing to the middle and southern areas of the city, the inflammation in these areas of the rental market is more than the inflammation in the northern tenants. urban dwellers experience

The rising future of earnings in the south of the city

However, in general, in our country, due to the lack of effective tax tools in this market, it is an economic investment that, despite its non-productive nature, is completely profitable and does not impose the least cost on the owner; But for the optimal selection in the market, what has been discussed in the field of income in the housing rental market should be taken into consideration, so that at least the housing market can benefit from the presence of this type of applicants.

The current conditions of the housing market, which has increased the rental income in the south of the city to twice that of the northern areas, can be an alarm for the housing market activists and determine the win-win ground for their presence in a situation where the rental income is generally low.

In recent months, except for a small group of applicants for conversion to Ahsan, most of the buyers of residential units have been real estate investment applicants, and this process has not stopped at least yet. In this situation, if real estate investors make their purchases in the current stagnant market in the southern half of the city, they will enjoy two advantages.

The outstanding and main bonus is that they will receive a rental profit at a double rate compared to the landlords in the north of the city, and the second bonus is that they have made their purchase in an area of ​​the market where the majority of housing rental applicants in the capital have moved to and in As a result, they can easily rent their apartment in the shortest time even in the cold season of the housing market. In this way, it is even possible for them to secure a few 100 million Tomans of the transaction value by mortgaging the unit.

The thing to think about is that investors should not think that following the increase in the supply of rental units in the south of the city, the rental market will face a significant drop in the rental price level and they will suffer.

This increase in supply can lead to a slight adjustment in the rent level and reduce the amount of pressure on the tenants, and for this reason they will also win; But this win is not the result of Mojran’s loss. They also enjoy the rental income at a higher rate, but they should keep in mind the fact that due to the non-capital nature of the rental market, fluctuations in this market will be partially affected by the increase in supply.

In addition, it is expected that if the current trend continues without fundamental changes in the variables affecting the housing market, the amount of income in the south of the city will increase slightly to 8% in the coming months. Even though in 1996, when the housing market was at the peak of stability, the amount of rental income in the southern half of Tehran had reached the same limits; That too in the situation that the average rental income in Tehran at that time was 6.4% and in the north of the city was 5.8%.