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August 4, 2016

Report: Iran’s construction industry set to grow with international sanctions lifted

The output value in real terms of the construction industry in Iran is set to grow at a compound annual growth rate (CAGR) of 6.34% from 2016 to 2020 according to a Timetric report.

The output value in real terms of the construction industry in Iran is set to grow at a compound annual growth rate (CAGR) of 6.34% from 2016 to 2020 according to a Timetric report.

Titled ‘Construction in Iran – Key Trends and Opportunities to 2020’, the report states the industry’s promising outlook is a result of revocation of international sanctions, which spurred growth in rail, energy, and infrastructure projects. The country is witnessing an improvement in investor and consumer confidence, leading to an increase in investment in construction projects.

The government is currently focussing on infrastructure development to promote economic growth and overall progress. Plans were announced in 2015 to develop the rail network by 2025, which included an overhaul of the existing network and aligning the regional rail network to Central Asia and the Persian Gulf.

Iran’s rail network is expected to increase from 15,000km in 2015 to 25,000km in 2025 as a result of the steps initiated by the authorities. Efforts are also being made to attract foreign investment in the transport sector to revamp existing infrastructure.

The Islamic Republic of Iran Railways (RAI) signed a memorandum of understanding for co-operation in the rail sector with Germany’s Siemens in January 2016. The agreement is aimed at enhancing Iran’s rail infrastructure and leading to economic development.

The Timetric report cautions against dwindling oil prices, expensive labour, corruption, and political risk. Iran’s construction industry is still recovering from the effect of the international sanctions and declining oil prices pose a threat to the industry’s successful recovery as oil export is the country’s economic mainstay.

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