Following five years of contraction, the Iranian construction industry rebounded in 2017, and registered an annual growth of 4.3% in real terms. This was driven by the implementation of the Joint Comprehensive Plan of Action (JCPOA) agreement between Iran and P5+1 countries - the US, China, France, Russia, the UK and Germany. In January 2016, the US, European Union, and United Nation removed sanctions from Iran after getting clearance from International Atomic Energy Agency (IAEA). Under the JCPOA agreement, the P5+1 countries placed restrictions on Iranian nuclear activities, and in return agreed to establish normal trade activity and economic relations with Iran.
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The Trump administration’s maximum pressure campaign against Iran reached a milestone on November 5, 2018, with the re-imposition of US sanctions aimed at Iran’s banking, energy, and shipping sectors, as well as the governments and companies still engaging with those sectors. This is expected to trigger a new economic crisis in Iran, and impact the country’s construction industry adversely in the coming years. The administration showed some flexibility by granting waivers for oil purchases to a handful of countries.
The government’s efforts to enhance transport and residential infrastructure will support the industry’s output over the forecast period (2018-2022). In addition, the government’s aim to improve local energy resources is expected to support investments in energy infrastructure projects, which will in turn fuel growth in the industry. The government plans to build 1,700km of new road between Tehran and Lebanon by 2023, and 400.0km of railway line between the Gulf port and Shiraz.
The industry’s output value in real terms is expected to rise at a compound annual growth rate (CAGR) of 3.38% over the forecast period - up from -5.61% during the review period (2013-2017).
GlobalData’s "Construction in Iran - Key Trends and Opportunities to 2022", report provides detailed market analysis, information and insights into the Iranian construction industry, including -
- The Iranian construction industry's growth prospects by market, project type and construction activity
- Critical insight into the impact of industry trends and issues, as well as an analysis of key risks and opportunities in the Iranian construction industry
- Analysis of the mega-project pipeline, focusing on development stages and participants, in addition to listings of major projects in the pipeline.
- GlobalData expects the energy and utilities construction market to register a forecast-period CAGR of 16.80% in nominal terms, driven by the government’s focus to increase the country’s electricity production capacity. The country’s total electricity production capacity increased by 2.9%, rising from 76.3GW in CY2016-2017 to 78.5GW in CY2017-2018. Moreover, the government plans to increase the electricity generation capacity to 100.0GW by 2025. Accordingly, in September 2018, the government announced plans to build a new 5.0GW power plant by the end of March 2019, with an aim to reduce electricity shortages during summer months.
- Forecast-period growth in the residential construction market will be driven by the government’s plans to build new affordable houses in the country. According to government estimates, the country requires 5,000,000 houses to meet the residential property demand by 2027. Accordingly, under the sixth Five-Year Development Plan, the government plans to invest IRR1.2 quadrillion (US$28.3 billion) to renovate the slums and poor neighbourhoods of the country and construct 900,000 housing units by 2022.
- GlobalData expects the infrastructure construction market to record a forecast-period CAGR of 12.08% in nominal terms, supported by the government’s plan to develop transport infrastructure within neighboring countries with an aim to increase trade activity. The government is planning to build 1,700km of new road to connect Tehran with ports in Syria and Lebanon by 2023. Moreover, under Iran’s sixth Five-year Development Plan, the government plans to increase the total length of freeways from 6,600km in 2017 to 7,500km by 2022.
- Forecast-period growth in the industrial construction market will be driven by investment in industrial and manufacturing activities and improvements in the regional economy. The government is seeking help from private investors in the manufacturing industry to reduce its dependency on oil, and cause the country to emerge as a manufacturing and innovation hub in the Middle East by 2025. Moreover, under the Master Plan for Industrial Development and Renovation Organization of Iran, the government plans to develop the infrastructure of the Garmsar Economic Zone, Jahrom Economic Zone and Kavosh Research and Technology Park, with an aim to provide adequate facilities to foreign manufacturing companies by 2020.
- The total construction project pipeline in Iran - as tracked by GlobalData, and including all mega projects with a value above US$25 million - stands at IRR18.6 quadrillion (US$558.7 billion). The pipeline, which includes all projects from pre-planning to execution, is relatively skewed towards late-stage projects, with 59.6% of the pipeline value being in projects in the pre-execution and execution stages as of January 2019.
This report provides a comprehensive analysis of the construction industry in Iran. It provides -
- Historical (2013-2017) and forecast (2018-2022) valuations of the construction industry in Iran, featuring details of key growth drivers.
- Segmentation by sector (commercial, industrial, infrastructure, energy and utilities, institutional and residential) and by sub-sector
- Analysis of the mega-project pipeline, including breakdowns by development stage across all sectors, and projected spending on projects in the existing pipeline.
- Listings of major projects, in addition to details of leading contractors and consultants.
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- Assess business risks, including cost, regulatory and competitive pressures.
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