New Market Report: Iran Infrastructure Report Q4 2012

New Construction research report from Business Monitor International is now available from Fast Market Research

by Bill Thompson

(WireNews+Co) - Boston, MA - 24 October 2012

BMI View: We maintain our bearish outlook for Iran's construction industry with a negative forecast of -5% for 2012 due to the persistently high inflation - estimated above 25% between 2012 and 2015, later subsiding to 15% in 2016 - and continued pressure on Iranian finances following the latest wave of US and EU energy sanctions. We expect this downward pressure to continue largely unhampered until 2016, after which we anticipate a gradual easing and an average annual growth of around 2% between 2016 and 2021. However, Iran's business environment remains opaque and difficult to penetrate for any outside investors. China and Russia are, by and large, the only two countries with a continued international presence, yet even this relationship is currently experiencing setbacks.

View Full Report Details and Table of Contents (http://www.fastmr.com/prod/464509_iran_infrastructure_report_q4_2012.aspx) (http://www.fastmr.com/prod/464509_iran_infrastructure_report_q4_2012.aspx)

- The Chinese government has made an offer to build a new freight rail line in Iran, according to Engineering News-Record. The freight line is aimed at allowing continuous rail transport of goods from China, through the Middle East, to Europe. The project is expected to cost US$2bn, starting in Tehran and running to Khosravi on the Iraqi border. The line will also offer a passenger service. Iran's minister responsible for transport is reported to have invited bids to construct the line. That said, we are seeing some setbacks within the China - Iran relationship, when the former recently pulled out of the development of phase 11 of the US$4.7bn South Pars gas field.
- Iran launched the Bushehr nuclear power plant during a ceremony held on September 12 2011. The 1,000 megawatt (MW) plant will undergo several test stages before becoming fully operational, reports the IRNA news agency. The west has opposed any such developments, claiming that the Iranian nuclear programme is a cover for the development of atomic weapons.
- Iran's Ministry of Housing and Urban Development has confirmed that contracts have been agreed with construction firms for work on the Mehr Housing Scheme, according to AMEinfo. The scheme will see the construction of 430,000 urban residential units before March 2012. The deals in place relate to 260,000 of the residential units, with arrangements for the rest yet to be finalised.

The Islamic Republic remains in a downward spiral of pronounced risks, including political instability, economic stagnation and social tensions, and we believe the current situation will be unsustainable over the long run. Despite a spikes in oil prices, the latest wave of US energy sanctions and EU oil embargo coupled with a ban on London issued insurance on oil tankers, has started to take its toll on Iranian oil production, and consequently the economy at large. With its main avenue for earning foreign currency - oil represents half of Iran's governments revenues, and account for 80% of the country's total exports - more or less depleted the government will be forced to cut back further on public spending.

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