Financing real estate and urban regeneration in Iran

The advancement in institutional financing in Iran has affected both the funding and investment environment in almost all businesses including urban development and real estate in recent years. This has provided private sector owned businesses with new vehicles for capital raising while offering innovative investable products to institutional and retail investors compared with other forms of investment notably the saving accounts and share trading. In a broader context, however, this has enabled businesses to utilise private sector capital in a larger scale. Reviewing recent activities in the capital market particularly the funds, provides a better understanding of both the market size and its contribution to real estate and urban development sector. This paper will outline the latest development of the real estate market in Iran. Furthermore, through providing an analytical investigation of the capital market in Iran, this paper examines a variety of mechanisms utilised for delivery of urban regeneration projects in Iran employing different forms of public private partnerships and private sector finance via establishment of Special Purpose Vehicles (SPVs). This is done through utilising live case study projects in which sources of finance, fund structure and operation models are investigated. This paper undertakes an in-depth analysis of the financing mechanisms based upon the evidence drawn from case study projects, identifies three different types of SPVs focusing on main sources of finance and assesses the characteristics and effectiveness of these schemes.