In part 2 of the Iran series, I will focus on different areas of opportunities to invest in. I will divide this into digital and non-digital ventures. For the sake of keeping it a bit simple, I will focus on several sweet spots because if you look close enough, you will see chances and opportunities in everything. And trust me when I say that Iran has lots of spots where you can dive into it because of its isolation.
You can practically start a needle factory, and it would still be a smash hit. Should you have missed the first part of the series, catch up with it here
Investment opportunities in Iran
Digital:
This is probably one of my favourites because my lazy ass enjoys getting stuff down behind the computer and earn a living out of it, I have been doing it since I was 12, so this is like music to my ears. We already got the uber, takeaway and amazon lookalike in Iran, but there where most of them dominate the capital, it allows easy copy-pasting method in other areas of Iran with fresh investment and freedom of navigation and building up the backend from scratch catered to that specific location.
These companies need to scale to stay profitable, and they are very slow in adapting to new situations and demands. A startup is like a speedboat, while an established company is most of the time more like a big oil tanker. A popular way of managing and rolling out new features is through agile/scrum methods, which is still pretty young in Iran’s management culture. Now you might think who gives a hoot but again, compare this with a fight between Mohammad Ali and some overweight guy in his 40ties. We both know the other guy will go down faster before he can say, “cheeseburger and some fries, please”. If you cannot move and adapt fast, you have lost the fight.
So any startup fighting these companies with a cloning method deployed in other areas of Iran has a high chance of success.
Other services which are still pretty young in Iran are:
- Webdesign services
- Service-based option
- Quoting services
- Product comparison
- Used market
- Online used car sale
- Online real estate services
- Law services online
Some of these already exist, but they don’t even come close to their western counterparts in terms of options and UX. If you match this with the manoeuvrability of a startup, you can pose a serious threat to them 😉.
Non-digital:
Here is where things get hairy (and I am not talking about Ahmad, my masseuse). Non-digital ventures are like anything offline, it can be a simple grocery store to a Walmart, building stadiums to carpentry and anything in between.
The reason non-digital ventures in Iran are more difficult ( in general digital ventures are easier to start up, run, scale and manage) is due to the nature of Iran’s legal system. It is a mixture between Islamic law and bills passed through the parliament and a lot of grey in between laws that aren’t actually laws but maybe more common sense (to them), and this grey area gets messy if you don’t know how to navigate it.
Many people get upset or put off by this, but to be frank, if you enter a basketball field and start playing tennis….you are not going to have a good time. I can tell you that much.
Real-estate
This is probably my favourite non-digital venture because it has always been a solid approach no matter where you are. True, the saying “location…location…location” is still important, but this becomes true when you dive into the local bit. In general, the reason I love real estate is kind of basic and a sure thing most of the time.
The number of habitable places is limited, but the number of people running around fucking and multiplying has proven to be quite limitless. Don’t worry, I won’t go on a rant on crowd control because before you know it, I will get cancelled in 10 years time for suggesting that there are too many people! When Snowhite is getting cancelled, do you think I stand any chance ?!
Alright, back on track. Where were we? Ah yes..real estate. You got several kinds of opportunities to jump into Iran, and I will describe them here briefly.
Keep in mind all these options are payable by cash, even though Iranian banks offer here and there loans to purchase a house, but this is merely meant for the lower-income household. So whatever option you wish to choose, just remember you have to pay it upfront.
Existing buildings:
Existing buildings are always a good idea because they have proven to be stable, you got a track record from the neighbourhood prices and potential growth, you can do surveys on the property health. The downside of existing buildings is that they need maintenance a lot more than new builds, and chances are they already had much of their growth during the first 20 years.
Now when I say growth, I measure it in euro’s because the Iranian toman has plummeted over the years, so if some Iranian reading this and owns some property worth 2billion toman while he purchased it for 100 000 toman. If you go back to the exchange rate back when he purchased it and take into consideration the adjusted inflation rate and current market price, then you can say whether he has made a profit or not.
New built:
New built is always good, but they are also quite costly, and it is a race between the growth of the area and the market demand as opposed to the decline of the “added price per meter” for the fact you purchased a newly built house. For example, same street, same location. 1 house is 20 years old, and the other is just 1 year old. Most of the time, the new one (depending on the location) is 30/50% more expensive per square meter than the old one. Now this price difference will decline with time. So you have to take into consideration what added value will this new built have to the market. Will you be using the plot to build more building per square meters? Will you use the plot to build 40 flats and break down the current 5 flats to create value out of thin air? Does the new building have additional private parking and elevator, and other facilities to create value over an existing dwelling?
As you can see, a new building is not easy, and unless you have proper inside knowledge of the market and, above all, the law and permits needed to get these things done… do not start with such a venture because it will end in tears for you. 😊
This does not mean you can’t do it, but it is best to partner up with a local or an investment group that focuses on property development. Which kind of brings me to my next bit, which could provide the perfect solution for you.
Pre-order a house:
This is also a favourite if done correctly because you could still get screwed over like any contract if you signed it hastily and did not read it through!. Pre-order is basically when a developer purchases a piece of land or partners up with the landowner to build new apartments on their plot and sells the properties before he even started the work.
This sounds dodgy/shady, but it works great for all involved because the person pre-ordering the property will pay less per square meter than a newly built property. The developer who has to finance everything himself gets startup funds to get it started. The original landowner doesn’t need to lift a finger except agreeing to build X amount of properties on his land. In exchange, the original landowner gets additional properties. So before, he might have had 300m2, 2 apartments. After the development, he might end up with 4 newly apartments, each 150m2. And since it is newly built, the price per square m2 is much higher, and he might get additional perks like an elevator and parking spaces etc.
Devil in the details:
Like any good agreement, you need to read it thoroughly and when it comes to Iran, reading it thoroughly is the minimal because once you enter the grey area, things can get ugly if you do not play the same game as others and in some areas give in so you can benefit from it elsewhere. I won’t call it you scratch my back, I scratch my back, but it is a give and takes culture.
Property development might be hard to tackle, but I can promise you it is worth it, and it is also kind of fun. But even if you don’t like to dive into properties, lack the funds or find it simply boring. There are so many other spots to dive into, but it will be all done with the same game rule. I am not trying to put you off, but just a friendly reminder that you shouldn’t bring a tennis racket to a basketball game if you want to have fun.😉