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Ilia Farahani

Ilia Farahani

Doctoral student

Ilia Farahani

Public housing, intersectoral competition, and urban ground rent: Iran’s first public housing program that never was

Author

  • Ilia Farahani
  • Shadi Yousefi

Summary, in English

This paper investigates the structural political economic drivers of the housing market in urban Iran and the ways in which social and economic dynamics of the housing sector are rooted in peculiarities of Iranian capitalism, characterized by a relatively small public economy, low productivity of capital, and an underdeveloped financial system. The paper examines these processes and mechanisms in the light of the illustrative case of the country’s first and largest state-led housing program, the Mehr Housing Program (MHP). The paper argues that the program’s failure is due primarily to the state’s market-oriented approach toward housing. The MHP’s units were sold at their market prices, and the state subsidized the land to the developers with low rent, facilitating investments. Utilizing an intersectoral and multi-scalar analytical framework, we further argue that what drives the investment is absolute ground rent present in the housing sector due to its labor-intensive character. The high level of rent is due to persistently low profitability in the manufacturing sector and, subsequently, excess profits in construction and housing. Thus, rent-seeking investors tend to invest in housing. These peculiarities of the Iranian economy determined the trajectory and the
failure of the MHP as a public housing initiative.

Department/s

  • Department of Human Geography

Publishing year

2021-03-31

Language

English

Pages

45-61

Publication/Series

Human Geography

Volume

14

Issue

1

Document type

Journal article

Topic

  • Social and Economic Geography

Keywords

  • Absolute ground rent
  • Intersectoral competition
  • Iranian capitalism
  • Mehr Housing Program
  • Public housing

Status

Published

ISBN/ISSN/Other

  • ISSN: 1942-7786