If an Iranian butterfly flaps its wings…
So here’s the scoop: Iranian sanctions are due to be lifted soon. Yes, the moment the International Atomic Energy Agency verifies that Tehran has upheld its side of the bargain and restrained its nuclear program to be in line with the international agreement (JCPOA), everything changes. That day will be affectionately known as: implementation day.
Huh? I hear you saying out loud. Perhaps you are even checking the url of this blog post, trying to figure out why I am telling you about Iranian sanctions when all you wanted to know about was the London residential property market. Well that’s a fair question and one I am about to answer, so calm down and read on.
In very simple terms, if sanctions are lifted there will be $100bn of frozen assets unlocked – that is a lot of extra money floating around and needing to be invested in something. And that ‘something’ is bound to at least in part be the London market.
Now, for the technically minded among you, here are the details: (for the less technically minded, feel free to skip to the last paragraph for the super good news):
On 18 October, dubbed adoption day, Iran began to take steps to restrain its nuclear program in line with the international agreement (JCPOA,). As a quid pro quo, both the US and EU took initial preparations to lift sanctions.
Should all go well, Iranians hope that sanctions will be lifted as early as the beginning of 2016, but of course it could be later than that.
Lifting sanctions will have a significant impact on the world oil market, the Iranian economy and Iran’s trading partners, specifically:
- It could add about a million barrels of oil a day, lowering oil prices by US$10 per barrel next year
- It could lead to a 2% surge in Iranian economic growth
- It could lead to more Iranian exports with Britain, China, India, Turkey and Saudi Arabia being the countries most likely to benefit
- The lifting of sanctions represents an economic windfall to the Iranian economy.
While most US sanctions will remain in place, the EU have agreed to remove sanctions in the financial, banking and insurance industries, the energy sector, transportation and shipping, and unfreeze the assets of Iranian banks, individuals and other organizations.
So you can see why this is exciting right? With the new found freedom to move their money in whichever way they see fit, Iranians are likely to look at both commercial and residential opportunities within the London market. In fact, we believe Iran could well become a major force in the London residential market, both via funding projects and buying homes (for individual use and to rent out) in the coming years. We will be following this emerging market closely, so watch this space…