Despite the value of Iran’s currency taking a nosedive due to Western sanctions, demand for luxury items - especially Persian carpets - is increasing.
Although prices have soared by up to 150 percent compared with last year, “Iranians are the biggest buyers of Persian carpets,” said Abolfazl Ghanbari, CEO and owner of the Dubai-based family business Zomorod Ghanbari Carpet.
Iranian culture, and the still-wealthy individuals who make up the private sector, are keeping demand steady, said Ghanbari, who travels to Iran every month to bring fine pieces to the United Arab Emirates, the second-biggest market for Persian carpets.
“Most of the newly married girls want to start their new lives with two or three pieces,” he said. “The most wanted pieces aren’t exported, but are purchased by wealthy people from major Iranian cities.”
Prices have risen as the loss in the riyal’s value makes it cheaper for foreigners to buy Persian carpets, and as the number of weavers in Iran decreases sharply due to people opting for better-paid jobs.
Hedge against inflation?
With imports becoming increasingly expensive for Iranians, some are buying more carpets as a hedge against inflation.
In times of economic depression, “Persian carpets are like gold for Iranians,” who “prefer goods instead of money as its value is decreasing,” Ghanbari said.
Wholesale traders in Iran are buying carpets and hoarding them, selling them at higher prices to offset inflation, said Hamdan al-Sharif, CEO of Persian Carpet House and Antiques, one of the UAE’s largest carpet retailers.
In July, the United States will ban the transfer of precious metals to Iran, as part of its efforts to pressure Tehran to curb its nuclear program.
“This might push the standing of Persian carpets as investments for Iranians,” Ghanbari said.
When asked if Persian carpet prices will ever go down, Sharif replied: “Impossible. It’s the only item that will go on appreciating if one decides to sell,” making it a great investment option.
While the price of Persian carpets is rising, the “appreciation isn’t fast because of sanctions,” said Eyad Abu Shakra, regular columnist for the pan-Arab Asharq al-Awsat newspaper, and co-author of “Oriental Carpets.”
While he likened investment in high-quality Persian carpets to gold in light of the sanctions, he said there are “many variables to take into considerations, and the situation is simply not black or white.”
Iranians need to have enough cash to export, and there is a looming issue of finding new markets to sell the luxury good, said Abu Shakra, adding that Europe and Japan are viewed as the best options.
“Iranians are already selling Persian carpets suitable to European tastes at lower prices,” creating a win-win situation for both Iranians and Europeans, he said.
However, countries such as China and Turkey are competing with Iran, as they have digital Persian carpet designs, and are able to produce oriental rugs at much lower prices.