The price of a Persian rug in the UAE has increased by as much 40 per cent in the past year even after a devaluation of Iran's currency and higher inflation.
Iranians have been buying more high-end carpets - a traditional haven during tough economic times - to protect their savings, driving up the price. This comes even as traditional markets in the United States and Europe are at a standstill following Washington's move to ban the import of Persian carpets and investor appetite in the euro zone wanes as the region faces a debt crisis.
"Iranians inside Iran are buying ... carpets like they are buying gold, dollars and even land to protect the value of their money from inflation," said Dawood Hossein-Zadeh, the owner of Centre of Original Iranian Carpets in Abu Dhabi.
Iran's currency has been volatile in the past year as a result of international sanctions imposed on the country over its nuclear programme.
On the official market, the Iranian rial has lost about 15 per cent, trading at 12,294.95 to the greenback. On the black market, however, the rial has lost 70 per cent, trading at 17,650 per dollar last week. Inflation has risen 21.8 per cent over the same period, according to figures published on the central bank website.
The surge in the price of carpets comes even after the traditional markets in the West have halted. The US banned the import of Persian carpets two years ago as part of a larger sanctions regime to put pressure on Iran's economy, while sales in Europe have slowed down with collectors hesitant to make big purchases as the region reels from a worsening debt crisis. "The main market right now is Iran," said Mr Hossein-Zadeh.
"The cost to buy a Persian rug has increased dramatically, and in such a short span of time," said Asif Ali, the owner of Mehreen Carpets & Novelties in Dubai. "If you call up anyone in the well-known carpet workshops [in] Tehran, Tabriz, Qom and Naaeen right now, they will all be adding 40 per cent to the price tag of these rugs."
A fine rug, made by the well known master weaver Haji Jalili's workshop in Tabriz, dating back to the 1890s, at 455cm by 309cm in size could start at Dh40,000 (US$10,890), compared with less than Dh30,000 a year ago.
Traders in Persian carpets in the UAE, who usually wait four to five months to pay after receiving carpets, are being pressured to sell their pieces immediately because of the unpredictability of the currency.
"The current situation is making that time window shrink because nobody trusts the currency," Mr Hossein-Zadeh said. "For us buyers it is more difficult because we normally rely on that grace period."
The economic turmoil has also encouraged master weavers of Persian rugs to give up on the trade and seek employment from other industries.
"The trade is getting extinct. The well-known weavers are not encouraged to work for a year and a half to two years without pay and then sell the carpet," said Ali Al Bayaty, the chief executive at Estuary Auctions, an auction house in Abu Dhabi."They want something they can buy and sell quickly, while the younger generations are getting educated and getting jobs in industries or finance."
twitter: Follow and share our breaking business news. Follow us
iPad users can follow our twitterfeed via Flipboard - just search for Ind_Insights on the app.