What is the truth about the recovery of the real estate market in Lebanon?

What is the truth about the recovery of the real estate market in Lebanon?
What is the truth about the recovery of the real estate market in Lebanon?

The real estate market has witnessed several fluctuations in recent years, between periods of stagnation and others in which we have witnessed prosperity in this field, although some consider it illusory due to the presence of many factors that played a role in that. Despite the fact that the economic crisis is still the same as well as the purchasing power of citizens is the same, it is said about a “surge” in the real estate market and a noticeable rise in prices to a level where real estate markets can compete in the Gulf countries, where political, security and economic stability, unlike the situation in Lebanon, This raises questions about the reality of the current situation in the real estate market and about what prosperity can be expected in the next stage, in light of the decline in the purchasing power of citizens.

constant stagnation

It seems as if the fluctuations in the real estate market and the state of stagnation coincided with the onset of the crisis in 2019, but in fact the real estate market witnessed a stagnation since 2015. The random development of projects and the supply is surplus as a result of investors’ attraction to the high benefits offered by banks to take advantage of them, instead of investing in the real estate sector. . As for the real estate developer, he was attracted by banking facilities and loans to launch major projects on a large scale. This was a blow to the real estate market and caused a glut in it, so things got out of control at the time, according to what the expert and consultant in real estate affairs, George Nour, explains. Therefore, we witnessed a recession as a result of the imbalance between supply and demand. With the onset of the crisis, a major shift occurred with the deterioration of the national currency, causing chaos in the real estate sector. The citizens then wanted to smuggle their money withheld in the banks by any means, while the real estate developer wanted to pay off his debts, and the solution was through bank checks. Then real estate prices fell by between 40 and 60 percent of their value.

However, at a later stage, real estate developers were able to pay off their debts and no longer needed to reduce real estate prices, and the amount of dollars in banks declined, and the purchasing power of citizens decreased with the decline in liquidity rates. The real estate developer became keen to pay in “fresh” dollars. Selling is no longer an urgent need for him, so he raises the price whether he can sell it or not. This is what inspired some of the unprecedented rise in real estate prices. In fact, they are limited and special cases and are not a rule that can be generalized in the market or talk about prosperity. Thanks to the money of a group of Lebanese working in the Gulf, the demand may have increased to some extent. However, the demand is not for real estate in general, but perhaps for chalets or old houses in the mountains. They are limited choices in what is known as the Marche Niche, which pertains to a limited group of people who have specific choices of real estate. Based on this, Nour considers the increase that is being talked about in the real estate market in Lebanon to be fake for promotional purposes, so that the promotion of price increases in general is fake. In fact, the rise in the prices of materials used in construction and the global rise in oil prices also contributed to the rise in real estate prices, of course, and cash sales became no longer possible.

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“In real estate, the movement of the market is mainly related to supply and demand. As demand declines, prices decrease and vice versa. Personally, I do not expect major new projects to take place in the next ten years because the market cannot bear that in the absence of demand and cash flow. As for real estate developers, they are waiting to sell from existing projects. Instead of entering into new investments, they incurred more losses, especially since financing is not currently available, and because housing loans are not available.

request in a specific direction

To talk about a boom in the real estate market, the revitalization of the economic movement, and the birth of trust between the depositor and the banks, and this is not easy at the current stage. With the decline in the purchasing power of citizens and the lack of cash liquidity or bank loans, citizens will not buy real estate or invest in this field, unless there is an urgent need for that, and therefore it is natural for the demand to diminish and be limited to a limited segment of people who are able to pay such sums. cash Money. Note that the demand may focus today on residential apartments with small areas that do not exceed 110 meters, in line with the requirements of modern life. As for apartments with a large area, they are not currently desirable, which leads to lower prices. And because the citizen is looking for apartments that are smaller in size and less expensive, he may search outside the capital. Therefore, there is an increasing tendency to buy apartments in the suburbs, as their prices have increased significantly, and we are witnessing a real estate boom in the outskirts.

On the other hand, the demand for investment in lands or even in offices and shops may increase for those who have cash and not in residential apartments. However, Nour expects that the urban movement will automatically rise again with population growth, hoping that the state will also seek to regulate the rental law for a start. new economic life.

Between Lebanon and the Gulf… Exaggerated numbers

For his part, real estate expert and engineer Walid Daher points out that the figures circulating about real estate prices in Lebanon are exaggerated. Referring to an office outside the capital, where the price per square meter is five thousand dollars, is exaggerated. In general, real estate prices rise in Lebanon, especially in the center of Beirut. The highest price reaches five thousand dollars per square meter and below that for offices, but it may rise to between six thousand and eight thousand per square meter for residential apartments, and the price varies according to many factors. As for the surrounding areas, such as Ashrafieh and Hamra in Beirut, it comes after it in the price level, and prices range between two thousand and three thousand dollars per meter, and with moving away from these areas, prices decrease even more.

The movement in the real estate market has never returned to what it was in the past in Lebanon, as it is said, and this cannot happen due to the lack of cash liquidity, nor the natural economic movement and investments, and with the continuation of the crisis. Currently, prices in Beirut have risen to 75 or 80 percent of what they were before the crisis, and they have not recovered to previous levels. Only the Prime Location residential apartments were able to maintain their price to some extent, as they have the required specifications that allow for higher prices, but there are not many options available.

In a comparison between real estate prices in Lebanon and those in Saudi Arabia, Daher notes that the price per square meter may range between 10 thousand and 15 thousand dollars.

In Dubai, the real estate market witnessed a remarkable boom in 2022, with the arrival of large investors, most of whom are from Russia. Particularly benefiting from Dubai’s lower prices are those who buy off-plan properties. The value of the property rises later and returns huge profits if the decision to sell is taken at a later time.

And about the prices of apartments in Dubai, the real estate consultant in Dubai, Cynthia Al-Khoury, indicates that they are at a rate of three thousand dollars per square meter to eight thousand dollars for the most expensive apartment. The prices of luxury apartments may reach 37 million US dollars.

In a comparison between the real estate market in Dubai and its counterpart in Beirut, Al-Khoury points out that major investment projects, luxury real estate, and developed infrastructure are known in Dubai, and this is precisely what attracts investors from the world to it. Noting that Dubai ranks fourth in the world as a real estate market for luxury apartments in terms of sales, in light of the economic crisis in the world.

As for the real estate market in Beirut, it is largely linked to historical and cultural factors, as Beirut offers a mixture of modern and traditional real estate that attracts many and reflects the country’s history. There is no doubt that the focus in the real estate market in Lebanon is in particular on the city’s ancient architecture. And this is what constitutes a major attraction, so both Dubai and Beirut have certain attractions that can contribute positively to the real estate market for each of them.