Lebanon Real Estate Newsletter Vol. 3, Issue 3 - April, 2007

     Lebanon, being geographically situated at this strategic location at the cross roads of all major historical civilizations and conquests – its fate is to constantly live in turmoil at the edge of all kinds of risks and witness all world changes, evolutions and revolutions… and at the same time to withstand  the different unpleasant temptations for being envied by most outsiders.

Currently, Lebanese politicians are undergoing a schizophrenic state of mind manifested by their conduct, attitude and vocabulary. When we hear their debate on TV using the words: Democracy, Freedom, Sovereignty, Independence…etc, we wonder how those words have been distorted and how far from the true definition of the words as understood in democratic institutions elsewhere.

Lebanon is also in a state of weightlessness: Even when the Arabic mother’s tongue is used we do feel that we are watching the historical “Tower of Babel” or a controversial “Byzantine arguments” to identify the gender of Angels.

The magic Lebanese formula of Compromise which used to be implemented at difficult times and events between factions… it has now been replaced by TOTAL IMPASS.

The democratic temporary “SIT-IN” manifestations have been transformed into unlimited “SLEEP-IN” in 5 star TENTS in “Beirut Central District” (BCD) in the purpose of paralyzing the normal function of the government.

Despite the stretched demonstration in B.C.D newly camp, land prices of adjacent Gemayze, Monot, Saifi and Beirut in general have risen by more than 30%.

The fever of confrontation between the two major political factions of the Lebanese society is gaining momentum and adversely affecting all aspects of life.

The surprise 12 July, 2006 Israeli war which caused serious damages and losses in human lives (1200 casualties + 4500 injured) and economic damages and destructions amounting to US$15 billion added to the US$40 billion national debt deficit did not shake the conscience of our political leaders; to sit and resolve the accumulated problems through appropriate, sound, wise and responsible democratic dialogue.

And despite the political and economic crisis culmination, we assure our clients that although the real estate market demand on some sectors like the international high quality standard residential apartments in Solidere and BCD is reduced; the overall sector in the other regions remains unaffected.

The national growth indicator which was anticipated to reach +6% by year end 2006 - has now sank to -3% due to the surprise war and related negative repercussion.

The overall picture looks gloomy, but the real estate market strangely enough is still maintaining its strength and the prices are still climbing higher and higher.

The inflow of major foreign investments has been partly slowed down probably awaiting the improvement of the political situations in the region and in Lebanon. The “Wait and See” attitude is still prevailing in the BCD sector.

 Nevertheless, local developers in Beirut surrounding and especially in traditional demanded spots like Keserwan and Metn areas are maintaining and increasing their construction schemes. 

New construction sites are growing like mushrooms wherever you look around. In the new residential construction projects in Beirut, more than 100 (10-12 storey buildings) are already under construction or just completed; the emphasis on demand is back to the medium size apartments varying from 150m2, 170m2, 210m2, 260m2, and 300m2 designed mostly to accommodate the upper Lebanese middle class and Lebanese expatriates clientele.

But the demand on larger apartments of 450m2, 800m2, and 950m2; mainly designed for foreign and Arab Gulf citizens along the coastal sea front of Beirut and Solidere, is temporarily shrinking.

Moreover the developers in Beirut (outside Solidere) confirm that the situation did not affect their sale programs. In fact they are selling their apartments while still under construction and before the buildings are completed. They have full confidence in the Lebanese expatriates working in the Gulf and Europe in particular. As soon as they approach the completion of their projects on-hand, they are seeking new site locations for new construction.

The apartment sizes of 170 to 250 m2 with limited budget between US $ 350,000 to 450,000 are currently the guide line of most transactions within Beirut area. The apartment prices start at 1,300 $/m2 or 1,700 $/m2 for the first floor and increased by 30–100 $/m2 per each floor height depending on the location and quality of the building.

With the increase in the price of reinforcing steel (From US$500/ton – US$950/ton) and most of the other building materials…The upcoming new construction prices are subject to be increased by another 20% - 25%.

In the last 2 years, the increase in apartment prices has reached more than 30% in Beirut… and in Beirut Central District, the

 apartment prices which were prevailing prior to September 11, 2001 at US 2,500 $/m2 – now after 6 years have reached the threshold of US 5,700 $/m2 and US 6,000 $/m2; more than doubled.

The same fever which was initiated in Beirut Central District is now expanding to engulf the whole Beirut, the outskirt of Beirut, the Keserwan coast, the Metn area, and Lebanon as a whole, depending on its proximity to Beirut, location, and views.

It has been proven that investment in real estate properties in the last 50 years has been a source of excessive profit and wealth – irrespective of the civil war and political unrests that hit and still continue to destabilize the normal peaceful life in Lebanon.

Our repeated advice to invest and buy property as soon as you can, still stands. In fact it is more than a promotional sale story because the figures and current prices support our claims.

Lebanon enjoys particular advantages over most of other countries due to the large community of Lebanese expatriates spread all over the world – which constitutes a bank of resources. Each expatriate dreams to come back home, and many foreign communities love to live in Lebanon and make of Lebanon their second home. Most residents appreciate the beauty, culture, history, climate and the warm hospitality as much, if not more than, the Lebanese themselves.

I wish to stress on that point – and wish that the citizens would appreciate the gift that God granted them and start resolving their differences by peaceful and true democratic means through the constitutional institutions already in place in order to fulfill the aspirations of the silent majority.

In conclusion, our humble and sincere message to our DEAR politicians is to bear in mind Lebanon's interest FIRST and to comprehend that the basic ingredients, constituents and features of Lebanon's magic strength lie on:

• Lebanon's historic mission as a unique prototype based on dialogue, tolerance, freedom, love of life, amalgamation and openness to all civilizations and cultures. (The policy of two parallel lines or one way traffic will ultimately fail because they will never meet).

• And definitely neither on its military might or its tiny territory (10,452 km2 including Shibaa occupied land).

• Nor on its large population (Almost 4 millions that could be accommodated in one hotel in China-or a street in any major world city).

God bless and save Lebanon to remain for our children and grand children; an oasis of beauty, joy, peace, freedom, prosperity, creativity and happy living...with affordable living conditions in order to be able to acquire and build our own nest and final resting place under its clear blue sky.

Eng. Joseph Safar

Hayek Group