- 23
- Mar
- 2024
The real estate sector is going from bad to worse. Hindered by a scarcity of bank loans and a grim outlook for the country's future, both supply and demand have been severely crippled. Agents are leaving for more promising markets abroad. This represents an endless ordeal.
“Speaking real estate investments in Lebanon at this juncture is a bad joke,” a real estate developer told This is Beirut on condition of anonymity. “Substantial investments in the sector necessitate stable legal frameworks and a guaranteed minimum return,” he said, adding, “It is normal that developers do not want to lose money.” “Lebanon is a country at war, regardless of the government's denial,” underscored an old hand in the real estate brokerage field.
Estimating the value of a property
According to him, “The real estate market in Lebanon is an unregulated market, given that fundamentally, estimating a property’s price is not a precise technique.” He explains that no one can accurately provide a justified and reliable approximate percentage of the market value of built properties in 2024 compared to pre-October 2019 levels, when the multidimensional crisis began. Each property is assessed on a case-by-case basis in the real estate sector.
The rich and the poor
From now on, the real estate market is segmented between the rich and the poor. The rich have already purchased; they do not sell nor invest in the country until the situation settles down. As for the poor, they refrain from purchasing simply because they lack the means to do so. Bank loans have vanished and saving has become almost impossible in the current circumstances due to salary devaluation, despite a portion of earnings being paid in fresh dollars amid rampant inflation. Indeed, purchasing without loans avoids the accumulation of debts. Yet, to accomplish this, the potential buyer must possess substantial savings.
Knock-down prices
The Banque de l’Habitat (Housing Bank) has initiated loans of approximately 50,000 dollars. However, the conditions are not straightforward. Moreover, loan applicants must anticipate relocating far from the capital due to the trivial amount of the credit.
Are good deals still possible? “Not really,” points out the aforementioned broker. Properties with knock-down prices due to owners' need for immediate liquidity are becoming less appealing in terms of the specifications of the property being offered, resulting in an automatic price discount.
Money laundering
Real estate has persistently served as a means to launder ‘dirty’ or illicit funds in Lebanon, as elsewhere in the world. However, in Lebanon, it represents less than 9% of the market, according to various experts, which does not accurately determine the market’s pulse.
Foreigners are purchasing
As for foreign buyers, the slight increase of approximately 1.76% in the areas acquired by non-Lebanese individuals between the end of 2019 and the end of 2023 is not an indication. This increase probably stems from properties purchased with bank dollar checks or from delayed registration of acquired real estate transactions, due to the closure of land-registry departments.
We are all familiar with the saying: “When the building sector thrives, everything thrives.” However, today, the building sector does not…
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