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The real estate sector in Lebanon is sinking into a paralyzing stagnation, reflecting the country’s overall economy. The well-known saying, “When the construction sector is thriving, everything else follows suit,” has never rung more true than in the current economic crisis gripping Lebanon.
“The real estate sector sustained successive crises in the aftermath of the outbreak of the war between Israel and Hamas and the deterioration of security conditions at the southern border of Lebanon on October 7th,” Massaad Fares, honorary president of the Real Estate Syndicate of Lebanon (R.E.A.L.), firmly stated to This Is Beirut.
The real estate sector experienced a brief revival in 2020-2021 as property owners were quick to repay their loans at a favorable official exchange rate of 1,507.5 Lebanese pounds (LBP) to a dollar. Those keen to sell seized the opportunity to do so, and buyers also acted promptly.
The Benchmark
“Today, the real estate market is virtually non-existent, primarily due to the absence of demand and supply,” Fares asserts, highlighting that “requests to buy apartments for a son or daughter planning to get married do not qualify as a viable market.” Fares further explains that “the current benchmark for assessing the selling price of an apartment is 60% of its pre-2019 value.”
No Guts, No Investment
Real estate development and its affiliated industrial sectors, including materials and services, face a shortage of investment. This is due to the ongoing uncertainty regarding the country’s economic and financial future. Additionally, the real estate development sector faces a funding shortfall due to the absence of bank credits. On the other hand, the lack of available housing loans in the market hinders prospective buyers.
Real Estate Transactions at -88,4%
The number of real estate transactions recorded a steep annual drop of 88.4%, reaching 7,834 by the end of October 2023, compared to 67,506 during the same period a year earlier. This drop reflects two realities: the slump in real estate activity and the strike by government employees that led to a major dysfunction in public sector services.
Thus, the total value of transactions reached 1.94 billion dollars in October 2022, calculated at the new official exchange rate of 15,000 LBP per dollar, compared to 11.31 billion dollars during the same period, indicating a decrease of approximately 82.85%.
On a monthly basis, the number of transactions amounted to 4,409 in October 2023, compared to 11,006 in October 2022.
Breaking down the data, Northern Lebanon led in real estate transactions in October 2023, capturing the largest share at 29.35%. Zahle followed in second place with 23.61%, trailed by Southern Lebanon at 22.5% and Nabatiyeh at 9.73%. Beirut accounted for a mere 9.73% of the total transactions in the tenth month of 2023.
It’s important to highlight that no real estate transactions were recorded in the regions of Metn, Keserwan or Baabda as of last October.
However, in terms of transaction value, the capital Beirut dominated with 46.63%, totaling $577.06 million in October 2023, followed by Southern Lebanon at 29.22%, amounting to $361.65 million.
