Lebanon rises again

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Despite political tensions in Lebanon, particularly in the lead up to the presidential elections scheduled for September, the consumer real estate market is booming. Demand for small and medium sized residential apartments is not only high, but has increased over the past few months both inside the capital and in some of the country's outlying regions. This, as disputes between Lebanese factions continue to escalate.

Latest research on the Lebanese real estate sector reveals demand is mainly coming from Lebanese who work and live abroad, and are looking for affordable secondary housing back home. It is estimated that the Lebanese diaspora have an accumulated wealth of US$60 to US$80bn.

Beirut and its suburbs are becoming increasingly popular to these expatriate Lebanese, particularly in the areas of Ashrafieh, Ramlet el Baida and Tallet el Khayat. Outside Beirut Ghazir, Adma and Broumana are also witnessing high demand.

Prices have consequently risen by approximately 15 to 17% this year compared to 2006. While soaring demand is one of the reasons for the increase, the rise in the cost of building materials and land has also contributed. Steel has soared from around US$200 per tonne five years ago to about US$800 per tonne today. Cement prices have increased from US$75 per tonne before last summer's July 12th to August 8th war between Hezbollah and Israel, to above US$110 today.

Also factored into the equation is the dwindling labour force caused by the recent departure of the large Syrian working population who had helped rebuild the country's infrastructure after the civil war which took place between 1975 and 1990.

Economists predict prices will escalate even further and potential home sellers are taking that into account before putting their properties on the market. Analysts say the few homeowners who are willing to sell are doing so because they are in dire situations.

"I must say that most people are unwilling to sell because they are expecting the price to increase," says Mohammed Zebib, Lebanese economist.

"People who are willing to participate in the market are either desperate for cash or asking for extremely high prices for their homes. In addition, prices are high due to the high inflation. Moreover, speculators are more active."

Figures from 2006 reveal Beirut accounts for the majority of real estate transactions in Lebanon with 33% of total sales attributed to the capital. Mount Lebanon, comprised of Metn, Kesrwan and Jbeil made up 28% of sales. Baabda, Chouf and Aley accounted for 24% of transactions. The remaining three regions of the south, north and Bekaa held between 3 and 7% each. Analysts say buying in certain areas can be very advantageous for investors who are looking to make a profit in the near-term, rather than buying a residence for personal long-term use.

"The best place to invest in is West Beirut," says Zebib.

Like most other places in the country, West Beirut has a mix of low and high-income housing. Although it is a predominantly Muslim area of the city, it has significant Druze and Christian populations as well.

"In general, it is a good idea to invest in real estate anywhere," says Zebib. "But West Beirut is very small and the demand is extremely high.

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