Demand for residential real estate in Lebanon dropped to its lowest level on record in the third quarter of 2020.
The ongoing decline of the Byblos Bank Real Estate Demand Index since the start of the year comes amid the ongoing socioeconomic challenges in the country and the uncertain economic outlook, which has shifted the attention of citizens away from major investment decisions.
The August 4 explosion at the Port of Beirut also severely affected demand for real estate in the third quarter as citizens were forced to address more urgent and basic needs.
Respondents to the survey in Q3 showed that 0.6 percent of Lebanese residents had plans to either buy or build a residential property in the coming six months, down from 1.1 percent in the second quarter of 2020 and compared to 4.7 percent in the third quarter of 2019.
Real estate demand decreased across all income brackets in the third quarter of 2020 from the same quarter last year as developers demand cash payment only or a banker check that is almost three times the value of the apartment.
The foreign share of the total number of real estate transactions stood at 1.25 percent in October, down from 2.05 percent in the same period last year. However, foreigners executed 120 transactions in October compared to 78 in October 2019.
While investors are trying to liberate their deposit from banks by investing in real state, the sector is suffering as the demand is low and the stock of residential units remains significantly higher than the demand due to the devaluation of Lebanese pound and the decrease in Lebanese purchasing power.
The Byblos Bank Real Estate Demand Index posted a monthly average of 5.6 points in the third quarter of the year, constituting a decrease of 41 percent from 9.6 points in the second quarter and a decline of 86.5 percent from 41.8 points in the third quarter of 2019.
The Byblos Bank Real Estate Demand Index is based on a survey of 1,200 people living in Lebanon
The Index’s average monthly score in the third quarter of 2020 was 95.7 percent lower than the quarterly peak of 131 points registered in the second quarter of 2010.
The Index dropped to a record low in Q3 despite the increase in the number of real estate transactions throughout the period, driven by the migration of some deposits out of the banking sector towards real estate since November 2019.
But the purchasing trend for housing has originated mainly from a relatively limited number of buyers, amid the rapid rise in real estate prices and the complicated methods of payments that sellers are requesting.
The Byblos Bank Real Estate Demand Index is based on a survey of 1,200 people living in Lebanon.
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