Lebanon’s real estate market is what many may refer to as the most rapidly growing market in the country. However, as a result of political instability and the lack of security, the past few years have witnessed a major slowdown.
In 2013, the real estate sector continued to face weakening demand due to the stressed economy coupled with the fragile internal situation and the ongoing Syrian war spillovers. This was reflected by a 7.2% decline in transactions amounting to 69,198 in 2013, compared to 74,569 transactions in 2012, according to Blom Bank’s 2013 Annual Report. As the situation worsened in 2013, the real estate sector was the least fortunate.
A demand for smaller property
While demand for commercial properties continued to drop, the demand for residential properties wasn’t as severely affected. However, buyers started looking into more affordable, smaller-sized properties. According to research done by InfoPro Research, the share of apartments above 300 square meters in size sold up till June 2013 dropped from 17% in the same period of 2012 to 14%. Meanwhile, the share of sold apartments with sizes between 150 square meters and 199 square meters increased from 29% in January-June 2012 to 32% in the same period of 2013.
A decrease in foreign demand
With political instability and lack of security posing as major threats, Lebanese natives aren’t the only ones with shifted demands. Lebanese expats have also been reluctant to invest in the country. While the real estate market saw a 9% drop in the volume of sales to foreigners following repeated warnings from GCC governments calling their citizens to avoid Lebanon, the Syrian crisis played a role in solving this issue. Fleeing to Lebanon for security and stability, many Syrians rented and purchased apartments in the country.
While the real estate market recently suffered from the country’s political instability and a shift in demand, in terms of property sizes, location, and willing investors, developers are staying optimistic because buyers continue to invest. Massaad Fares, CEO of Prime Consult, the company managing the marketing and sales of Sama Beirut, said, “demand is currently increasing and there’s a positive outlook for the real estate market in Lebanon. We must keep in mind that there is no investment without stability. However, the Lebanese real estate market is maturing and competition is increasing but that is healthy.”