Emerging real estate market in Lebanon set to increase by up to 15% by 2013, it is claimed
|Thursday, 25 November 2010|
It may not be the most obvious place to buy property, more associated with unrest and war, but the real estate market in Beirut is buoyant and set to grow by 15% in the next three years, according to industry professionals. ‘Lebanon has gone against the current of the international financial crisis in the real estate sector,’ Fuad Fleifel, director general of the economy ministry told the Beirut International Property Fair.
He told delegates that values have risen by 9% during the first eight months of 2009, with expectations that they will rise between 10 and 15% until 2013.
According to the fair’s organizers, thousands of people from across southern Asia, northern Europe and the Gulf Cooperation Council countries have attended the event with the main debate focussing on how the market will grow.
The country if facing a number of issues including the threat of a property tax and the emergence of a more mature mortgage sector.
Some real estate agents raised issue of how the market can increase when domestic incomes are dwindling and foreign buyers are few at present.
But Fleifel said that he believes that the Central Bank will take on a pivotal role in terms of taking the mortgage market forward. In recent years, the Central Bank has introduced incentives to encourage the middle to low income buyers to take out loans.
Fleifel said that durable loans were particularly important since 15% per annum price rises would prevent many people from becoming home owners in coming years.
‘There are voices inside the Cabinet that are calling for an increase in taxes on real estate investments, and others are calling for a suspension of work on a decision to re-evaluate real estate assets, which would mean burdening the sector with heavy taxes and that would not be in the interest of the national economy,’ Fleifel said.
Although real estate agents said they are pleased by the growth in the market they are also concerned about speculation. They have seen other emerging real estate markets in the Middle East, most notably Dubai, suffer as a result of speculators buying off plan to sell on to make a quick buck fast.
Developers have forced up prices, according to Samer Hajjar, general manager of Al-Hajjar Enterprises. He believes that already the market is showing signs of contracting because prices are too high. ‘We noticed that there is a halt in demand. This halt is justified because developers will set a price that they want, without providing matching quality standards,’ he told the Daily Star.
But he added that there are buyers out there who will pay whatever price is asked and that would result in ordinary buyers being priced out of the market. Developers say that they will look at building smaller sized apartments because otherwise there will be a price correction downward.
In the first quarter of 2010, Lebanon’s real estate sales increased 41% from the same period in 2009, totalling just over $2 billion, according to the Directorate of Real Estate. The Directorate said that the market benefited from strong economic growth.
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