Lebanon: Real estate demand shifts to suburbs
Despite a drop in demand, developers have maintained the same asking price for residential units in Beirut due to the high price and scarcity of land
Lebanon’s real estate market has entered a slowdown phase, particularly in the capital, where developers are offering discounts of up to 15 percent on residential units under construction.
However, on the outskirts of Beirut, investors can still profit from prices that are ascending, albeit at slower pace, mainly in the Metn and Baabda districts, industry experts told The Daily Star.
“Despite a drop in demand, developers have maintained the same asking price for residential units in Beirut due to the high price and scarcity of land. However, serious buyers are being offered discounts of up to 15 percent,” Nadim Kazma, senior property consultant at the PBM real estate agency, told The Daily Star.
The shift in demand for more affordable residential units outside the capital would see the value of properties in the Metn and Baabda districts rise, though at a slower pace, Kazma added.
“Developers outside Beirut have been faster to adapt to the shift in demand from large toward small-size apartments,” he explained, “and have benefited from increased demand on more affordable housing units outside the capital.”
Residential units on the outskirts of Beirut could rise 10 to 15 percent in value annually for the next two to three years, Kazma said, provided that the security, political and economic situation improves.
The Mount Lebanon governerate accounted for the lion’s share of issued construction permits in 2013 at 46.9 percent. Construction permits across Lebanon fell in 2013 by 12 percent, while the number of sales transactions dropped 8 percent
An improved security situation would boost the number of sales transactions across Lebanon, Kazma said, but the upside in the asking price for residential units in Beirut would still be capped at current levels in the short to medium term.
According to a recent study by RAMCO real estate advisers, the starting asking price of an apartment under construction in Beirut varies from $1,925 to $7,647 per square meter, depending on the neighborhood. The study covered asking prices for first floor apartments in 382 buildings currently under construction across 69 neighborhoods in the Beirut municipality.
Lama Beydoun, private coordinator at SD Development, which has an ongoing project in Hamra neighborhood in Beirut, said developers were offering discounts to buyers who paid a down payment of more than 25 percent.
“Investors with a large capital are still buying residential units in Beirut,” Beydoun told The Daily Star, adding that more than 50 percent of apartments under construction by SD Development in Beirut had been already sold.
However, Beydoun concedes that the number of closed deals dropped by as much as 50 percent in 2013 compared with 2012.
Demand from wealthy Syrians, who have flocked to Lebanon since the beginning of the Syrian war in 2012, has been offset by Gulf investors exiting the Lebanese market, Kazma explained.
“Wealthy Syrians are more inclined to buy in Cyprus or other European countries that offer residency permit in exchange for buying properties while Gulf investors are putting their properties [up] for resale,” Kazma added.
Despite a stagnating market, developers who have already acquired land are carrying on with their projects as previously planned, Beydoun said.
SD Development is starting the construction of a new residential building in Fern al-Shubbak area in the eastern suburbs of Beirut.
“We obtained the construction permit recently and we have started the project. ... Investors with a small capital are looking for deals outside the capital where starting prices are still affordable,” she said.
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