Lebanese real estates move to greater transparency
Lebanon’s real estate sector has registered more progress in terms of transparency than any other MENA country, an index released by Jones Lang LaSalle showed. The report attributed the progress to a real estate market boom that helped encourage institutional practices.
According to the recently issued report, “2012 Real Estate Transparency Index,” Lebanon scored 3.75, ranking 66th worldwide and fifth regionally.
In 2010, Lebanon had also ranked in the 66th place but was in 10th place among 15 regional markets included in the survey with a score of 3.78.
The report highlighted that Lebanon made the ninth highest progress in the world, classifying it as “semi-transparent” up from the “low-transparency” category it had occupied in 2010.
According to the report, the Lebanese real estate market has experienced “a very strong run” in the last few years, resulting in massive increases in land value in Beirut.
“As a result, the market is gaining more structure and attracting attention from more institutional players,” the global real estate services firm said.
The report said the Central Bank of Lebanon played an important role in improving Lebanon’s ranking after it recognized the importance of the real estate sector to the overall economy by imposing more rigorous regulations on real estate lending.
“The newly formed Real Estate Association of Lebanon (REAL) is implementing other improvements in transparency by better regulating the previously chaotic brokerage industry,” the report added.
Despite the improvement in transparency, the sector remains challenged by political instability and tensions, which have wracked Lebanon for the past 30 years, the report argued.
According to a recent report by Bank Audi, Lebanon’s real estate market has been slowing as domestic political bickering and regional instability begin to take a heavy toll on purchasers’ confidence.
The report highlighted that the total value of real estate transactions contracted by 6.7 percent in 2011, “and only seems to be picking up slowly, posting a 4.0 percent upward movement year-on-year in the first four months of 2012.”
The figures are strikingly low compared to annual growth that remained around 32 percent during the past five years, when the country had experienced a real estate boom.
In the MENA region, the availability of market information and public interest in the real estate sector have both been rising. However, the pace of improvement in the region remained slower than in other regions since 2010, the report further highlighted.
While Dubai remains the region’s most transparent market, the report said Egypt was the only market globally to have registered deterioration in transparency over the past two years.
Despite 12 out of 15 MENA markets showing improvement since 2010, “these improvements have been relatively modest, and MENA remains one of the least transparent regions in the world,” the report said.