Matt Nash

Beirut real estate boom is no bubble

Less may soon cost more on Beirut’s residential real estate market as buyers vie to snatch the limited supply of small apartments and turn a cold shoulder to the spacious flats that have tended to define the local market.

The price of new apartments under 200 square meters is almost certain to rise this year, while developers may be willing to negotiate down on flats 400 square meters or larger. Housing costs in the capital, in fact, are now so high that the majority of resident Lebanese cannot afford a new place even with a bank loan.

That said, analysts are convinced the price boom in Beirut is no bubble.

In recent years, most new residential towers in Beirut offered apartments around 350 square meters or larger. They sold well, analysts and real estate brokers told NOW Lebanon, and since 2005 residential real estate prices in the city have leapt at least 120 percent, according to Ramco, a leading local real estate brokerage.

However, not all of the apartments in these buildings have been sold and developers continue to include 400, 600 and 800 square meter apartments in their design plans even as demand is weakening, threatening to drag down the price of these large units.

“The really big units are in big trouble,” said Marwan P. Hamadeh, managing director of the real estate brokerage Sogetim. Buildings with apartments of “350 or 400 square meters – these developers are in big trouble. They’re not selling. People who wanted [to buy] them have already bought their units,” he said.

Most newly-built apartments of 400 square meters or more now cost over $1 million throughout the city, although prices vary considerably. The seafront square meter in the Beirut Central District, or “Solidere”, sells for around $8,750, while a few blocks inland the price drops $2,000, according to February statistics from Ramco.

To the south in Ain Mreisseh, inland real estate prices are near $3,300, and to the east in Saifi and Gemmayzeh, a square meter in a new apartment costs approximately $3,800. At these prices, 400 square meters on the sea in Solidere can reach $3.4 million, while a large flat in Ain Mreisseh runs near $1.3 million.

Demand is strongest for newly built apartments, analysts and real estate brokers told NOW Lebanon, and prices drop around 20 to 30 percent for existing apartments.

“There’s around a 20 percent difference between new and recent – not old,” Hamadeh said. “We don’t really have old [apartments for sale]. People just destroy [old buildings] and put up a building with more floors.”

The high cost of new real estate in Beirut, according to The Monthly, a magazine published by the local research company Information International, is weakening the demand for large apartments, meaning their prices “will remain stable or witness a limited drop.”

However, should they drop, they won’t fall far. A majority of the residential projects in Beirut have sold enough units to recoup building expenses, explained Jad Abi Haider, an analyst with the Credit Libanais research department. This reduces the pressure to slash prices for a quick sale.

“Developers can afford to sit on [unsold units] for a while,” he said.

Many expect prices on sought-after small apartments to keep going up. Monthly estimated a five to 10 percent rise. Marwan Barakat, head of research at Bank Audi, agreed that price rises would be more moderate this year compared to 10, 20 or 30 percent jumps since 2007.

“I think the pace of increases will not be as high as in the past three years,” he said.

While most experts agree that stability will keep prices buoyant, they rejected the idea that Beirut prices were floating up on a bubble. “We’re not afraid of a speculative bubble because there is not a lot of speculation,” Barakat said.

Abi Haider said that real estate speculation has increased in recent years as foreign capital poured into Lebanon, but has still not reached the levels seen in places like Dubai.

“Lebanon is a very small country with limited space available for housing,” said Kamal Hamdan, head of the economic division of Beirut’s Consultation and Research Institute. With demand coming from resident Lebanese, wealthy expatriates and – primarily Arab – foreigners, he said he is confident high prices are sustainable.

Hamdan did note, however, that as prices go up, the number of resident Lebanese who can afford to buy in the capital will go down. By 2030, he told NOW Lebanon, he thinks people living and earning their entire incomes locally will essentially be pushed out of the city assuming non-resident demand is sustained.

“The whole area from Khaldeh, [a few kilometers south of Beirut] to Saida will eventually be built up” for Lebanese who cannot buy in the capital, he said.

Rabih Haber, director of Statistics Lebanon, said that based on surveys his company conducted in the past year, over 90 percent of the resident population earns under $2,000 per month. Three local lending houses – BankMed, Bank Audi and BLOM Bank – told NOW Lebanon that the maximum housing loan available with such low earnings is $120,000, far below Beirut prices.

Hamadeh, the real estate broker, agreed that many resident Lebanese cannot afford property in Beirut but urged caution when looking at reported incomes.

“There’s a lot, lot, lot of hidden money in Lebanon,” he said. “These people don’t go into statistics.”

Maya Khourchid contributed reporting to this article.

  • George Hazim

    I would like to know how much aproximately would cost the square meter of raw land at Bazbina, Lebanon. Thanks for your attention.

    August 2, 2012

  • George

    ,there is a bubble. It happened in Beirut In the mi nineties. People have short memories. Every time prices goes up 40 to 50 percent each time for 5 years. It is a sign for a bubble. Argument lebanon is small, no more lands is not valid. Lebanon is over built. Demands is less than supply. Investors and speculators will sell quick and bring the price down so quick. Prices will drop 10 to 15 percent for the next 3 years then level out for couple of years. Watch and see.

    March 23, 2011


    the developers are not the greedy ones, not in all cases at least! it starts with the land owners! as i look for a plot to construct, i am faced with outrageous land prices for locations where people are willing to buy apartments (what's the point of building where no one wants to live) and so the developer's hands are forced to either sit idle out of busienss, or buy expensive land. the developer must then add construction cost (which has come down thankfully) then add a small profit margin (it is lower than most people think) and the end result is still very expensive units, caused by the land owners! the developers stand to face the music though they are truly the ones taking all the risk and adding value to people's lives to be able to own homes.. dont get me wrong though, some developers have land banks and play the land game too, but overall, the main issue, starts with the land pricing itself.

    March 11, 2011

  • georges

    The prices are beginning to drop... I found an appartment 2 months ago for 1650 USD in metn Area , now the owner is willing to sell it 1500 USD thats a 150 USD decrease in 2 months. That applies to other buildings i checked too (percentage decrease is now ony 5% but it will increase). DONT BUY!!! wait a little bit the expectations are that prices will drop significantly in beginning 2011. If you buy now you will be participating in that BUBBLE of prices . JUST DONT BUY NOW!

    October 23, 2010

  • Nabs

    I wouldn't take a realstate firms opinion into consideration, especially that they want to lead the very small market to think that market will always boom and keep buying/demanding. There is many reasons people a big burst will happen and i will take facts that they said. 90% of people make less than 2,000 so affordibility is very far from reality. someone can enjoy lebanon culture as a tourist place for couple of month or years, but then he will want something that give him what he work for where lebanon is too far from being fair in salaries, or having jobs. Politics is really screwed up that it will damage the whole thing. A war will be a sure thing if the poor/medium class will feel that he will never own a house so they wont work too hard for there lives and instead want to damage the rich people since lebanese are jelouse in blood. Medium class is poor because they can't afford a house. All people can drink and eat. A war will happen which will make our country a better one.

    October 7, 2010


    I am a developper in the U.S. couple of things I like to mention: Obviuously Developers are in business to make money so you cannot blame them; However, it is the government responsibility to protect the public by makinf=g Developer provide what is called "Affordable Housing" for every numbers o unit they sell to the rich customers....Before you know it Lebanon will be empty of Lebanese...Might as well immigrate if you have to be a slave in your Own Country

    September 27, 2010

  • Hany Hussein, CFA Charter holder

    Lebanese Real Estate is a bubble about to burst By, Hany Hussein, CFA August 2010 24 months ago, exactly in June 2008, CEOs of giant real estate players in UAE and Qatar kept saying that their own real estate markets were immune from what was happening at that time in US, UK , and Spain . It did not take more than 2 months and the real estate bubble in the region was burst. Among the key reasons that led to such bubble was the excess leverage from GCC banks, surge in land and building material prices, and delay in delivery. Today, the same is happening in Lebanon . Banks are financing up to 80% and 90% of the units’ prices. Also they offer relatively lower interest rate compared to their peers in the region benefiting from their historical low loans to deposits ratio. While this ratio has always been above the 100% in UAE, it was – until recently – in the range of 50% in Lebanon . Although the cost of building materials is not as high as 2008 levels, developers

    August 13, 2010

  • farah

    we, as lebanese citizens, should do something about this increase in real estate prices, the government wont make anything about it, it is really difficult for a middle class person to buy a house we cant just give our country to gulf people....

    July 27, 2010

  • Rafael

    just like dubai, greece and many other places, these prices r not true at all...this is a BUBBLE...oh and please dont ask real estate people to analyze the market

    May 22, 2010

  • John

    The lebanese are so proud of their country and they think living here is like paradise. Most of them believe that the cost of properties is reasonable for no reasonns :)

    April 17, 2010

  • Sabine

    Please join this group: http://www.facebook.com/home.php?#!/group.php?gid=110132772354014

    April 12, 2010

  • samar

    I am a doctor in the US and I make excellent money but cannot afford a house in Lebanon, so that I can move back. How shameful. and even if I did, I refuse to pay so much money on a flat that can be destroyed in a second. It is too expensive and it is strangely uninsurred. SO my life's savings would dissapear in seconds. I forgot about it and will probably never move back, unfortunately!

    April 6, 2010

  • Maya

    The government should take this matter seriously; there should be classification of areas, prices should be controlled rather than ruled by purely supply and demand, we are not in a stock exchange market here. Real estate companies and agents are sending false messages: they say the demand is high, but what is the % of Lebanese people able to buy an apartment for millions of USD, are they all sold to gulf people, then where is the law that protects the country from being sold to foreigners? If we were living in Beverly Hills, we would accept this fact easily, but we are living in a country where people have to struggle for everything even the simplest rights. Greed and corruption are ruling and we lebanese people are pushed to the extreme to leave our country, so it would be a leisure place for the wealthy countries.

    April 3, 2010

  • mike

    crash in lebanon's real estate? are you mad? lebanon is one of the most populated countries in the world...demand will always outstrip supply and there are always people (with money) who are willing to pay any price for a flat.

    March 29, 2010

  • joe

    I find it curious that there are quite a number of buildings in Ashrafieh for example that have finished a while ago and at night only a few floors are actually lit up. Not sure what that means.

    March 26, 2010

  • Fadi - Montreal

    Yeah a real estate broker is THE reference when it comes to assessing the real estate situation in Lebanon, and it's a BUBBLE. These people are causing prices to jump, jerks! How can Lebanese, even the expatriates, can afford apartments in Lebanon anymore. Even someone who's making $150,000/year, that's $75,000/year after taxes, and if he's VERY good he can save $60,000/year. If he wants to buy a half-decent flat in Beirut or the surroundings, he CAN'T, even with a 500 year loan, as the bank will only give you 33% of your salary, and the interest rate is going up. Those few working in the gulf making $15,000 or about $10,000 after their expenses can't as well. Show me the logic! Lebanon has NOT learned the lesson from the US. There WILL be a crash in Lebanon and the nice thing about it is that those who will get crushed by it are the speculators and others that are currently causing prices to go up.

    March 25, 2010

  • Always be closing

    Call them greedy or generous the bottom line is the developers are business people and when they can't sell what they got for the price they set prices go down, they cannot sit on an empty building forever, and apartment are not selling at sustainable rates at the current prices.

    March 24, 2010

  • فريد

    Actually, if you consider that in Lebanon when you buy real estate you pay also for areas such as the stairs, heaters place etc...you don't really live in, the real price by sqm should be inflated by 15 to 20%, which brings us to prices nearly equivalent to some major european cities

    March 24, 2010

  • joe

    When you say Downtown Seaside, what area does that include and does that mean only buildings right on the water or in the vicinity of the water?

    March 24, 2010

  • halim

    Could you please tell us where are these small apartments? They are almost inexistant which explains the rise of the price. Mr. Nash should have stressed on the fact the the promoters refused to see the needs of the lebanese society and followed only their greed. It is also funny to note that these same investors were using the same slogans found in this article: el balad machi wala yhemmak.. Because of their greed it seems that the country will be soon walking over them. A final remark: the picture you use is very old. The Semiramis building you show is finished since years. More information, more precision and less propaganda please!

    March 23, 2010

  • Miumiu

    The figures mentioned are very much exaggerated, the developers publicity machines are very hard at work pumping the 'high demands' claims..yes there are demands,but over-priced flats are not selling,and the claims that 60-70% sold off-plans are the same claims Dubai used,in Beirut,the inflated prices & the control by the developers-com-Bankers-com-brokers....etc can't AND WILL NOT afford to let it fail...

    March 23, 2010

  • houda

    Don't ask a real estate agent about the state of the real estate industry you will get a skewed self-serving bias answers. Real estate agents in the US were still talking up the industry in the summer of 2008 a few month before the big crash. As for the lot, lot, lot of hidden money in Lebanon no one hides 70% of their worth which is what most of us have to be hiding if we are to afford a even modest apartment anywhere in Beirut.

    March 23, 2010