Rents are rising, yet wages have stagnated or fallen. It’s a common complaint heard from youth across Beirut’s streets, many of whom are caught between deciding whether to scrape by at home or to seek better opportunities abroad.
But for those without option, a recent article making waves across the Internet has spelled yet another bout of bad news. According to Mercer’s 2012 “Cost of Living Rankings,” Beirut has become the most expensive city in the Arab world, surpassing both Abu Dhabi and Dubai, two emirates long known for the hefty price tags they command.
Nuno Gomes, a consultant for Mercer, however, cautioned against the buzz surrounding the 2012 rankings. He told NOW that the results only take into account the cost of living for expatriates, not nationals. “They [expats] tend to have a different spending pattern … the sort of goods and stores they shop in tends to be very different than the ones that someone that actually lives in a place.”
Regardless of the report’s methodology, prices in Beirut continue to rise. Other Arab cities, by contrast, have witnessed the reverse trend. “If you look at Dubai in 2009, it was the 20th most expensive city in the world, and in 2012 it dropped to below 90.”
Gomes told NOW that real estate is the main factor. And in Dubai and Abu Dhabi, which had for years been the two most expensive cities in the region on Mercer’s annual report, housing costs have plunged roughly 40 percent between 2009 and 2011.
That both wages in Beirut are meager and rents are rising underscores just how unaffordable the city has become. Lebanon’s minimum wage, for instance, is $500 per month, exactly one-third the amount in Abu Dhabi. Yet high costs remain a problem that cuts across socio-economic classes, even if the poor are most affected. NOW spoke with Robert Naouss, the communications manager for a major international beverage company, as an example of how even a white collar employee with a good salary finds the cost of living in Beirut to be quite prohibitive. “It’s expensive … And real estate is the most horrendous and horrid aspect of all this,” he said.
Naouss told NOW that many of his friends are leaving Lebanon because of high rents and the sour economy. Of those who choose to remain, they “largely rely on bank loans to get a car, to get an apartment, to get personal loans – even wedding loans.”
But according to Jad Chaaban, an economics professor at the American University of Beirut, rent controls and subsidies make Lebanon more affordable for certain segments of the population. “The fact that you don’t have street riots compared to the high cost of living is either that the people are stupid – which is not the case – or it is something else. They are getting a subsidy somewhere else.”
Chaaban said that Lebanon’s economy is geared toward the older generations. “Anyone who is young or entering the marriage or housing market, that want to own or rent a house … they would get market rates; whereas their parents or grandparents will be living in rent-controlled or subsidized housing.”
For Lebanon’s young adults, then, many view migration as the only means to be able to one day purchase a home. Although Naouss plans to stay in Lebanon, he said others don’t always have that option. “For some people, this is not sustainable, paying mortgages and paying all these loans on a monthly basis. That’s why they travel to get some cash, to save some money.”
With low incomes and high costs – Beirut, experts agree – is ill-suited for building financial security. Mercer’s Gomes reports, for instance, that in the Arab world, Dubai by far remains the strongest regional hub. “All other locations come really far behind,” he said.
Yet even though Lebanon’s economic issues are well-known, the AUB’s Chaaban said that few government officials talk about policies that would help young people open a shop, start a business, or alleviate taxes. “All economic policies are geared toward what we call incumbents – those already in the system.”
And so, for young people caught in low-wage jobs, it seems few options exist, especially if they can’t leave Lebanon. “Unfortunately, they’ll have to settle for what they have,” Naouss said.