Real Estate in Lebanon: Crisis for many but still a profit for some
Looking from one place to another throughout Lebanon, searching conscientiously for an affordable apartment to start his marriage life, Nasser is one of many young men facing the real estate crisis in Lebanon. Despite Lebanon’s political turmoil, property prices are now growing strongly. At a time when most countries of the world and the Middle East were facing crisis resulting from the real estate bubble that has prevailed in the past. Some countries appear like islands which are protected for this type of investment, no matter what crisis they face, notably Lebanon, which reflected this state of stability, and a boom in construction and development to serve the growing demand. But to whom is this demand for? One of the major conditions facing the real-estate sector in Lebanon is the giant clash that subsists between the small earnings and incomes of the majority of the Lebanese and the exceedingly high prices of apartments nowadays.
Mohamad Nasser’s story
A 31 year old young man, that works as an accountant, with a B.A. in business from the Beirut Arab University, like a lot of Lebanese at his age, is facing a problem in buying an apartment: “I have been working for ten years now and I am trying to buy a decent residence to live in plus start a family with my fiancé.” When asked what are specifically the problems he is facing Nasser said the dilemma is that the income of most employers in Lebanon is not enough for them to be able to buy or even rent a small apartment. “With the shooting prices of apartments and the very low revenue one cannot even dream of starting a family. Not everyone in Lebanon is born rich and not everybody’s parents are capable of getting them an apartment. There are now middle-class people who are not privileged enough; I think that the landlords are becoming very greedy and these prices are not accommodated for the average Lebanese person. Lebanon in a few years will not be ours anymore because now an average Lebanese man cannot afford a house the target of the owners seems to be the foreigners.”
Mohammad Othman’s story
Mohammad is a 25 year old Lebanese that works in a Bank in Beirut, with a B.A. from Lebanese American University in Business, similar to Nasser’s case Mohammad is a young guy who is facing the real estate crisis. “I’ve been working for 4 years in the same Bank and my income is 620$ per month!” Students should know that when they graduate they will face a lot of problems, for example in my case, I have been with my girlfriend for 6 years and we cannot afford to buy a small house to get married. When I was a student I thought life is easy, I’ll graduate, work for a couple of years, then get married. My father worked hard to offer me a good education, thinking that this will guarantee my future but we never thought that the economy in Lebanon will become so high especially when it comes to real estate. I have two choices to accomplish my dream, I either immigrate or I work for another 5 years and take a loan from the bank.
The owner of several constructions, such as “MAYA Building” one of the new buildings in Verdun Street, Mr. Mohamad Boulad shed the light on the estimate prices of an apartment he said that for rent, a 200 meters apartment starts at the price of 2500$ per month as for the apartments for sale the prices begin from 900,000$. I asked Mr. Boulad how many apartments are still vending knowing that the building is not fully complete yet. He said that out of 28 apartments there are still 7 for rent/sale. Boulad: “Most of the buyers are Lebanese but I have sold a few apartments for families from the Gulf.” When asked about his opinion of the high prices of apartments Mr. Boulad said: “Everything in Lebanon is rising up, the economy, the tourism and much more, this is affecting our work because with this rise in prices everything has become very costly even the material and the workers are now costing triple what used to cost us before so it is normal for the apartment prices to become higher, not to forget that politically Lebanon now has become more stable after the Doha reunion.” I also have to acknowledge that in real estate we do not only depend on the locals there are many Arabs from neighboring countries who are extremely interested in owning houses and property in Lebanon because of its beautiful atmosphere and freedom.
Economist/ Economic Writer, Lawyer Ibrahim Oussama Al Arab said that; the cash flow continues in the national economy without problems until it faces a dilemma, and here begins the liquidity critical situation in the running if increased or decreased liquidity circulating in the economy for the required level. In other words, the amount of money does not reflect its value, inflation is a kind of tax undeclared imposed indirectly on everyone and the impact would be more severe in poor and low-income than in rich. Over time, inflation will increase the gap between the levels of society and the erosion of the purchasing power of salaries and wages with the attendant factors of economic and social stability. It should be noted here that the lifting of all wages as a way to fight inflation will sooner or later, to a parallel rise in prices will negatively impact on the competitiveness of goods and services produced domestically, and carries with it the risk of an economic slump in the future. The problem of inflation linked to an organic pace of rapid growth, which are due to increased government spending, and the significant growth in the volume of domestic liquidity and the lack of real estate and housing in addition to imported inflation, which is difficult to control. The concept of inflation is difficult and troubled idea for many investors, higher prices in commodities in general; inversely proportional to the monetary value, meaning the higher the prices, the weaker value of cash. This in itself is a dangerous lead to raise the level of poverty in countries that do not work hard to maintain and balance prices. On the local level we must work continuously to reduce the money supply in circulation through the process of absorption of the organization in dealing with trading stocks and bonds in the securities as well as markets that help to stimulate the stock market and assistance to the fragmentation of inflation.
With this in mind the financial policies should not be expansive, but it is important for these policies to be more balanced, any increase in salaries and wages should match the increase in productivity sequentially to not become inflationary, while the infrastructure projects must be put into practice within the time frame that is relatively long, as it should in such circumstances to provide financial support for the segment of the population that is mostly affected by inflation, so that the phenomenon of the cost of source of revenue, we must be on the alert to deal with it thoughtfully, because, if left untreated it will become more deeply rooted. In order to prevent inflationary pressures, and maintain stability in interest rates and a rise in the proportion of lending to the private sector and the profitability of banks, and to achieve a surplus in the balance of payments covering the entire trade deficit stress the need for sterilization and absorbing excess liquidity in the Lebanese banks, and that by continuing to issue treasury bonds by The Ministry of Finance and certificates of deposit by the Central Bank, and the coordination and harmonization between the monetary and fiscal policy of Lebanon, and to track the Lebanese national economy as a whole within the limits of socio-economic strategy in general. In this case, we will achieve a number of benefits to resolve the housing crisis and the reconstruction of the country and also provide working opportunities for the unemployed. In addition to absorb a large volume of money supply and thus stem the clear rein in inflation as an overture to limit the phenomenon of inflation and reduce its negative impacts and make it to the narrowest possibility.



















