BEIRUT: Lebanon’s once booming real estate sector is now seeing a sharp drop in sales in the first six months of this year as the economic slowdown, deep political rift and regional tension ravages most tourism, trade and construction industries. According to figures released by the Directorate of Real Estate, real estate activity in Lebanon during the first half of 2011 fell by 18.6 percent relative to the same period in 2010 with a total of 37,386 transactions.

Bank Audi’s Lebanon Weekly Monitor, which published the figures, said the contraction in real estate activity is attributed to the domestic political bickering that prevailed in the country during the first five months prior to the Cabinet formation and to the regional turmoil that is adversely affecting investor sentiment at large.

“The latter is proven by the yearly drop of 32.5 percent in sales transactions to foreigners over the first half of 2011. The drop in demand for property in Lebanon during the first half of this year was coupled with an almost similar decline in the value of property sales during the period, which shows that prices of property in Lebanon remained stable.

The value of property sales reached $ 3.850 billion in the first half of 2011, down by 18.3 percent relative to the corresponding period of 2010.

As such, the average value per property sale in the first half of 2011 went up by a minor 0.4 percent relative to the same period of 2010 (to reach $103,000).

The fall in property sales in Lebanon, however, did not have a major impact on the prices of houses and apartments whether in Beirut or outside the capital.

Real estate brokers don’t believe that the developers are willing to reduce the prices of properties at the moment because their confidence that the demand for apartments will pick up again once political tensions decrease

The fall in the property sales did not affect the construction sector.

Figures released by the Order of Engineers in Beirut and Tripoli reveal that the area of newly issued construction permits reached 1,781,038 square meters in June 2011, up by 9.1 percent relative to the same month of the previous year.

This increase follows a year-on-year expansion of 16.8 percent and 5.6 percent witnessed in the months of April and May 2011, respectively.

Over the first half of 2011, newly issued construction permits reached 8,811,256, up by 4.6 percent relative to the same period of last year.

This growth compares to a much higher 34.1 percent expansion over the first half of 2010 relative to the corresponding period of 2009, attesting that the political environment and the strong economic growth witnessed last year contributed to the boost in construction activity.