BEIRUT: Serene, 33, is an accountant who wants to move out of her parents’ apartment and find a place of her own. But what should be an easy feat for the mid-career professional is more of a pipe dream. Her budget is $500 in monthly rent, and the only way she can look is out of the greater Beirut area, an option that she immediately brushes off.

“Maybe if I were married and with a family, I would think about living out of Beirut. But Beirut is so central, and I am young. Young people don’t want to feel like they’re out of the picture,” she said.

That’s a sentiment echoed by many of those looking to set up a life in the capital. Income levels remain inert, while property values coast at record-high levels set by a two-year real estate boom in 2008 and 2009. It’s pushing even Beirut’s locals to take flight. Yet there are perhaps equally great reasons to resist the current.

Poor infrastructure outside the capital, and spiraling gasoline prices are two of the major deterrents against suburbanization, a trend typical of developing countries.

Jean-Marc Nahhas is a painter who spent five years shuttling between his family’s home in the Metn area and Gemmayzeh. Having just returned from France, he was looking for a small apartment to buy so he could gain a foothold in the city’s art scene, which the 2008 economic revival throbbed to life.

It was an extremely difficult thing to do, said Imad, Nahhas’ real estate agent. He led the painter through Gemmayzeh’s delicately crafted archways to empty rooms. But Nahhas said the prices were too high and decided to bide his time. Three years and a nearly 40 percent price rise later, Nahhas recalls the house-hunt with a rueful smile.

“The only way locals can find an affordable place to live is through a stroke of pure luck,” said Imad.

“Only when a property owner is very desperate – like if he has to leave the country immediately or pay some debt – will they sell at a reasonable price.”

The reason why housing prices are so out of sync with local purchasing power is well-known: Expatriate Lebanese and Gulf Arabs were the main driving force behind the real estate boom, forcing housing prices to be more in line with incomes in oil-producing states than with a crisis-ridden Lebanon.

A January 2011 survey by the Global Property Guide ranked Beirut the most expensive Arab city for 120-square-meter apartments.

Transactions from expatriates have dropped since the boom, and Gulf Arabs are now more likely to be selling property than buying. Analysts attribute the phenomenon to the recent turmoil in the region which was compounded by the effects of a series of financial crises in the West and the Gulf.

Whereas expatriate Lebanese once made up a significant majority of the real estate market, they now comprise only 40 percent of the market.

Still, prices have not budged, and local Lebanese, who now make up the majority of buyers, still cannot afford Beirut housing.

“The problem is that when expatriate Lebanese and foreigners decreased their purchases, real estate developers continued to cater to them anyway,” said Joe Kanaan, director general of property management group Sodeco Gestion.

Developers pressed on with luxury apartment projects, well beyond the price range of any regular Lebanese, and they have since come to a standstill, explained Kanaan.

Now developers are catching on. They are building smaller housing units – around 150 square meters – in central areas for prices deemed affordable to local Lebanese, around $350,000.

People are not prepared to leave Beirut, said Kanaan. “The cost of gasoline for a trip to the suburbs is nearly as much as a city dweller’s mortgage. Why would anyone opt to leave the city?”

An economy highly concentrated in Beirut leads to congested traffic on the country’s highways, protracted power outages, and poor public services in general in the city’s outskirts.

For American University of Beirut finance professor Salim Chahine, fixing that problem is key to solving Lebanon’s housing quagmire. “We might prepare for an exit out of Beirut,” added Chahine.

Major cities like Beirut have, in the past, seen waves of migration from urban areas to the suburbs, he said, but they had the infrastructure to accommodate it. Prices in Beirut are expected to stay the same, Chahine added.

Developers generally enjoy low-leverage ratios, making them less susceptible to demand drops. Additionally, the speculative component of the real estate market is high, because developers bank on the fact that there are better days to come, and that expatriates will be tempted to return to their roots.

Regulations should be enforced to control speculation, by, for example, imposing tax on investments in property, because it is “not healthy where salaries are not benefiting the Lebanese. Lebanon is not an industrialized country, and tourism is not generating wealth that is transformed into welfare,” said Chahine. “We’re becoming poor and frustrated.”