BEIRUT: Lebanon’s real estate sector is stagnating amid an overall economic slowdown and an unstable political and security situation. Consumer and investor confidence is low and demand for residential units by Lebanese – both residents and expatriates – has dropped, Nagi Ghaddar, managing partner at Masahaat real estate agency, told The Daily Star. Unlike the majority of agencies, Masahaat mainly provides services to Lebanese expatriates seeking to invest in the real estate sector or simply looking to own a residential unit mainly in Lebanon and Cyprus, Ghaddar said.
Masahaat operates offices in Lebanon, Cyprus and four African countries while providing services through joint ventures with local developers and real estate brokers in 30 countries.
Like residents, the percentage of Lebanese expatriates looking to buy residential units in Lebanon has dropped, Ghaddar said.
The volume of sale transactions brokered by Masahaat dropped by 30 percent in 2013 compared to the previous year, Ghaddar added.
He attributed the decline to concerns by Lebanese expatriates of both a stagnating real estate market and a deteriorating security situation.
“Speculators buying in anticipation of price hikes have significantly dropped in numbers since the market stagnated,” the broker explained, “while those seeking to own a residential unit in Lebanon in the hope of returning to their homeland sometime in the future have put their plans on hold.”
The number of real estate transactions in Lebanon dropped in 2013 by around 8 percent compared to 2012 while the number of issued construction permits declined by 12 percent, according to the Finance Ministry.
Despite the slowdown in the sector, Ghaddar doesn’t expect a correction in prices.
“The demand and supply are relatively in equilibrium,” he said. However, Ghaddar said that some developers had been offering discounts up to 20 percent for serious buyers.
“There has been a shift toward smaller size apartments even among wealthy expatriates who are following in the footsteps of Lebanese residents. Instead of buying one large apartment, expatriates who can afford it are buying two smaller apartments,” Ghaddar said.
Lebanese residents and expatriates have been also buying fewer residential units in Cyprus despite incentives by the Cypriot government to boost the real estate sector, Ghaddar said.
Ghaddar said residents of Lebanon accounted for half of his buyers of residential units in Cyprus while those living abroad made up the remaining half.
“However, so far this year, 80 percent of concluded deals were conducted by expatriates,” Ghaddar said.
Masahaat, which operates an office in Cyprus, has partnered with local real estate developers in order to provide more buying options at competitive prices, Ghaddar added.
The Cypriot government has been offering residency permits to foreign owners of residential units, but Ghaddar warned that some Lebanese real estate agents were launching misleading advertising campaigns with regard to the terms and conditions for acquiring residency permits.
For a permanent residency permit, one has to buy a residential unit for more than 300,000 euros ($415,000) and will have to visit Cyprus once every two years, Ghaddar said.
A property that costs less than 300,000 euros will grant buyers a temporary residency status provided that they meet several other conditions, Ghaddar added.