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French Version

Foreign investors focus on Lebanese property

Tense political situation discourages investment in other sectors

The head of the Investment Development Authority for Lebanon (IDAL), Nabil Itani, said Monday that foreign direct investment (FDI) and property purchases by foreigners in Lebanon rose to nearly $3 billion in 2007 from $2.3 billion in 2006. "Most of the $3 billion investments were in the real-estate sector and this is not considered an FDI," Itani told The Daily Star in an exclusive interview Monday.

The disclosure came one day after Saudi newspaper Al-Watan claimed that the oil rich kingdom withdrew $4.8 billion of direct investments from Lebanon over the past two years.

But Itani stressed that some of the Arab and foreign investments in 2007 concentrated in prime properties in Beirut.

"Some of the properties rose by 50 percent in value in some parts of Beirut and that's explains the surge in property investments last year," Itani said.

He added that the oil boom in the Gulf region has induced many property owners in Beirut to increase the price of the real estates to amazing levels.

However, Itani said that FDI, or investments in job creating projects, did not see a considerable increase in 2007.

"The investments which came through IDAL, for example, rose slightly to $127 million from $123 million in 2006 - a year marked by an Israeli war on Lebanon," Itani said.

He added that FDI through IDAL in 2005 reached $550 million despite the assassination that year of former Prime Minister Rafik Hariri.

Properties in Lebanon have always attracted the interest of Gulf Arab investors looking for ways to channel part of the massive liquidity that was generated from the oil boom in the region.

Brokers say the prices of properties varied between one area and another.

"In some parts of Beirut, the prices of properties surged by 50 percent or more while in other parts of the country the prices remained stable," one broker told the paper.

Itani said that the tense political situation in Lebanon is not encouraging Arab investors to make more commitments in Lebanon in the future.

"The election of a new president ... will send a positive message to investors but if the situation remained the same then investments will definitely not flow here," Itani said.

IDAL saw increasing interest in the industrial and agro-food industries in Lebanon in 2007.

But economist Marwan Iskandar warned that investors will shun Lebanon in 2008 if the political crisis persisted.

"You can't expect investors to rush to Lebanon while the opposition forces are still staging a sit in at the heart of the capital," Iskandar said.

He added that the provocative speeches by the politicians are scaring away investors.

Iskandar said that thanks to the donor countries that flooded billions of dollars into Lebanon, the country was able to record a surplus in the balance of payments in 2007.

Brokers said that some of the wealthy Lebanese expatriates have made significant investments in properties in Beirut over the past two years.

"We know for sure that some of the properties in Achrafieh and the Corniche were sold for hefty prices last year," one broker said.

Economist Ghazi Wazneh denied that Arab investors have relinquished their investments in Lebanon in 2007 and 2006.

"We may have lost new commitments for investments but we surely did not see an outflow of capital," Wazneh said.

Citing some official statistics, Wazneh said that Lebanon attracted nearly $2.5 billion of Arab investments in 2007 that were mainly concentrated in real estate.

"Lebanon did fairly better than many Arab countries in terms of inter-Arab investments in 2007," he said.

However, Wazneh cautioned that Lebanon may lose as much as $3 billion in direct investments in 2008 if the political deadlock remained.

Beirut 26-02-2008
The Daily Star

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