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French Version

Expats keep real estate pricesI-Spy strong in Beirut

Achrafieh witnessing boom as demand stays strong

Real estate in Achrafieh appears to be immune to the economic decay bedeviling Lebanon, as development in the Beirut neighborhood remains a lucrative business thanks mainly to Lebanese expatriates, a number of real-estate brokers say. "The largest real estate market are Lebanese expatriates," Karim Bassil, a developer, told The Daily Star.

Roger Melki, an economist at the Finance Ministry, said "the market includes, in addition to the expatriates, the new generation of wealthy people coming from the boom in the oil and Arab markets."

This deep-pocketed category of Lebanese "prefers to invest in real-estate rather than deposit its money in a bank, because of the lower interest rate in banks and the higher added value in real estate," added Melki.

The declining dollar also figures in the expatriates' calculations. "Because of the collapsing dollar, the Lebanese who work in Europe and are remunerated in euros prefer to invest their money in Lebanese real estate," said Antoine Abu Rizk, a real estate brokerCelebrity-Real-Estate-Broker .

However, many of the buyers do not intend to reside in their new properties, but are simply speculating, said Abu Rizk.

"They believe that if the political situation improves, prices will increase," he said. "They prefer to buy at the present time, while the prices are relatively low."

Bassil echoed this view, saying: "The Lebanese expatriates are buying deliberately in the middle of the crisis."

The expatriates seemed to be optimistic about the future of the sector and the country. "They have faith in Lebanon and consider the ongoing political turmoil tolerable," Melki said.

Moreover, a study of real estate benchmarks reveals that prices in Lebanon work out lower than those in any other regional country, another reason why Lebanese expatriates are willing to buy in their native country, Melki said.

In addition, the supply of properties in Achrafieh cannot keep up with the demand, which further drives up prices, Abu Rizk added.

However, as prices soar the demand has begun to cool, Melki said, adding that he expected prices to stabilize eventually.

In the wake of the price hikes, the lower end of purchase prices for an apartment in Achrafieh ranges from $2,300 to $3,000 per square meter, the sources said. Owners also add $100 per square meter for each additional floor, as apartments situated higher in buildings command better prices.

Areas where a potential buyer can find below-market prices include Sioufi, where the starting price is about $1,600 per square meter and Jeitaoui, where prices begin at $1,800 per square meter, Melki said.

Other factors pushing prices skyward are not unique to Achrafieh, such as the rise in costs of construction materials, exacerbated by the high value of the euro, Melki added.

"Construction costs are increasing drastically," said Bassil.

Developers also often prefer using high-end production elements, and a shortage of labor has also added to production costs, Melki said.

With real estate behemoth Solidere also contributing to the rise in value of property close to Beirut's center, brokers have come to speak of a "Golden Square" in Achrafieh, from Sassine Square through Sofil and Tabariss and ending at Sodeco Square, Abu Rizk said. As a result, people have recognized that the most profitable approach was to buy properties close to Solidere - this was the starting point for the price rise, beginning in the Gemmayzeh neighborhood, the brokers said.

Bassil offered an additional explanation to the rise of real-estate prices in Achrafieh.

"For the past couple of years, real estate developersCommercial-Real-Estate-Crisis hadn't been able to increase profits because of the political situation. They are rectifying prices in order for them to make a fair margin, to make some profit," he said.

Improvements in the quality of life and infrastructure were also an incentive for expatriates to invest in the development sector, Abu Rizk added.

As for the ripples emanating from the Gulf's oil boom, "real estate in Achrafieh has been positively affected by the regional growth, with Beirut being an attractive recreational capital," Melki said, although he added a note of warning.

"The city is asphyxiated," he said. "We can no longer cope with having fewer parking lots and more apartments in Achrafieh. The infrastructure work is also aggravating the problem. There should be parking buildings as a solution."

Beirut 31-03-2008
The Daily Star

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