|Lebanese construction activity increases by almost a third growth comes despite global financial meltdown
|Figures released by the Order of Engineers of Beirut and Tripoli reveal that construction permits totaled 9,471,338 million square meters in the first 10 months of 2008, up by 31.4 percent relative to the same period of the previous year.
"This increase signifies acceleration in construction activity in the first 10 months 2008. Indeed, this year, contractors have been constantly launching new projects, undeterred by the political stagnation prevailing in the first few months of the year, or even the global financial downturn in September and October 2008," Bank Audi's Weekly Monitor, which released the figures, said in its last report on Tuesday.
During the month of October 2008, new construction permits totaled 1,141,509 square meters, up by 37.1 percent as compared to the same month of 2007. This year-on-year increase continues the on-going upward trend that was prevailing in each of the first four months of 2008 and was temporarily interrupted in May 2008 as a result of the political deterioration, to be directly resumed in June of this year.
July and August 2008 saw year-on-year increases in construction activity; however, growth rates were still lower than previous months.
"However, in September, construction activity surged by 70.4 percent year-on-year, possibly on account of a fall in prices of construction material, following a global decline in oil prices," Audi said.
Newly issued construction permits peaked in 2008 in September, reaching 1,374,417 square meters, followed by those issued during October.
"This means that as the financial crisis accentuated all over the globe during September and October 2008, Lebanon saw its construction activity reaching its pinnacle," the report said.
Mount Lebanon accounted for the majority of distributed construction permits in the first 10 months of 2008 with 49 percent of the total, followed by South Lebanon which accounted for 16.4 percent, North Lebanon and Beirut each with 14.5 percent, and the Bekaa Valley with about 4.9 percent.
The order of engineers, however, said recently that the demand for properties in Beirut and Mount Lebanon may drop next year if the Lebanese working in the oil rich Arab states sends less money back home.
But the order ruled out the possibility of a sharp drop in the prices of properties because the market supply is still smaller than the demand.
Lebanese expatriates have constituted the bulk of real-estate investors over the past three years and this led to a rise in the prices of properties by more than 30 percent.
The World Bank said the remittances from Lebanese expatriates could fall by 9 percent in 2009 if the credit crunch continued to squeeze Gulf Cooperation Council (GCC) countries.
A leading banker, speaking on condition of anonymity, told The Daily Star that Lebanon may benefit from the crisis gripping the GCC and especially the emirate of Dubai.
"Some public relations and consultant firms are seriously considering moving their offices to Beirut from Dubai because the rents in the emirate are simply outrageous. But these companies want assurances that the security situation will remain stable," the banker added.
He said the average rent for an office in Dubai is $80,000 a year while a company can get the same space for $40,000 or less in some parts of Beirut.
The Daily Star