Demand for properties in Lebanon surged by 13.7%
Demand for properties in Lebanon in 2017 surged by 13.7 percent to 47.6 points compared to 2016, but this score is still far lower than the peak achieved in 2010, according to the Byblos Bank Real Estate Demand Index which was released Monday. “The full year results show that Byblos Bank Real Estate Demand Index averaged 47.6 in 2017, constituting an increase of 13.7 percent from a low base of 41.9 in 2016. However, the index’s average monthly score for the year was 56.7 percent below the annual peak of 109.8 points posted in 2010, and remained 22 percent lower than the index’s monthly trend average score of 61 points since the Index’s inception in July 2007,” the report said.
Demand for properties in Lebanon peaked in 2009 and 2010 due to the strong economic growth and high inflows of capital from Arab countries.
But this trend eventually fell following the outbreak of war in neighboring Syria and ensuing political bickering at that time which crippled most government departments.
Economists agree that GDP growth as well as political and security stability are the main factors determining the future of property demand in Lebanon.
The report also showed a drop in the real estate demand in the fourth quarter of last year.
“The results show that the index posted a monthly average of 44.9 points in the fourth quarter of 2017, constituting a decline of 9.3 percent from 49.6 points in the third quarter of the year and a decrease of 3.3 percent from 46.5 points in the fourth quarter of 2016. The results constitute the 14th lowest level in 42 quarterly readings,” the report explained.
Commenting on the results, Nassib Ghobril, chief economist and head of the Economic Research and Analysis Department at the Byblos Bank Group, said: “Demand for housing in Lebanon is primarily correlated to political stability, consumer confidence and economic activity. As such, demand for residential real estate in Lebanon decelerated in the fourth quarter of 2017, as the resolution of the political crisis that was triggered by the resignation of Prime Minister Saad Hariri in November could not offset the impact of the Lebanese Parliament’s ratification in October 2017 of a series of tax increases on consumption, income and profits.”
Ghobril warned that the new taxes applied by the government at the beginning of 2018 would further hurt the real estate sector in Lebanon.
“The negative impact of the tax hikes on sentiment will weigh on the willingness of prospective buyers to acquire a residential unit, given that buying a house constitutes one of the most important investment decisions for the Lebanese, and the value of a house is usually the single most important nonfinancial asset for Lebanese residents,” he added.
Ghobril cautioned that “Lebanese residents consider that the increase in taxes and fees will negatively affect their disposable income and purchasing power, and will impact their already-stretched budgets and increase real estate transaction costs, which, in turn, will hold back demand and delay the recovery in real estate activity.’’
The index showed that out of the 1,200 surveyed, only 5.1 percent of Lebanese residents had plans to either buy or build a residential property in the coming six months.
Ghobril pointed out that “the index’s results reflect the intentions of the Lebanese to buy or build a house, but these intentions need a conducive environment to translate into actual sales, which, in turn, requires immediate measures and incentives.”
He reiterated the need to stimulate demand over the short term by halving the registration fee of purchased residential units for a two-year period as this would incentivize the purchase of property.
The Daily Star