TBY talks to Elie A. Harb, President of Coldwell Banker, on the local real estate market, domestic demand, and developments outside of Beirut.
TBY How would you describe the state of the local real estate market? Is the boom in prices fading?
ELIE A. HARB By no means or stretch of the imagination has Lebanon ever boomed in anything. All the industries that built this economy are quite sporadic and cyclical. Yes, we put in a great performance in 2010, but what we need to do is look five years ahead—not five months. The last 10 years indicate a 7% y-o-y increase, and this is healthy growth. However, in 2005, 2006, and 2008 there were severe drops in the market. Having said that, people eventually need places to live and that does feed through the system in the end.
What areas represent the lion’s share of the real estate market?
The province of Mount Lebanon, which consists of seven districts, makes up 55% of the market and population. It is the most cosmopolitan area of Lebanon and contains the largest labor pool and the most extensive industry. It starts at the seashore and ends in the Bekaa. Investment, however, is very focused on Beirut, and this is only representative of 9% of the market. Having said that, we are currently developing a mega project called Cascada Village in the Bekaa Valley. It is a 200,000 sqm development and will be a one-stop leisure destination, combining retail shopping, entertainment, dining, event hosting, business servicing, and outdoor touristic attractions amid beautiful landscapes. It is close to both Beirut and Damascus, and addresses the needs of both Lebanese residents and foreign visitors.
What is the demand for housing units and who is buying?
The required residential units per year for the Lebanese population is approximately 30,000. During 2010 we had our best year with permits for almost 22,000 units. Also, in 2010 the total number of real estate transactions was 94,000—85% representing the residential market. Approximately 77% of those apartments sold were of values below $200,000. That takes away from the concept that it’s a luxury market. Once you size the market you try to decide who is buying and where their income is coming from. The majority of buyers are Lebanese returning from abroad, especially from the GCC, who then get married and require housing.
What is your evaluation of the commercial market?
The drive for residential development has left gaps in other areas. In that respect, we have decided to promote the commercial side of our business. The commercial segment does not even exceed 5% of the total size of the market yet, and so we have been working hard to produce reports and open the eyes of developers and investors. Lebanon is developing as a real investment destination, with plenty of foreign companies, NGOs, and embassies looking to locate here. In that regard, there is a real need for commercial space. Universities are also creating a need for student housing, and are working to build dormitories and furnished apartments. The private sector is happy to step in and rent that property.
How else are you developing outside of Beirut?
If stability can be maintained, then this country will see an influx of people, especially tourists. Currently, tourism is focused on Beirut, yet Lebanon has so much more on offer, including eco-tourism, faith tourism, and much more. These areas are not getting the attention they deserve. To develop the regions further in terms of tourism potential sufficient shopping centers, hotels, lakeside attractions, dining facilities, entertainment venues, and mega retail stores must be present, and this is an area we are involved in heavily. We have been advising and consulting our investors to ensure long-term profits on this.
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