The flames of domestic demand are being fanned by expatriate and foreign interest in the real estate sector, and growth is being witnessed in residential, office, and retail spaces.

A decade ago there were only a handful of developers investing in Lebanon's real estate market, but the last five years have seen the sector boom, with purchase prices consistently rising year-on-year. The capital city Beirut is to a large degree a unique market, attributable to the fact that it is a liberal and cosmopolitan city, and an attractive tourist destination, but at the same time remains cautious of regional unrest.

The average price of an apartment in central Beirut rose from around $1,200 per sqm in 2004 to $4,200-$6,800 per sqm in 2010. At the same time, gross rental yields in Beirut dropped notably over this period, an inevitable result of the price rises. At present, gross rental yields on Beirut apartments range from 2.7% to 3.5%, a stark comparison to gross rental yields in 2004, which averaged 10% to 11%. By 2010 the general consensus was that the consistent steep price growth was not sustainable, and figures released in 2011 supported this prediction. With prices now appearing to have stabilized, and recession fears still simmering around the globe, the sector has remained cautious to the risks of real estate bubbles. Experts, however, believe that the current slowdown of growth represents a more realistic and sustainable market trend, and that given the size of the country and the level of demand that still exists, prices are unlikely to drop.

Mounir Douaidy, General Manager of Solidere, told TBY that “land and property in Lebanon has never lost value; it goes up or it stays the same, but prices do not go down." Demand for property in Beirut is consistently strong and prices in areas such as the high-end seafront are unlikely to ever see price decreases. An apartment along the seafront runs for no less than $7,000 per sqm, right up to $10,000 per sqm for properties on upper floors. The main factors that will continue to contribute to fluctuations in the Lebanese real estate market are the regional political situation, the buying power of the Lebanese diaspora, and the wider global economy.

FDI flows into Lebanon remained largely unaffected by the global financial crisis, with $4.95 billion invested in 2010. A significant proportion of this FDI is directed toward real estate. There are few restrictions on foreign ownership of real estate property in Lebanon, with foreign buyers permitted to purchase up to 3,000 sqm of land. If a larger plot is sought, a prior decree from the Council of Ministers is required. There are measures in place, however, to prevent foreign ownership becoming excessive. Foreign ownership is restricted to 3% of the total land area of Lebanon, and up to 10% of the total area of Beirut.

In 2009 the Banque du Liban allowed the banks to provide more accessible home loan products to encourage mortgage activity by adjusting liquidity reserve levels. Estimates provided to TBY indicate that approximately 50% of loans go to locals, 40% to members of the diaspora, and 10% to Gulf clients. The ability to acquire competitive mortgages has opened up the market significantly, allowing first time buyers to get a foot on the ladder, increasing the demand for smaller low-cost apartments to around $200,000. The Lebanese banking industry, mindful perhaps of the global crisis, does, however, remain extremely controlled and regulated, and obtaining a loan requires a significant downpayment, and the ability to prove stability of income.


There is a strong demand for residential real estate in Lebanon—key driving factors being the organic growth of Lebanese resident households, the large diaspora community, and demand from individuals in the MENA region for second homes. There has been a historic and ongoing demand for property from Lebanese expatriates, and owning a property in their home country remains a high priority.

Following the end of the 2006 conflict residential prices grew steadily though steeply, resulting in several years of consistent double-digit growth. By 2010 a distinct chasm existed between the purchasing power of potential buyers, particularly Lebanese residents, and the variety of housing stock available. This was in large due to the wealthy Lebanese expatriates and Gulf Arabs that were buying up luxury Lebanese property en masse, effectively pricing many of the more conservative purchasers out of the market. According to industry experts, the world global crisis has meant that such days are, for the time being, a thing of the past, and the market is now dominated by Lebanese residents. These purchasers are educated and savvy, making conservative choices when buying property.

During the 2008-2010 period the rapid price explosion resulted in the cost of 500-600-sqm apartments in central Beirut costing no less than $1 million-$1.5 million. There is now significant demand for smaller more affordable property, and the developers who foresaw this are now being rewarded. Mercury Development was one such company, which in 2009 went from building 400-sqm apartments, to building 147-sqm, 173-sqm, and 200-sqm apartments. According to its CEO, Mustapha Ahmad, “As regards to pricing, we went from selling apartments at $800,000-$2 million down to $300,000-$600,000 maximum, because this is what the majority of the people can afford." A key factor is that the Lebanese are not accustomed to commuting any significant distance to work, and location is therefore the paramount consumer concern. Experts assert that the concept of a 400-500-sqm apartment has passed, with demand now being for 150-200-sqm apartments. The middle class market demand stands between $350,000 and $600,000, and the upper class market demand is between $800,000 and $1 million. Above that the market is at the moment virtually stagnant, and so opportunities will exist when the wealthy buyers return.


Beirut's thriving liberal social and cultural scene bolsters the retail market, with a strong demand for food and beverage outlets, banks, boutiques, and art galleries. The 2011 Cushman & Wakefield survey of the world's most expensive retail rental locations ranked Beirut 37th out of 63 cities worldwide and the most expensive out of 10 Arab cities listed.

Considered by many to be Beirut's central cosmopolitan hub, Hamra is one of the most coveted locations for retailers, with a frenetic population of students, professionals, expatriates, and tourists. Hamra has displayed a rapid recovery from the 2006 conflict, although some areas are still a work in progress. The most expensive area, home to many major international retailers, is Hamra Street, where yearly Estimated Retail Values (ERVs) range from $800-$1,200 per sqm.

Tightening competition for Hamra is Ashrafieh, one of the most popular destinations for shopping, entertainment, dining, and nightlife, and home to the most expensive retail destination in the city—ABC mall. While prices have generally stabilized in Ashrafieh, they are continuing to rise in some areas. The yearly ERVs for retail space here range from a reasonable $300 per sqm, right up to $2,000 per sqm. ABC mall is at the highest end of the spectrum, recording yearly values of $1,500-$2,000 per sqm, with prices continuing to grow. Charles Malek Avenue is another popular area, particularly for banks and restaurants, with yearly ERVs of $500-$600 per sqm. Indeed, these popular areas are almost fully saturated, leading to a ripple effect in surrounding areas, evidence of which can be seen by the growing occupancy rates of the side streets surrounding ABC mall.

The Beirut Central District featuring the Souks retail center, which had its soft opening in October 2009, is also shaping up to be one of the premier shopping districts in the country. Annual rents can vary anywhere from $1,400 to $2,000 per sqm, according to TBY research. The area is especially popular with tourists, and occupancy levels can vary depending on the success of the tourism industry.


Whilst growth slows in other areas of the retail sector, office space continues to experience high demand. Property advisory firm RAMCO reports that grade-A, purpose-built offices are in short supply with the majority of space being grade-B capacity, often made up of old stock buildings without parking facilities. The Beirut Central District is home to the only available purpose built office space and as a result the leading national and international companies' office spaces are located here. Yearly ERVs range from $275 to $375 per sqm, with the highest end being around the Park Avenue area, and the lower end around Beirut Souks. The second most popular office space available is in Ashrafieh; however, this is dominated by older properties and there is significant undersupply of high-end product available. High-end properties, where they can be found vacant, have a yearly ERV of $250 to $350 per sqm. Lower-end units have yearly ERVs of $150 to $200 per sqm. The Verdun and Clemenceau areas also offer some attractive office space with yearly EVRs ranging from $250 to $275 per sqm.