Strong demand for reconstruction and housing is keeping the building industry booming, while ambitious companies are gaining experience abroad.

Alongside banking and tourism, the construction industry is one of the main drivers of the Lebanese economy, playing a vital role in the country's reconstruction and economic growth. Between 2001 and 2007, the contribution of the construction sector to GDP fluctuated between 9% and 10%. In 2007 it reached 11%, and as of 2011 it stands at 13%. Construction accounts for about 6% of total employment according to official household surveys. Furthermore, more than 400,000 of Lebanon's foreign workers are estimated to be employed in either the construction or agriculture sectors. Not only do Lebanese construction companies' activities go beyond the country's borders, Lebanon is also among the top destinations for foreign investment in the construction sector, primarily from the greater Middle East and North Africa (MENA) region.

In the first four months of 2010, construction activity increased by a record 56.5% compared to the previous year. In 2010, 17.6 million sqm of construction permits were issued, which marks a 91% increase over 2005 levels. Although construction activity fell by 9% in the first quarter of 2011, the issuing of construction permits sustained a positive trend. In the January-February 2011 period, construction permits for 2.1 million sqm were issued, which marks a 17% increase on the same period in the previous year. However, this trend seems to have slowed during the second half of the year. According to August 2011 figures, the number of permits issued has fallen 7.3% in year-on-year terms.


Currently, ongoing and planned projects amount to $25 billion in value. Approximately $8 billion of this sum alone includes recent residential and tourist projects in Beirut, while infrastructure projects are estimated to add up to $2.38 billion in total. Around $1.8 billion worth of mega-construction projects were launched in downtown Beirut, including BeitMisk, Venus Towers, Beirut Souks, and Sama Beirut, which is slated to be the highest building in Lebanon.

Solidere is one of the leading companies in the execution of planned construction projects. Established in 1994 as a joint stock company, Solidere is in charge of the planning and redevelopment of the Beirut Central District. The company currently has $5 billion worth of projects in its portfolio. The reconstruction of Beirut Central District constitutes one of the most ambitious contemporary urban development undertakings. The project involves a surface area of approximately 1.8 million sqm in the heart of the city and envisages reclaiming 608,000 sqm of new waterside development land from the sea. Once completed, Beirut Central District will have 4.69 million sqm of reconstructed and developed space, furnished with modern infrastructure, including roads, utilities, public spaces, and marine works that can host a wide variety of business and leisure activities.

The reconstruction and development of Lebanon's infrastructure presents many investment opportunities for regional and international construction companies and contractors. Under the direction of the Council for Development and Reconstruction (CDR), Lebanon has a wide spectrum of planned and ongoing infrastructure projects. For example, the continuing multi-million Sayyad project in Beirut will upgrade a section of the Damascus Highway from Hazmieh to Baabda to an eight-lane highway. Beyond Baabda, the road will head to the Bekaa and Syria in six lanes. The project will be finalized by the end of 2012. Among other planned projects, the construction of 54 dams by 2035 in three phases aims at alleviating water and power shortage challenges. Designed by the Ministry of Energy and Water, the project is expected to channel $2 billion into the economy annually.


Housing construction in Lebanon has increased significantly in the past few years due to several factors, including the reconstruction of the battered suburbs of Beirut and demand for housing from the Lebanese diaspora. While the former factor involves rebuilding 1.2 million sqm of built-up area damaged by Israeli bombing during the July 2006 conflict, the latter points out surging demand from the diaspora returning to their homeland to buy real estate for the future.

In June 2007, a massive reconstruction project started in Beirut's southern suburbs and soon became Lebanon's biggest construction venture. As of July 2011, 230 buildings out of the 269 were rebuilt. A total of 28 contracting companies were involved in work on the ground.

The construction boom is not limited to the suburbs of Beirut. What were once quiet and wooded neighborhoods are transforming into flourishing urban centers. “There is a lot of construction and development being seen in the mountainous regions of the country... Many people find Beirut too hot over the summer months, and thus like to escape to a second home," Hassan Kronfol, General Manager of Hassan Kronfol, told TBY. “There are also areas surrounding Beirut that are attracting more and more interest as cheaper suburban prospects." For example, in the town of Hazmieh, located to the northeast of Beirut, more than 90 new buildings were constructed and the town's infrastructure underwent an overhaul.


Although Lebanon is one of few MENA countries with an oversupply of cement, the country is a net steel importer. Cement production rose from 2 million tons in 2006 to 6.5 million tons in 2011. Cement is one of Lebanon's largest export items. While 5 million tons of national production goes to domestic consumption, 1.5 million tons are exported, primarily to neighboring Syria and Iraq. Lebanon supplies 13% of Syria's cement supply. Holcim, Cimenterie Nationale (CN), and Sibline are the major cement producers.

As Lebanon has limited steel production, a majority of the demand for steel was met through imports, mainly from CIS countries and Turkey. Demco, Société Libanaise pour les Métaux, and Yared supply a large portion of the domestic demand, controlling a majority of the Lebanese steel market.

Imports of steel have experienced a CAGR of 15.7% over the past five years and increased to 1.2 million tons in 2010 from 664,000 tons in 2006. Demand grew by more than 30% in 2007. Long steel products are the most common steel products traded on the Lebanese market and constituted 61% of total steel-related product imports in 2010. Flat steel and steel tubes take second and third places, respectively.

Although Lebanon is a net steel importer, Lebanese companies conduct export-oriented strategies to reinforce their regional influence. “Out of our total production, around 25% to 30% is exported. Once we reach cruising speed at our new plant by the end of 2012, we will significantly increase our sales figures, further cementing our central role in the regional steel sector," Alex Demirdjiyan, General Manager of Demco Steel, told TBY. Industrial machinery and equipment, on the other hand, experienced a 14% growth rate in 2010, and stood at about 227.2 million units.


The relatively small size of Lebanon's construction industry is no obstacle for its skillful construction companies and their positive track records abroad. Dar al-Handasah and Khatib & Alami are among the leading Lebanese companies with a strong presence in the greater MENA region. To date, Khatib & Alami has undertaken more than $1.1 billion worth of residential and commercial construction projects alone. Dar Al-Handasah, on the other hand, operates throughout 29 countries with 43 offices. Other Lebanese contractors are looking to repeat this success and are employing aggressive expansion plans in the region. “We are actually looking at projects in Iraq and the Kurdistan region. The business investment potential in Iraq is immense, and expanding to the country will surely be a new milestone for us as it will establish Qualco as a regional construction company," Roger N. Karam, Chairman of Qualco, told TBY. As experience has shown Lebanese constructors, though the home market has plenty of opportunities on offer, to grow big you need to grow abroad.