The real estate sector remains a main pillar of Lebanon's economy, but affordable options and sustainability are lacking.

Broad sector indicators in Lebanon are optimistic. According to the Directorate of Land Registry and Cadastre, property sales were up 14.5% YoY in 2017 for a total 73,541 units; value of property transactions also saw a YoY increase, measured at 18.5%. After a five-year drop in the value of real estate transactions, 2016 was the first year of recovery, with total sales valued at USD8.4 billion from Bankmed estimates.

In terms of geographic distribution, Beirut essentially maintained its share of the market, even increasing its share when comparing the first quarters of 2016 and 2017. Sector experts speculate Beirut is again reclaiming a vibrant role in the sector by catering to the middle-income segment with smaller, more affordable housing options. This trend of catering to the middle segment often correlates to a decrease in foreign investors, who tend to nudge the real estate market toward more high-end, high-rise options.

Though the sector is slowly bouncing back with a focus on the middle segment, many are still feeling the squeeze from too-high housing prices. Indeed, the growth in the value of transactions outpaced growth in the number of transactions, meaning prices also rose. In 2016, prices rose by 5.37% when adjusted for inflation. Beirut, with its fitting sobriquet as the “Paris of the Middle East,” is one of the most expensive cities in the MENA region when it comes to housing. According to Bankmed's May 2017 report on the Lebanese real estate sector, Beirut was the region's second most-expensive city as measured by buying price per sqm. Beirut's average price came in at USD3,693/sqm, followed by Marrakesh at USD1,549/sqm and Amman at USD1,415/sqm.

Thus, researchers at the American University of Beirut (AUB) are worried about the lack of affordable and inclusive housing options. Despite stable sector indicators, researchers are concerned by the national and local housing policies that disproportionately hurt low- and middle-income residents in Beirut. Notably, in a policy brief, AUB's research team highlights the lack of a national urban housing strategy; such a strategy would provide vision and guide decision making for greater efficiency.

Chief among AUB's recommendations is increasing the role and types of public interventions in the housing market. In the past, housing incentives focused on home ownership. However, recently, the government stopped giving housing loans, sparking a slowdown in purchases in 2018.

In contrast, AUB offers various solutions other than demand-side subsidies, such as supply-side incentives for affordable housing development, a revised rent control mechanism, and inclusive zoning. Institutional reforms are being pushed by the Public Corporation for Housing (PCH) to create loans for housing cooperatives, which would increase the supply of affordable housing through supply-side incentives. Developers would be given subsidies for allocating more building space to housing cooperatives, while renters would have increased access to subsidized housing.

PCH is undergoing its own rebuilding with Rony Lahoud at the helm. Lahoud plans to introduce new types of loan programs, increase staffing for the public institution, and digitize processes and services. With increased staff, Lahoud is anticipating PCH can assist more low- to middle-income Lebanese, refugees, and migrants get and maintain affordable housing options.

Supply-side incentives would also spur the construction sector, which is oh-so-slowly recovering. From 2012-2016, construction permits for housing (measured by sqm) decreased every year except for 2014. Cement demand, though up in 2016 compared to 2015, remained below levels seen before 2015. Taxes on empty properties combined with grants and other incentives for developing housing in the middle segment would catalyze construction, particularly residential, efforts. Indeed, a more sustainable housing market would have stabilizing effects on the economy, more so than luxury apartments sitting empty with no tenants who can afford them.