A sense of optimism about the future of Lebanon’s real estate sector prevailed last week when the Daily Star met with major developers during a local exhibition, dispelling the uncertainty that took hold of the market in past years. This optimism is partly fueled by the developers’ increased awareness about the needs of the market in addition to the improvement in the overall situation in Lebanon following the election of a president and the formation of a government.
“In our projects, we do not aim to be expensive but we focus on affordable luxury in a bid to attract more demand from middle income people,” said Tarek Dalloul, managing partner at Cityscape Development.
“Affordable luxury is not much affected by the political or economic situation,” he said.
Dalloul acknowledged the slowdown in the real estate market when it comes to demand for big apartments. “The audience for big units is not there for the time being,” he said. “But small apartments can always sell.”
Dalloul owns a residential project – in addition to many others – in Caracas, Ras Beirut, where his apartments range from 110 to 150 square meters. He has managed to sell half of the units since its launch a year and a half ago despite the complicated political situation.
The developer also owns a project in Ashrafieh with 210-sqm units, but believes that people are much more interested in buying 150-sqm flats because they give the same experience as 210 sqm, and the client saves the price of the extra 60 sqm.
“We have two unsold flats in our Ashrafieh project and we tried selling them by cutting their prices by 15 percent to 20 percent but we did not succeed in doing so,” he said. “Clients today are intelligent and they’d rather buy the smaller units instead of paying for the extra 60 sqm, which are usually used for a bigger living room or corridor.”
Dalloul said that the demand for small apartments prompted Cityscape to study a new project in Ashrafieh’s Sassine area with units ranging from 50 to 110 sqm.
Investors Group partner Joe Nehme has also introduced new small apartments to his projects’ portfolio in a bid to serve the market’s needs.
One of the projects by Investors Group is Gardens One 282, located in Baabda’s Jamhour, with spaces ranging between 131 and 220 sqm and prices starting at $1,800 to $2,000 per square meter. “We managed to sell 60 percent of the project so far,” he said. “This is the demand we are witnessing nowadays, especially from young couples and Lebanese expatriates.”
Nehme’s main projects are outside of Beirut with a new landmark launched recently in Mansourieh, Metn. “We prefer to focus on areas outside of Beirut because they are less expensive and people look for affordable units,” he said. “Our units in Mansourieh start at 85 sqm, priced at $2,000 per square meter.”
Nehme reiterated Dalloul’s comments by saying that prices of small apartments did not drop but only big apartments are witnessing low demand, which prompted their developers to cut their prices in an effort to sell.
Likewise, Aline Abboud, property sales and marketing manager at Imar Properties, said most demand today is for small apartments.
Imar Properties owns a residential project in Downtown Beirut’s Saifi neighborhood, with units ranging from 172 to 360 sqm, priced at $4,400 per square meter for the first floor. “It took us around four years to sell 65 percent of our project due to the complicated political situation, but we managed to sell small and big apartments,” she said.
However, Abboud explained that big apartments were sold to Lebanese expats whereas local residents mostly demanded small units.
Abboud said that Imar did not reduce its prices to be able to sell its big units, unlike the rest of the market. “Our units are attractive because of their location and the high quality of the material used; this is why we did not need to drop our prices,” she said.
Remarks by developers interviewed by The Daily Star were further emphasized by exhibiting banks, which agreed that client demand is mostly focused on small loans for the purchase of small residential apartments.
“Most of the loans that are in demand nowadays stand at LL350 million [$230,000] and less because the purchasing power of people has dropped and prices of real estate went up tremendously since 2008,” said Joseph Sassine, chair of Banque de l’Habitat, a public-private lender whose mission is to help Lebanese build or buy their own home.
Sassine said demand on housing loans in general has increased sixfold since his bank cut interest rates to 3 percent in January 2017.
Likewise, Myrna Maatouk, head of a regional center at Bank of Beirut Invest, said that most of the demand that is taking place is on small loans.
However, she added that even wealthy people tend to take loans to purchase real estate as an investment in order to resell them later on.
The Daily Star