Slow property market shows slight improvement

Bank Audi report: Flat property prices are here to stay “for a while”

The real estate market has shown “relatively flat performance in recent months,” a Bank Audi report said. This marks a break in the trend of double-digit growth rates registered over the past few years.

Nonetheless, the report, issued mid-June, said that while regional and domestic tensions have curbed buyers’ appetites, the realty market is showing “slight improvement,” albeit at a slow pace.

The value of real estate sales transactions have seen a four percent increase in the first four months of the year from the same period last year. The value of real estate transactions saw a 6.7 percent drop in 2011 from the previous year, following a 32 percent annual growth recorded over the previous five years.

Although non-Lebanese buyers, especially Arab Gulf buyers, have been absent from the market over the past few years, the residential property market is still supported by local demand.

Local buyers represent over 90 percent of demand for residential units. Demand for retail and office spaces has been steady over the past year, with overall stable rent rates in Beirut. “Demand for retail spots was mainly boosted by the defensive food and beverage industry.”

On the supply side, developers have started to slow down construction activity. The number of construction permits issued in the first five months dropped by nine percent. The total square area for which construction permits have been issued also fell by 12 percent up until April.

The total square area for which permits are issued is an indicator of future construction activity, which showed a seven percent drop in 2011 from 2010 levels. This followed a period that saw a 19 percent average annual growth from 2006 to 2010.

Realty prices have remained stable on the whole for the past year and a half despite adverse investment conditions. Prices are expected to remain stable in spite of the tense local and regional situation. The report said that the “era of flat property prices” is here to stay, “for a while” at least.