Beirut with the brakes on

The Financial Times

The Financial Times
By Abigail Fielding-Smith

The panoramic view is supposed to be a selling point for a new 15th-floor apartment on Beirut’s seafront but right now its four master bedrooms are as empty as the turquoise Mediterranean stretching out in to the horizon. “We used to have many people come to see it,” says Wissam Habchi, marketing manager for Mena Capital, the investment firm behind the development. “Unfortunately, due to the situation in the Middle East, the market is freezing.”

The $7m property is one of the most desirable in the Hochar tower, a luxury residential block on the seafront in the final stages of development. A couple of years ago, it would have been snapped up, mostly probably by a Gulf-based client, before the ink was dry on the construction permit.

Now, however, like nearly a third of the other homes in the tower and hundreds of new upmarket developments across the city, it is struggling to find a buyer as the civil war in neighbouring Syria escalates.

The waves of money that have washed over urban Beirut in the past six years are drying up, leaving developers to consider a client base they haven’t given much thought to for a while: middle-income local residents.

The boom, which began amid the rubble of the 2006 war with Israel, was initially driven by the hundreds of thousands of Lebanese who live and work in higher-income countries in the Gulf and elsewhere. The 2008 global financial crisis, from which Lebanon remained largely insulated due to its ultra-cautious banking practices, accelerated the flow of capital into Beiruti bricks and mortar. Well-off local residents and Gulf nationals, who used to come here to escape the scorching Arabian summers, joined the stampede.

At the peak of the buying frenzy, prices in central Beirut rose around 30 per cent a year. All over the city, the ar FULL STORY