The mission was simple. A couple with a combined monthly income of $3,000, a salary that puts them in the top 10% of the nation’s earners, would go shopping for a new house to see what they could afford and where. This couple would not have access to a huge inheritance, nor generous parents (why should they?) They, like most modern couples, would go to their bank and apply for a mortgage. Our one concession was that we did give our imaginary couple the 30% down payment, which they had saved. Without it (at least according to the rules laid out in the lending requirements), no bank will approve a loan, irrespective of salary.
The banks they spoke to would only approve a mortgage that had repayments that did not exceed one third of their combined salary. Based on that, our couple could borrow $120,000 to be paid back over 15 years at a 7% interest. In total they would pay back roughly $180,000. With their hard-earned savings thrown into the kitty our couple had $160,000.
What could they buy?
With prices in excess of $1,800m2, the BCD has nothing to offer, so our couple ventured into Tabaris, where it soon became clear that pickings were equally slim. “The closer you want to live to the BCD, the more expensive it will be,” said Lara Kanj, of Ashada Real Estate in Tabaris. “The problem is the price of land is normally 25% to 30% of the sales price, but in areas such as Tabaris, Sursock and Abdel Wahab areas, it may be up to 40% and this is reflected in the final price.”
The apartments built in these areas are generally large, luxurious and cost $1,500/m2. The smallest unit of 233m2 in the beautiful Ashada apartment complex just constructed in a quiet corner of Tabaris, costs $350,000. “What you could do,” Kanj said, “is to buy an old house – if you can find one without old rents and 60 family members fighting over the inheritance. In these cases the price will drop to $800/m2, but you will have to spend roughly $200/m2 for renovation.”
Properties in Mar Mitr, Sassine, Sioufi, Gemaizeh and Geitawi were more realistic. A newish 150m2, 3-bedroom apartment could be bought for as little as $1,000/m2, although the finishing won’t be spectacular, and often parking or central air conditioning or heating will not be included. If you don’t mind living in an old and at times slightly run-down building, there are still plenty of opportunities in these areas to find prices as low as $500/m2. “If I had $150,000 to spend on a house, I would forget about Ashrafieh and head for Hazmieh or Yarzeh. There you’ll find beautiful spacious apartments with a view for your budget,” Kanj said.
On the other side of town in Sanaya, it turned out to be more or less the same story as in Ashrafieh. One new 200m2 apartment on the edge of the garden was selling at $280,000 ($1400/m2), while a palatial, granite apartment block also overlooking the garden, offers apartments of 450m2 with a price tag of $900,000 ($2,000/m2).
Inside the narrow streets of Watwat, the prices tumble. “There you can find cheaper locations for $800 to $1000/m2,” said architect and interior designer Mohamed Haidar. “However, these are slightly older, usually 2-bedroom apartments and are generally not bigger than 100m2.” Hamra and Ras Beirut proved more encouraging. Around Concorde and Jean d’Arc it was possible to find a 150m2, 3-bedroom apartment for some $150,000. “That wouldn’t be a brand new building though,” said Haidar. “Maybe up to 20 years old. The new apartments in the areas of Hamra, Ras Beirut, Verdun and Telat el Khayat sell for a minimum of $1500/m2.”
It was becoming clear that $160,000 doesn’t get you an awful lot in the prime locations, the sole preserve of wealthy expats and Gulf holiday makers. The situation is not likely to improve. Both Kanj and Haidar confirmed that the average price per square meter will only increase over the next few years, as a consequence of the higher prices of steel and concrete, the strength of the euro and the Value Added Tax (VAT). Whether this will pressure land prices to fall remains to be seen.
“One m3 of concrete has risen from $120 to $150, said Haidar, adding that steel prices have doubled and all imported products are subject to 10% VAT. “One should estimate an average increase of some $200 per m2, especially for top-end apartments,” he said.
Our couple headed out of Beirut’s property hotspots to find that $160,000 could buy them a whole lot of real estate. “You can find wonderful apartments for up to $1,000/m2 in the areas overlooking the Hippodrome and Jardin du Pins,” said Haidar. “Most of them will be bigger than 150m2, but if you’ll search a little, I’m sure you can find something.”
Even cheaper is the popular, yet more central area of Mousaitbeh, where the three new Beirut Towers have recently gone up. They look unimpressive from the outside, but the interior is comfortable, spacious and carefully finished, and sales manager Ghada Berro was quick to offer a deal: a 160m2 apartment with 3 bedrooms, 2 bathrooms, or a 220m2 apartment with 4 bedrooms and 3 bathrooms for $110,000 and $150,000 respectively. However, these are “rack rates,” and a tenant suggested that prices might come down a further 15%. Add to that the extras, such as underground parking, air conditioning, a generator and 24-hour security, and you actually have an excellent deal.
If you go further down into the southern suburbs, prices in some areas fall as low as $300 to $400/m2, which for $160,000 will buy a veritable penthouse of 400m2 to 500m2. “The problem with south Beirut however, is that the region developed so rapidly without planning, that it lacks urban tissue and has a lot of traffic problems,” said Haidar.
Prices in the northern suburbs Antelias and Zalka also fall off to around $500/m2. Real estate agent George Younes offered a 200m2 apartment with 3 bedrooms and 3 bathrooms for $125,000 in Antelias. In Zalka, prices were similar. The only exception being Rabieh, where prices start in dreamland and go up. However, further north in areas like Zouk, Jounieh, Ajaltoun, and Ghadir general prices fall to $300/m2.
Our couple also consulted the world wide web. Scrolling through the pages of One Estate’s website, they were pleasantly surprised to find that $80,000 (half their budget) can buy you a 180m2 apartment with a 200m2 garden, while in Ajaltoun they could blow the lot on a 260m2 apartment with a 90m2 terrace, overhanging pine trees and a view over the sea and mountains.