Empty towers

Just because you build it does not mean buyers will come

Seven years ago if you went out at night and looked at some of the newer residential buildings completed in Beirut, you would notice that many of the flats were dark. At that time, the explanation was that the owners were either foreigners or Lebanese expatriates who only use the apartments for a few weeks or months per year. Today the phenomenon is the same but the reason has changed: many of these units are still not sold. Since the Syrian crisis erupted in 2011, the Lebanese real estate market has been in a slump. The number of real estate transactions fell in 2011, 2012 and 2013. The first nine months of 2014 suggest there may be a small rise in sales activity compared to 2013, but 2014 will no doubt still stack up short compared to 2010.

The Syrian crisis, however, is arguably not the only culprit here. After the 2006 war, developers announced a flurry of projects that did well in off-plan sales. This prompted even more projects with little attention paid to whether or not the market truly wanted — or needed — all of them. The result is unsold apartments. At the end of both 2012 and 2013, Ramco Real Estate Advisors did a survey of buildings completed in Beirut in each respective year with an asking price for a ground floor apartment of $2,800 per square meter and above. In each year, Ramco found that 65 buildings matched their criteria. By the end of 2012, 217 apartments in the newly completed buildings surveyed were unsold. By the end of 2013, there were 277 unsold units in newly completed buildings that fit Ramco’s criteria. For each year, Ramco noted, the unsold units were over 300 square meters in size. Jihad Ibrahim, managing director of Jamil Ibrahim Establishment, argues that many of the buildings going up in the downtown area are also largely unsold. The real crisis in the real estate market seems as related to oversupply as it does to the war in Syria. 

It is true that there will always be some demand for property in Lebanon (both local and expatriate), however, whether developers understand and respond to that demand will be an important question for 2015 and beyond.

Matt Nash

Matt is Executive's Economics & Policy Editor. He has been reporting on Lebanon since 2007 with a focus on oil and gas, policy and legal matters.

7 Comments

  1. Georges Chehwane said:

    Dear Matt,The number of unsold apartments (250,300 or even 500)doesnt represent a dramatic situation.In fact,in less than 6 months of political stability, these apartments will be sold out.this is not a dream,its a reality and over the last 15years this is how it happened.no more lands in Beirut for new projects,and population is increasing.
    Yes there is a lack of demand today,mainly on high end units but potential clients are always around waiting for some stability.

    • Richard said:

      Sure Mr Chehwane it’s not a dream to sell those apartments at all in Lebanon, and to tell you that if your target is selling expatriates or Arab GCC’s you will for sure achieve your target, but in the same time you NOT adding anything or solving any issue for Lebanese people living inside Lebanon and have salaries even up to 4000$ per month and they can’t afford to buy one of your properties. So as a Lebanese worried about his existence and about his country, I will ALWAYS pray to GOD to those apartments or else will NEVER be sold, maybe in that way you can look after your people here in Lebanon, enough selling to ARAB GCC’s, we don’t even have a toilet corner left in this country.

  2. Ziad said:

    So it is time to initiate a serious plan in order cope with youth abilities, which is large stake of affordable apartments in size (100-120). Just compare the Per Capita income and the value of square meters in Beirut district, is it unbearable! Add to this, mostly offered apartments are huge in size.

    Even those empty mesh apartments if not sold, there is no alternative choice like “to rent” because the charges will be high relatively compared to small apartments.

  3. Rabih Ghorayeb said:

    Real estate developers need to understand that the pricing they are forcing on the city ARE a dramatic situation for the socio-economic development of the country. Housing is not restricted to market profits! – this a pitfall from the public authorities who are not able to control and protect the situation of the public interest.

    • Richard said:

      Just Greedy Lebanese people. shame on them, all what they want is to increase sqm prices for no reason, let them sell to Arabs only.

  4. Yaacoub Ishak said:

    It all comes down to the absolute social indifference of RE developers , and the complete absence of any planning and tracking from government , for years developers in Greater Beirut were completely reliant on rich GCC citizens and Lebanese diaspora neglecting all other aspects , and causing great damage to the social fabric , history , demography infrastructure and environment of Beirut , I have witnessed this systematic destruction … many of these Towers erupted in historic, narrow streets parts of Beirut , without any consideration to the damage they are imposing , traffic , pollution , demographic displacement … to mention few , not even proper sewage and drainage systems were planned !

    the so called crisis has benefits , and I hope it stays for a while to see some of those RE monsters going down , Solidaire is on its way down and I hope it continue this way , though nothing will really change unless the lebanese population wakes up from its indifference towards important matters that affects the population as a whole ….

    • Rabih Ghorayeb said:

      Mr. Yaacoub Ishak: very well said- Thank you for perfectly resuming our problem.

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