Once upon a time, in a tiny, almost mythical land tugged away from the rest of the world on the far eastern shore of the Middle Ocean, people were gifted a narrative of a resilient society where they are the sovereign. Many were happy as they heard their leaders promise that wishes would work with surety for all in the land. And the people were content because almost all had their little homes. Water could be scarce in the summer, and electricity even scarcer, but their homes were cozy and the weather was fine. A few had palaces.
Those fairy tale times lasted for many cycles but one day a big explosion devastated parts of their capital city, not to mention many minds. The little country’s economy—already tanking–sunk badly and the people’s cherished money lost its value. Soon after, the country was overpowered by an especially vicious war that revealed the true depravity and depth of the people’s hostile neighbors’ anachronistic aggressiveness. Thus abruptly ended the time when citizens of the small land lived out their dream of owning homes, however humble, while aspiring investors could freely fulfill their desires for storing wealth in hospitable mansions and building lavish residential towers that made them richer although they added no real value to the country. The property market vanished.
Or did real estate speculation not really end in the small land? In September of 2025, a new Lebanon Real Estate Sector report by the once-prominent local lender Bank Audi, offers a depiction of a gradually recovering property market. The report opens with saying that “demand for real estate [in the first six months of 2025] has recorded a noticeable improvement, returning to levels seen in 2022, albeit weighed down by challenging fundamentals.”
From a conventional economic advisory angle, it bears investigating if and why this statement – ant the entire report – comes with confusing undertones and hidden contradictions. But under a wider discourse on Lebanon’s economic recovery, property angles deserve to be discussed not only as store of value and space for speculation. The prudent approach to property from a macro-social perspective that considers both the Sustainable Development Goals of the United Nations and decades of e economic insights into urbanization, is that sustainable real estate developments are under-discussed, potential levers for uplifting social unity and economic productivity in a needed urban development framework.
The flat market approach
Bank Audi’s new report largely adheres to the pre-crisis property narrative that has been the focus of banks, sell-side real estate advisors, and business periodicals for 25 years or more. Replicating this well-known narrative, the report selectively covers demand trends from the angles of transaction numbers and transaction values, and then shifts to discussing current and future supply trends based on data on cement deliveries and building permit issuance.
The paper concludes with a section that highlights property prices with traditional investor appeal in the downtown of Beirut and nearby districts. It adds an economic-political outlook that in its weighing – between an optimistic, a mid-range middling, and a disadvantageous scenario – favors the optimistic scenario. Under its benign assumptions – stable security with a lasting ceasefire and state “supremacy” over weapons for at least the next 12 months, comprehensive reconstruction efforts, an IMF agreement, and a financial gap resolution law – Lebanon would see GDP growth leap up across the 8 percent threshold. This growth would pull property prices up “by no less than 20 percent”, with a recovery of the housing loan sector acting as “considerable catalyst to the market”.
But is gradual market recovery the core story of real estate in 2025? Property cradles an ambiguous spot in the economic landscape of Lebanon. It is deeply rooted in the nation’s mentality as a store of value and as an investment proposition. Smart urbanity and productive real estate development, on the other hand, are needed for a return to economic vibrancy. Yet, these aspects of the real estate theme are underdeveloped. They have almost never featured in forefront of minds and market reports or led to sincere considerations of social equity and economic productivity. The latest lender report on the real estate market is an illustration of this incongruence.
Admittedly, all three economic scenarios presented in the market outlook assessment of Bank Audi carry both upside and downside risks. By the bank’s perception, however, the property sector, under all possible scenarios, harbors value in the medium to long term. Moreover, while the report concedes that at time of its publication property prices in Lebanon were still subdued in comparison with the pre-crisis status quo, the analysts interpret this to imply a potential for “substantial capital gains” if and when “politico-economic conditions become fully supportive” of the traditional property value proposition and also cause “a potential noticeable price surge” in real estate.
A score of open questions
What seems not to be covered under any of the bank’s three scenarios cited above, is actual economic modeling of the impact of sector-specific policies or measures. Such could, for example, be real estate development regulations and social housing development incentives by the Lebanese state. The current, imbalanced regulations on property and urban development, or absence of property tax reforms, are not assessed as impact factors in the middling or negative scenarios. Nor is there any projection on property market developments under the positive scenario if, in addition to national stability and macro-financial efforts, a public national housing strategy were devised and implemented, and urban planning improved.
It is conceded in the Bank Audi report that the attractive, albeit risky, value proposition of local real estate over recent years has lately been reduced or, for upmarket real estate, already been eroded. But while explicitly acknowledging the need for a new property market approach that emphasizes diversification, improved quality, and increased affordability, the paper does not offer a strategic suggestion on how investment in Lebanese real estate could practically address these three worthy objectives.
This leaves a bounty of questions. A perspective of two urban development advocates, published late last year by consultancy Badil on the housing crisis after three months of the recent war on Lebanon, argued vehemently for “immediate and sustained action to address short-term humanitarian needs and long-term structural deficiencies.” Does this imply that a new national strategy for housing and real estate by the Lebanese government is needed as cornerstone in the recovery? Or would the opposite be better: should developing a new, smart, and sustainable approach to our dysfunctional property management and development be left to entirely to commercial actors, with society de-facto betting on the learning ability of the private sector players and their agency?
It is obvious that the vulnerability of the Lebanese society to corruption, inefficiency, local and regional crises, and war has also grown to acute danger for its housing market and urban productivity. Shouldn’t the state thus be held to the duty of providing much more than, for example, unspecified incentives for creation of rural jobs? In more positive terms, might the 2025 inflection opportunity provide the golden chance for the government to consult with the business community and local academia to actually design a national strategy for social housing, urban productivity enhancement, and balanced development in this country?
In the background of this question looms the lamentable fact that even since before independence, reiterative administrative and governmental plans on urban development and real estate organization have gone unimplemented or failed. Flaws in housing policies over the post-1992 decades according to the Badil comment include lack of public housing programs and failure of allocating vacant properties and state-owned urban plots to socially productive use. Additionally, the simultaneous oversupply and artificially high prices of housing units in the conurbation of Beirut point to a distorted market.
Faced with the post-2024 environment of excessive social inequality and housing supply gaps as well as the country’s huge backlog in economic productivity, Lebanon call ill afford any continuation of the broken housing system. Shouldn’t therefore, a national real estate and environment strategy for protection and best practice be among the urgent priorities of 2025 for the current government? Shouldn’t best use of the country’s one proven natural asset – land – and the associated, man-made assets of urban heritage, be raised as grand themes of awareness building? If so, the society at large and powerful investors in particular can embrace the imperative of a regulatory and fiscal clean up of the property sector.
