An exploration of mortgage finance opportunities at a time of daily bombings and property destruction seems to be an anything but natural thing to do. Investing into a new home at a moment while the enemy bombs, blows up, and bulldozes dwellings in nearby neighborhoods with impunity but no true predictability, is at its most optimistic an act of calculating risk and opportunity in an extremely contrarian and reckless environment. At worst it is perilous and could destroy one’s own life.
In this and every other sense, the market for real estate development and property transactions in Lebanon must be assumed to be in a state of acute shock and extreme uncertainty. But markets are survivors. Their ability to adapt is the very principle of their existence.
Moreover, it cannot be overlooked that even under the assault of war’s most malevolent forces and insidious lies, the needs of the Lebanese people do not change. The right to dignified shelter is the response to a fundamental human need. This need does persist and will resurge after the madness and evil of invasion under a fake pretext of defense has run its course – or if in an unlikely but far better alternative, the armed confrontations were stopped by global comprehension and multilateral repulsion and subjugation of this evil.
In the meanwhile, three issues are on the real estate agenda: the supply of living quarters in socially and economically productive ways, the avoidance of haphazard construction activity that serves short-term needs but damages the urban and rural quality and violates long-term “green” development objectives, and the restitution of damages to the lives and properties of all people who are victimized by the war.
Needs of planning the future amidst the morally valid dream of restitution
Of course, as long as the aerial and ground invasions last and wreak havoc on mental health and civilian livelihoods in Lebanon, it is not possible to map the property damages conclusively. Nor is it realistic to either plan for reconstruction and betterment of living quarters or assess claims for eventual reparations against the aggressors.
But both issues need attention already today. First is the practical aspect of people who are in need of shelter over the long term, and specifically a national need for shelter that is environmentally, socially, and economically sustainable. In this regard, it is a lesson of the internal conflicts of the past century that in times of armed confrontations and protracted violence, building activity in the country did not cease but was undertaken in ways that inflicted damages on urban fabrics and integrity of communities.
And then there is the moral elephant hidden in the mist of international discourses over human rights and victims of gross violations of those rights in countries like Lebanon. An even greater need than dignified shelter for the currently displaced Lebanese people is the need of safeguarding the rights of people living in the land without the specter of recurrent conflict. Part of satisfying this need could be for Lebanon to insist in front of the global community on reparations for unjust aggression by a belligerent neighbor.
According to concepts declared by the United Nations in 2005, not just the losers in a war (as seen in previous conflicts such as the two world wars and severe reparations imposed on aggressor Germany in post-war negotiations) but generally victims of “gross violations of international human rights law and serious violations of international humanitarian law” have rights to “restitution, compensation, rehabilitation, satisfaction and guarantees of non-repetition”, through mechanisms of reparation “in a systematic and thorough way at the national and international levels.”
Imperative to define and settle reparations
In any civilized court and international order of justice among peoples, these reparations have to be towering on the balance of real inflicted damages by one party to the other. Note: Israel some years ago claimed to be owed $250 billion in reparation for the victimization of Jews in different countries around the region.
Lebanon’s 20th century past is not void of historic failings such as discrimination against the country’s Jewish citizens and pogroms in the 1950s, 60s, and 70s, acts that marred both the human rights record and the country’s philosophy as home to minorities without discrimination. Big however: Even if Lebanon assumes the responsibility for all property damages south of the border that have been inflicted from its territory, plus shoulders the investigation and eventual reparation burden from the anti-Jewish actions of the 20th century’s second half, the infliction of harm on Lebanese people in the various Israeli invasions and occupation periods of the 20th and 21st century up to the current war crimes enacted with determination and fake justifications against civilians, will push the burden of reparations 100 or even a thousand to one on the scale of justice in favor of Lebanese victims.
This summer, an opinion by the International Court of Justice found that Palestinian people deserve reparations for 57 years of Israeli occupation. However strong the pro-Israel political gale force is in so-called high-developed countries with moral compasses anchored in EU and UN declarations of the past 75 years, and however weak the actual moral authority of the UN has been revealed to be in the past year, it is necessary to start thinking about a universal damage registry for the purpose of reparation demands and accountability.
Standing as a civilian in the bombed-out remnants of one’s home must count as one of the most tangible symbols of unjust victimization through the type of precision destruction that is by all evidence of September-October 2024 falsely described as minimizing civilian damages and despair.
While restitution and reconciliation over the incalculable cruelty meted out against Lebanese people by regional aerial superpower Israel must be assessed as a problem of future generations, real estate in this sense is literally more real and concrete as an argument for reparations, however politically uncertain and viciously opposed they are by culprits. But even if this cause of claiming reparations were to be taken up by global civil advocates and legal luminaries in the very hour of this writing, any recovery of physical compensation will be years and years away.
Getting real quickly
In the short and real realm of housing needs, however, the attention is on the financing of affordable homes. This is the segment of the real estate market that had been kept somewhat buoyant – but artificially and perilously so – in the 2010s by the Banque du Liban (BDL)-issued “incentive packages” for the Lebanese economy.
The economic perilousness of the unsustainable interventions into the housing market brought supply of subsidized lending crashing down five years ago at the threshold of the current decade, after it had been driven up over roughly one-and-a-half decades by a combination of speculative demand and genuine need for starter homes.
Expressed in numbers of housing finance, mortgages reached $13 billion, serving 12,000 beneficiaries just prior to 2019. A significant portion of housing finance contracts included subsidized loans, including $1 billion for members of the Lebanese armed forces (LAF), $265 million for members of the Internal Security Forces, $95 million for members of the General Security, and $25 million for the judiciary.
Although housing needs of and finance arrangements available to young couples and growing families were faced with the shocking freeze of banking and crash of currency values in 2020 and the two years thereafter, the real estate story of the past four years has not been a simple one.
According to Nassib Ghobril, the head of economic research at Byblos Bank Group, real estate was the first sector that benefited from the crisis because when the depositors discovered that they can’t transfer their deposits abroad, they transferred them out of the banks to the real estate sector in form of checks. “Companies and individuals were able to repay their dollar loans at a much lower value than they originally borrowed. This was a loss for both depositors and banks, as it contributed to the financial crisis.”
But this opportunity did mean neither that genuine demand in the organically growing and socially value-adding market segment for working people’s home was met, nor that the man-made, minor catastrophe called urban planning was addressed.
Whereas the void in urban planning has to be addressed in a broad societal development with insistence on sustainable real estate and communal coexistence paradigms (cf. comment piece), the collapse of the in the 2010’s thriving mortgage sector mandates a return of banking.
Ghobril emphasizes that the banking sector desperately needs to resume lending activities, “as loans have traditionally been a primary source of income for banks.” This revenue stream has been effectively cut off since 2019, severely impacting the sector’s financial health.
“The size of the loan portfolio was 58 billion dollars at the end of 2018 and today it is about 7 billion dollars or a little less,” Ghobril says. The decline is even more in foreign currency loans, with Ghobril noting that “loan portfolio in foreign currencies declined by $34.5 billion from the beginning of 2019 till the end of June this year.”
“Today, we hear companies saying they need banks to resume lending,” Ghobril says. However, he outlines three conditions for banks to restart this practice. First, banks must have sufficient liquidity to lend, which primarily comes from deposits and shareholder contributions. “Companies shouldn’t complain about banks not lending them money while also keeping their profits in safe boxes or foreign bank accounts. They should contribute to the economy by depositing their funds in Lebanese banks.”
Secondly, Ghobril argues, a law is necessary to guarantee that loans are repaid in the same currency they were originally given. “For example, if a bank lends fresh dollars, it should receive fresh dollars in return, not Lebanese pounds at the exchange rate or devalued checks.” Third, the importance of addressing a crucial question for Lebanon’s economic future: “What identity do we want for the Lebanese economy?”
In his view, one option is a liberal, free-market economy that is open to the world, particularly the Arab world. This model would prioritize the private sector and individual entrepreneurs, while the public sector would play a supportive role by creating a favorable investment climate and modernizing laws and institutions. The other option is an economy dominated by the public sector, characterized by efficient public services, tax evasion, open borders, and a large informal economy.
The return of housing loans
After a five-year hiatus, housing loans are making a comeback in Lebanon, offering a ray of hope to Lebanese youth who had almost abandoned their dreams of homeownership amidst the country’s economic crisis. On June 3, the Banque de l’Habitat began accepting applications for subsidized housing loans.
The new application process has moved online, replacing the old system of physical submissions at bank branches. Antoine Habib, CEO of the Banque de l’Habitat tells Executive in mid-September. “The enthusiasm is clearly there. Applications have exceeded our expectations. So far (September 19), 24,300 people have visited the platform,” he says while not specifying how many of these visitors submitted applications.
Habib states that this online platform aims to ensure a fair and transparent loan distribution process. “To prevent favoritism, this website is the answer. Anyone who meets the requirements will receive a loan. If someone wants to support specific individuals, they should do so with their own money, as the bank is not responsible for personal endorsements,” he elaborates.
Under the new scheme, households earning between $1,200 and $1,500 per month can apply for loans up to $40,000, while those with “average incomes” ($1,500 to $2,000) are eligible for up to $50,000. These loans come with a 20-year repayment term and a 6 percent interest rate.
The eligibility criteria are specific: the property must not exceed 150 square meters, applicants must not own another residence in Lebanon, and they should not have previously received a subsidized loan. The bank is also relaunching loans for improvements and restoration of old homes, with caps of $40,000 to $50,000.
Funding for these loans comes from a credit line of 50 million Kuwaiti dinars (approximately $163 million) obtained from the Arab Fund for Economic and Social Development. This agreement, signed in March 2019, but it faced delays due to the economic crisis and its aftermath.
Addressing concerns about the adequacy of the loan amounts, Habib acknowledges the limitations but emphasizes their potential impact: “If a Lebanese wants to buy a house in downtown Beirut, or in Tripoli Square, or in Bardouni in Zahle, the loan amount is certainly not enough, but if he wants to buy a house in the suburbs of Akkar, Sidon, or Zahle, the amount will be enough.”
You can’t buy a peace of land
Lebanon’s real estate sector defies predictions, with trends of growth and decline that do not always mimic the country’s broader economic and security shocks. While the market is heavily influenced by local and regional uncertainties, it also follows its own internal logic, driven by unique investor behaviors, foreign interest, and a historically durable expatriate demand.
While there are signs of resilience, such as the return of housing loans and the reopening of commercial centers, the sector faces significant obstacles. A comprehensive urban planning strategy is essential to guide development.
Real estate lending needs to resume more broadly, whether in form of purely commercial housing loans or through mortgage lending with support of subsidies and strict eligibility controls. Long-standing reform needs are still piling up, but now with the addition of war and disintegrating physical security as the most pressing challenge that impedes real estate and the right to shelter along with every aspect of civilian life – a challenge that stimulates Lebanese resilience and determination but can only be mitigated on the global stage.
Reporting by Rouba Bou Khzam was integral to this story.