Property transactions registered with the Lebanese government in 2012 reached a value of $9.2 billion representing a 3.8 percent annual increase, according to official statistics cited by Bank Audi’s Lebanon Weekly Monitor in January. The 2012 rise in property transaction values was juxtaposed with a 9.9 percent annual decline in the number of property transactions when compared with 2011. One year earlier, from 2011 to 2012, numbers and values of property transactions had both been in decline, by 11 percent and 6.7 percent respectively. Property sales to non-Lebanese in 2012 showed the lowest number of transactions since 2006, according to the data shown by the Lebanon Weekly Monitor. With property demand coming mainly from Lebanese citizens, Arab buyers were described in the report as “still somewhat hesitant” to purchase properties in the Lebanese market, which Bank Audi correlated with the travel advisories that some Gulf Cooperation Council countries issued last year against visiting Lebanon. According to the statistics, the annual number of property sales to non-Lebanese peaked at 2,300 transactions in 2009 and has fallen by a total of 40 percent over the past three years.
B.D.L. stimulus for home finance
Banque du Liban (BDL), Lebanon’s central bank, has allocated $817.2 million of a $1.46 billion financial stimulus package to the housing sector, according to a January 14 BDL circular cited by Byblos Bank’s “Lebanon This Week” report. The central bank’s lending pool will be dispersed on a first-come, first-served basis and will be accessible to commercial banks at a fixed interest rate of 1 percent per year. Commercial banks can draw advances equal to between 60 and 100 percent of the value of new housing loans they provide, significantly lowering their cost. Banks that tap into the central bank stimulus facility will have to abide by BDL-mandated interest rates when extending loans in different categories ranging from housing finance to loans for productive sectors and projects in research and development. According to the Byblos Bank report, a ceiling has been set of LL800 million ($530,700) per individual housing loan issued under the stimulus program, and housing loan takers must not employ other financial facilities in acquiring a residence when benefiting from the program. Commercial lenders have to stay below a ceiling of $63 million (per bank and semester) when extending housing loans in the first and second half of 2013. A financial stimulus package for the Lebanese economy was announced by BDL Governor Riad Salameh on the sidelines of a Lebanon investment day in London last November. According to the funding allocations which BDL has now announced, 56 percent of the $1.46 billion package will go to housing finance versus 14 percent to productive sectors and 1 percent to research and development projects. The total number of loan categories in the stimulus package is seven.
Getting more real, bit by bit
It was party time for Lebanon’s newest professional order last month as an organization of real estate intermediaries celebrated its elevation to a recognized syndicate. The Real Estate Association of Lebanon (REAL) was formed with the aim of becoming a syndicate with the authority to set standards for membership and distinguish certified members from unregulated operators in the sector. Executive reported on the syndicate’s expected formation last October when the organization’s status upgrade was nearing completion. When the official approvals and signatures of governmental entities were completed after some delay, REAL started 2013 with a celebration dinner during which REAL President Massaad Fares was not short in expressing his personal satisfaction. According to a press statement, he said, “Since the establishment of REAL, the thought of creating a syndicate for the realtors in Lebanon has been a main aim of mine. It is a proud moment for me today to celebrate this achievement after a long struggle.” According to its website and earlier remarks by its secretary general, Walid Moussa, to Executive, REAL aims to have more than of 200 members within two years. The organization’s online membership list in late January showed 30 member companies. The new syndicate will emphasize compliance of real estate intermediaries with its code of ethics and has prepared an education program for which REAL currently seeks to generate funding. The program will be offered in collaboration with the American University of Beirut. Some market participants told Executive that they expect the syndicate to take some time to reach efficacy.
Shot across the bow of property speculation
New regulations that would impose stricter limits on mortgage borrowing by nationals and expatriate residents of the United Arab Emirates are not going to be introduced until the third or fourth quarter of 2013, and banks are still offering home finance for high percentages of property values to all qualifying potential buyers. This is the situation after a tumultuous period in the wake of a UAE central bank notice to banks at the end of 2012 that outlined financing limits of 50 percent of first homes’ values for expatriates and 70 percent for nationals. According to a UAE central bank notice published on January 22 via the country’s official news agency, WAM, banks and finance companies should present their comments on the maximum loan-to-value (LTV) ratios for mortgages in the UAE to the central bank by January 31. WAM said the new notice acknowledged that views of banks on percentages specified in the previous notice were “diverse” and the central bank “considers it appropriate to seek the opinion of all banks and finance companies on the main components of the regulations that the central bank intends to issue soon.” Neither the December 30 nor the January 22 notice were accessible on the central bank’s English-language website, making it a matter of interpretation if the new notice was an about-face or correcting a misunderstanding. According to The National, banks in late January were continuing to offer home finance with up to 85 percent LTV ratios.
Waterfront dig awarded
Beirut’s Waterfront City, the suburban luxury development that was first seeded back in Lebanon’s civil war days by land filling of the sea in the Dbayeh area directly north of the Lebanese capital, is entering the first phase of construction this spring. According to statements released by Waterfront City and ACC-Matta, the latter company was awarded a $225 million contract for the first phase of construction. The entire project, whose future phases are meant to include a shopping mall, hotels, offices and more residential buildings, was designed by San Francisco-based SB-Architects which said on its website that the first phase was set to entail 112 residential units and 5,680 square meters (sqm) of space for retail and restaurants. Waterfront City is developed in a partnership of Lebanese Joseph Khoury et Fils and Majid Al Futtaim (MAF) Properties, a division in the United Arab Emirates-based MAF Holding. According to MAF Properties, Phase 1 was enlarged from 132,700 sqm built-up area to 193,000 sqm and now represents about 17.5 percent of Waterfront City’s total anticipated BUA. The city will envelop an area of 250,000 sqm when completed and is expected to be realized at an investment in the range of $2 billion. ACC-Matta, which is a joint venture of Lebanon-based construction companies Matta & Associes and Arabian Construction Company, said it won the contract for building the project’s enlarged first phase in “an extensive and thorough evaluation and selection process, which involved seven construction companies.” MAF Properties confirmed that this was competitive tender. According to ACC-Matta, work on the enlarged phase “is due to begin in the first quarter of 2013 and is scheduled to last almost three years.” Handover of the phase is expected to commence in early 2015.
Birthing a giant
Even with a consenting and eager family backing the enterprise, the birth of a new real estate giant in Abu Dhabi has not been a simple procedure; however, the emergence of Aldar Sorouh Properties now appears nigh. The boards of real estate development companies Aldar Properties and Sorouh Properties announced in a joint statement on January 21 that the board of each company unanimously approved a planned merger which is to create a company with more than AED 47 billion ($12.8 billion) in assets and one of the region’s largest land banks. The new company will concentrate on real estate development in Abu Dhabi, where its two predecessors have been associated with a wide range of the emirate’s most ambitious property developments — including some severe loss-incurrence.
