The legal framework governing real estate in Lebanon is convoluted. While several administrative bodies are tasked with applying the multiple laws and decrees that outline regulations for real estate projects in the country, the sector is guided by no strategic vision. Regulations are either favorable to developers or riddled with loopholes. Frequent changes in the regulatory framework over past decades have allowed a more intensive exploitation of both land and built properties, as modifications in the law increased building allowances and facilitated foreign access to real estate investment.
The city’s most recent construction boom has dramatically changed its skyline. Whereas high-rise buildings were still fairly atypical in Beirut until the 1990s, a brief look at the city today, and a survey of projects recently or currently under construction, shows that large scale projects have become common. A similar phenomenon occurred in retail as well, with ever-larger malls — such as Beirut City Center, which opened in 2013 — now competing for footfall with traditional markets and street-level shops.
Beirut’s urban planning still follows a master plan embodied in decree 6285/1954, loosely based on a vision laid out by the French urban planner Michel Ecochard. The decree, which remains the city’s planning reference, stipulates zoning regulations and a land parcel’s total exploitation ratio, as well as how the project under development fits in with its surroundings (e.g. distance setbacks, façade depth and width). Planning, however, has been left largely unmanaged by the government, despite several administrative bodies tasked with intervening, adopting the master plan and revising the construction law. Nonetheless, the plan, subject to minor amendments in 1955 and 1973, still technically applies to Beirut — except of course in the city’s central district, which is regulated by its own master plan, decree 5714 of 2001.
Other major Lebanese cities — such as Tripoli and Sidon — have their own master plans, Marwan Sakr of SAAS Lawyers tells Executive. A few municipalities have also adopted plans. And while the Directorate General of Urbanism within the Ministry of Public Works and Transport has studied numerous nationwide plans over the years, none has been adopted, Sakr says. This means that only 15 percent of Lebanon’s surface area is subject to any sort of zoning regulation, Sakr adds.
One of the clearest indicators of a trend of easing restrictions on large-scale projects has been the increase of building allowances, allowing for more built-up area (BUA) on a given plot of land than was previously permitted. This has mainly happened through changes to construction law.
Lebanon’s original construction law, number 61 from 1940, was designed in part to encourage a compact urban fabric in the city of Beirut. For example, it stipulated that buildings in Zones 1 and 2 — central Beirut, see map next page — could not rise above 26 meters, about eight stories. Modifications to Beirut’s zoning regulations through repeated revisions to the construction law have largely altered the urban fabric of Beirut to allow for higher density, while alterations of the implementation framework of the construction law have eased restrictions on large-scale projects.
Since the adoption of the original 1940 law, revisions have been made in 1971, 1983 and 2004. Construction law 646/2004 and its 2005 implementation decree 15874 significantly altered regulations by allowing developers more BUA and fewer height restrictions. The most recent legislation allows for more intensive construction but also codifies higher safety, cultural preservation and environmental standards.
The law is arguably more developer friendly than its predecessors. Sébastien Lamy-Willing, an academic expert in Lebanese real estate law at the Académie Libanaise des Beaux-Arts in Beirut (ALBA), explains that the 1983 law allowed developers to subtract parts of a building’s built-up area from the total exploitation area, or ‘building envelope.’ These deductions resulted in developers having around 8 percent more BUA than they would have otherwise been allowed. The 2004 law increased deductions — developers can subtract staircases, maid’s rooms and double walls from the calculation of a project’s BUA. By Lamy-Willing’s estimates, the new law lets developers add around 20 to 25 percent of BUA to a project’s total exploitation area.
Whether fairly or not, these additional areas are still charged to the apartment buyer in full, misleading purchasers on the usable square meters they are buying.
The Higher Council for Urban Planning (HCUP), formed in 1963 through decree 13472, approves the plans and regulations for building laws and approves requests for high-rise buildings and large projects, while the Directorate General of Urbanism oversees urban planning. The HCUP is composed of 12 members and presided over by the Director General of Urban Planning (DGUP). Its members include the directors general of select ministries (interior and municipalities, public works and transport, justice, and environment), representatives from several institutions (such as the Council for Development and Reconstruction), and urban planning specialists. The body advises on urban planning projects, regulations and large-scale development projects. Since the HCUP is chaired by the Director General of Urban Planning, Lamy-Willing argues this confuses the decisionmaking process: is the Director General signing on behalf of the DGUP or as the chair of the HCUP?
The current law allows building constructions in Beirut to reach 50 meters in height — about 15 stories — and defines the shape of the exploitable ‘building envelope’ on a plot of land. If the project is to exceed these regulations then the developer must apply for an exemption. The HCUP grants exemptions in two instances: (i) if the developer has four times the area of the plot of land of the project and stays within the building envelope as specified