Real Estate In Lebanon Post Oct 17- As Witnessed By Top Agents In The Market

13th January 2020
Home > News > Real Estate In Lebanon Post Oct 17- As Witnessed By Top Agents In The Market

Almost 3 months post the Lebanese revolution, the contrast of “before” and “after” 17 October 2019 is the most obvious in the real estate market.

Buyer vs. Seller Market

Before Oct 17, Lebanon was witnessing a buyer market characterized by buyers with access to cash or full payment of the real estate properties they intend to buy – as housing loans have stopped in the earlier year of 2018 (subsidized and non-subsidized). As such, the few buyers seeking to close transactions had excellent negotiation powers over abundant sellers and abundant available stock for sale in the market.

After Oct 17, and upon the reopening of banks the expected rush on banks was fierce. Banks therefore decided on a capital control scheme, banning deposits from being transferred outside Lebanon and on a weekly limit of usd cash withdrawals by depositors. Those measures were not unified in a clear memorandum that applied to all Lebanese depositors and as such varied widely from one bank to the other and worsened from one week to another. The ambiguity in taking those measures and the random way in applying them across banks and across depositors even within same bank led to a huge distrust in banking sector. The only common denominator across all banks is that the official exchange rate of usd/lbp that has been kept for years at the rate of 1515 remained the same at banks- while it started increasing in currency exchange offices reaching the rate of 2400 usd/lbp in first 10 days of 2020.

Political Crisis

On the political side and despite all of the above as well as pressures from the street and given the ever-complicated situation in the Middle East area, Lebanon remains without a government for the 3rd month in a row! Lebanese are hoping for a rescue government of professionals that may have the ability to draw & execute a plan to get the country out of its biggest economic problem ever. Add to that, Central bank in Lebanon keeps hinting that the real issue is political and that it (i.e. BDL) has limited ability to fix the current situation if not accompanied by a strong cabinet with bold economic decisions.

Anxious Depositors

Given all the above, rumors about possible “haircuts” and “forced conversion from usd deposits into LBP at the official exchange rate” made depositors more and more anxious about their deposits. Those depositors have very limited capacity of cashing their deposits with the weekly cash withdrawal limits varying between $300 and $1000 at max. They are equally unable to transfer their money outside Lebanon given the capital control. Their only remaining solution was to issue a banker’s check and buy real estate properties – the ever sound and safe investment there is in general.

Interview with JSK Top Agents

All areas in Lebanon – especially Beirut and Mount Lebanon – have witnessed a long-awaited momentum in real estate transactions.

We have interviewed some key players at JSK Real Estate to get their feedback about the current situation. Below are their inputs:

“We are receiving an unprecedented nb of buyer calls daily on our call center at JSK”, exclaimed Soumaya Haddad the head of call center services at JSK Real Estate. “Some people call mentioning they are traveling within 24hrs or 48 hrs and our agents are doing their utmost capacity to meet the high demand and prioritize all serious buyers; despite the tremendous pressure on admin people behind their desks as well as agents on the ground, we are pleased by our ability to serve our clients and find their real estate solutions and close deals.”

“Many deposits are in LBP – given the high interest rates that prevailed in the past couple of years; we have closed a couple of deals with payment transferred between buyers and sellers in LBP; however, the vast majority of deals are happening in usd” – explained Jade Zoghaib, CEO of JSK Real Estate. ” We expect this trend of high transactions to maintain in the first half of 2020 and even further; many people are waiting for their saving deposits to unblock at maturity and have their money in their current account to be able to use them freely for their purchases. We can see definitely the rocketing demand in Beirut especially in Achrafieh, yet the high demand is being witnessed in all areas and we have closed deals in Baabda, Metn, Keserouane and Jbeil as well and hope to continue to be able to serve our clients as such”.

“It is important to note that transactions are happening on all property types – be it residential (apartments), commercial (offices) and land”, expressed Carlos Zgheib – team leader Kesrouane.

“The real trick today is a continuous daily update of our database to filter the sellers that are still listing their properties for sale” says Samar Issa – team leader Jbeil; “the market has shifted quickly to a seller market where the upper negotiation hand is with sellers; it is a fine line though as those sellers have waited for a very long period to be able to sell their properties given the past 2 years of stagnation in real estate transactions and those sellers know that this is the phase in which they can sell. This is why our role as real estate agents is huge today. We need to be able to explain to buyers that decisions have to be made quickly or else another buyer may beat you to the property. And we need to remind sellers that only a few months back they were calling weekly their agents asking for updates about potential buyers – so it is time to benefit from current market dynamics if they want to sell their properties”.

“As real estate agents, we have been advising our clients about the importance of diversification for years. Put some money in banks and invest some money in real estate. Real estate is always a sound investment in Lebanon”, says Zeina Kosseifi team leader Achrafieh at JSK Real Estate. ” We have always believed in the trend of smaller smarter units as well. Today even clients with considerable amount to invest in real estate are preferring to invest in one or two smaller, more affordable units vs. one big more expensive unit. I think their logic is that those purchases of real estate are for investment purposes not necessarily to live in. And it is easier later on to rent or even to flip a smaller unit vs. a bigger one. Clients suddenly believe in diversification and they are applying it even within the real estate market dynamic. In the future, if banks go back to their normal healthy situation I can see depositors even diversifying their deposits within more than one bank. Diversification is key for risk management.”

On a final note, the real estate agents that have the best listings nowadays are those who have remained very active in the market even in the stagnation period of the last 2 years. They are being sought first by buyers and this is the strength of JSK Real Estate. Add to that, the coverage of many areas from Beirut to Baabda to Jbeil passing by Metn and Kesrouane has given JSK a competitive advantage in today’s dynamic market. Despite all the difficult economic situation, Lebanon remains our rock and our belief in Lebanon and its real estate market will remain a firm one.

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