Real estate sector in Lebanon | Conseil et Développement s.a.l.

The Current Market Physiognomy of The Real Estate Sector in Lebanon – October 2012

Throughout the post war period and until the present year, construction permits were geared mainly towards residential buildings with occasional slight variations.

During the past two years 2010 and 2011, the repartition of construction permits and related projects was segmented in the following manner, with an insignificant variation compared to the five years 2005-2009:

  • Residential buildings: around 83%
  • Commercial buildings: around 7%
  • Economic buildings (industry, agriculture): around 4.5%
  • Hotels and tourism: around 3%
  • Public buildings and services (schools, hospitals, governmental buildings…): around 2.5%.

 

The office market niche:

Commercial buildings and mainly offices or serviced offices buildings represent an average of 7% of total construction permits in terms of square meters, which place this segment of realty market second in importance after the residential segment.

It is important to note in what concerns this segment that the dynamics governing the office market in Lebanon differ from those controlling the residential market. This was particularly evidenced in the year 2011 when office rental prices burgeoned amid a general stagnation in residential real estate prices. In fact, Beirut was one of the few cities in the Middle East region to witness a rise in office rent in the year 2011, registering the third highest growth rate (13%) in the Europe, Middle East and Africa (EMEA) region. In addition, Beirut ranked 22nd among the most expensive office markets worldwide, because of the “scarcity of high quality space” that triggered an increase in office rental prices during the year 2011, a trend which is anticipated to be sustainable during the year 2012.

On the demand side, The Beirut Central District remains the main business hub in the country with more than 130 office buildings, and occupancy rates in the 75%-85% range.

Achrafieh’s Tabaris-Charles Malek sector is another top destination for businesses, with occupancy rates hitting the 90%.

With approximately 50 buildings strictly dedicated to office use, Hamra is to date the area with the largest concentration of commercial space outside the Beirut Central District.

However the large local companies and international institutions tend to shy away from Hamra as it has not been able to revamp its ageing stock.