Construction permits increased by 2.7 percent to 8,780 in the first six months of 2014, in comparison with the same period last year, according to the Order of Engineers of Beirut & Tripoli.
Mount Lebanon accounted for 43 percent of the total, followed by the South with 17 percent. Beirut placed last with five percent.
The surface area of construction permits issued in the first half reached 7.3 million m2, an increase of 15 percent from the same period last year. Mount Lebanon accounted for 46 percent of that followed by the North with 17 percent.
The total value of real estate transactions totaled $4.5 billion in the same period of 2014, constituting a rise of almost 18 percent from last year. Developer Phillip Tabet expects a large inflow of apartments in Beirut creating more supply. “There will be a large number of newly completed buildings coming onto the market in 2014-2015 such as SkyGate, Sama Beirut, Beirut Terraces, and others. They are currently half sold,” he said. Masaad Fares, Chairman of the Real Estate Association (REAL) said there is steady appetite for vertical construction among youth and expatriates living abroad.
George Chehwane, Owner of Group Plus Properties is optimistic there will be more demand as the country stabilizes. He said: “I believe the country has successfully passed the Arsal test and this brings more confidence into the sector from expatriates and people from the Gulf.” He said that demand will continue to be healthy with changing demographics and land scarcity. “New and large construction projects are now fewer than before. This will turn around. There is strong activity in Mount Lebanon and Kesrouan areas in the villa sectors,” said Chehwane.
Fares said consumer trends are dictating what permits or construction projects developers go for. “Five years ago, the market was looking for 500-1,000 m2 units and today it’s more towards the 100 m2,” Fares said. He said that apartments costing less than $500,000 are bought by working couples and new managers. “We need to have 10,000-15,000 new units per year. Buyers are weighting luxury versus necessity, distance versus size, but demand will always be there,” Fares said. He said political and security stability will unload the entire stock of built apartment units for developers within one year. “Metn, Jounieh, and other areas that were spared by security issues are witnessing a boom in construction and sales,” he said.
Cement deliveries have also increased by more than seven percent during the same period. “Good weather is reflecting positively on sales of cement,” said Adib Hashem, Marketing and Sales Director at Cimenterie Nationale. He said the work that takes one year at jobsites was reduced to six months as work continued with close to a month less of rain than last year. He said projects high above sea levels like in Mount Lebanon and summer destinations benefitted greatly. “There is strong activity taking place in Corniche el Nahr, the Metn Coast, and Byblos, compared to slower activity in western Bekaa, and the South,” Hashem said. He said that a government infrastructure development plan would boost cement sales in the near term. “We also expect cement production capacity to increase from a current 6.3 million tons to at least 15 million in local consumption and exports when the Syrian crisis is over and reconstruction begins."
Figures released by the Ministry of Finance indicate that the total number of real estate transactions reached 34,109 in the first half of 2014, an increase of almost seven percent for the same period last year. Similarly, there were 510 real estate transactions executed by foreigners in 2014, down 14 percent from last year.
Transaction activities are biased towards off-plan purchases made two or three years ago. Chehwane said: “I am now concluding a transaction of nine units in Yarzeh that I sold three years ago,” said Chehwane. Transaction numbers include land, apartments, as well as off-plan sales.
Chehwane said that the new residential rent law will reflect on the construction of middle-end housing units. Fares said that the outskirts of Beirut offer very interesting real estate development avenues.