Since at least 2014, the country’s real estate developers have been warning of troubling times ahead. The sector slowdown had begun much earlier, as Executive reported in its October 2018 real estate special report, and sector stakeholders have, for several years now, expressed hope that the next year would be better—repeating this mantra, as if speaking the words out loud would bring about the positive change they have been seeking. By definition, real estate is always cyclical, so the question is: Where are we on the down leg of this cycle—still declining, at the nadir, or nearing an upward turn?
Whatever the real status of the sector is, and where we are on the down leg of the cycle, stakeholders may actually have a better year in 2019 than in 2018. This time around, that optimism is based on hope and the tangible measures expected following the formation of a new government, rather than on hope only, as was the case in past years.
Lebanon’s housing authority, the Public Corporation for Housing (PCH), is set to restart its subsidy in 2019 for lower-income, first-time homebuyers, thanks to a one-time allocation of $66 million by Parliament. The subsidy had been offered by the central bank but was discontinued at the end of 2017, leaving borrowers in limbo. In November 2018, Executive interviewed the head of the housing authority, Rony Lahoud, who at that time said the PCH was still negotiating with banks to adjust the financing mechanism for subsidized loans and, possibly, offer a new home loan product to qualifying beneficiaries.
As for developers and apartment owners, a new real estate fund could partly ease the oversupply of high-end unsold apartments in Beirut. In October, real estate developers Namir Cortas and Massaad Fares launched Legacy One, a real estate fund that hopes to raise at least $325 million to buy up housing units in the $500,000-$2 million price range in Beirut.
These developments, coupled with the formation of a new government and the implementation of a housing policy, could mark the beginning of a return of investor confidence to Lebanon’s real estate sector. In the context of the t-junction faced by the Lebanese economy, meaning the economic model has hit a wall and must change direction, the real estate sector in 2019 could very well experience a decisive directional move, either remaining static or moving forward.
Source: Executive Magazine
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