Lebanon has several property hurdles to overcome
Lebanon’s property sector will need to overcome a number of political and geographical hurdles before it can realise its full potential
Property development is considered among the key foundations for wealth creation and economic growth in many countries, including Lebanon, where most people view real estate as a safe investment.
The housing and construction industries now make up around 18% of the Lebanese gross domestic product (GDP). Lebanese investors are also still looking for apartments, offices, and shops to buy or lease at a certain budget.
With its local population expected to reach 5.2 million by 2030, the future of the country’s real estate industry looks promising. Developers, however, remain conservative in their market outlook, owing to a confluence of political and geographical factors that hinder the sector in reaching its full potential.
Lebanon has to contend not only with reports of ongoing conflicts in the entire region, but also with its own political issues. These are a major concern for many real estate developers and are affecting the whole property sector.
One such political challenge is the absence of a clear government vision and a comprehensive national development plan. This is clearly demonstrated in the national budget, which the government only put together in March 2017. The country has been without a public budget since 2005.
Disputes among local political parties, which are driven by their own agenda, have also put property developers in a sticky situation.
Bureaucracy and lack of regulations are big issues on the real estate front as well. Presently, the waiting period for master-plan approval and the issuance of a construction licence can be years, delaying the progress of projects.
Lack of adequate infrastructure is another challenge. Real estate development is highly dependent on proper infrastructure development. After all, no one wants to erect a building in a location where the power, water, or road network is poor.
There is also a need to push developers to go ‘green’ and initiate environmentally friendly projects. For now, only a few projects fall under this category, despite some banks offering ‘green’ loans to encourage sustainability.
Finally, the taxation system plays a major role in attracting foreign investments to the country. A balanced taxation system will help convince Lebanese developers to initiate projects locally instead of taking their investments elsewhere.
Like any other sector, the growth of the real estate market is anchored in the country’s political environment. It is necessary to look at the present challenges and come up with the best solutions in order to drive essential change and bring the local property community to a new level of regional and global competitiveness.