Fear grips Dahiyeh: Local economy takes a hit after wave of explosions

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Damage caused by a car bomb targeting the Iranian Cultural Center in Beirut's southern suburbs. (Photo: Haitham Moussawi)

By: Mouhamad Wehbe

Published Friday, February 21, 2014

The residents of Beirut’s southern suburbs have lost their sense of security. Their economic behavior has changed, and now, their anxiety over more suicide bombings has affected their consumer habits.

The fear “virus” has not just plagued them, but also the consumers who come to Dahiyeh from the surrounding areas. This is quickly turning into a negative trend that is hurting economic life here.

Over the next few months, many of these businesses are set to take drastic action, even closing down for good. Some have already done so, while others are biding their time.

The local economy in Dahiyeh is hanging between life and death. Businesses are affected in varying degrees in Dahiyeh, depending on how close or how far they are from the center of Haret Hreik, the heart of the area that has been targeted by car bombs and suicide bombers since July, 2013.

The farther from this point, the less debilitating the sense of gloom is. Bir al-Abed, Roueiss, Sfeir, Moawad, Ghubairi, and the Airport Road are the hardest hit. However, while other areas may be experiencing anxiety at a different pace, all the residents of Dahiyeh are ultimately in the same position.

Businesses in this area are mostly small to medium enterprises, and only a handful of them are large corporations. They have a varying capacity to cope with the shock to consumer trends resulting from the current “bomb-phobia” but most of the businesses are quite fragile.

Some have resorted to layoffs to survive the deadly downturn in business, while others are on the verge of bankruptcy. Others have already closed, yet they are shouting the slogan, “We are steadfast!” But the real question is how long can businesses in Dahiyeh really remain steadfast?

The housing and real estate market

Behind the scenes of the carnage following the suicide attacks in Dahiyeh, the economic and social indicators are in a correspondingly painful state. A significant slump in retail activity has forced businesses to cut costs with measures that range from layoffs to going out of business.

Unemployment in Dahiyeh is on the rise. This is affecting all economic sectors in the area, from luxury items to the housing market, which are witnessing an unprecedented decline.

After the first explosion in Bir al-Abed a few months ago, residents started realizing that living here carried a high risk. However, there was no collective fear pushing a large number of people to think about leaving Dahiyeh.

The second bombing in Roueiss was more painful, and was followed by a flurry of advertisements to sell apartments in the area posted on social media sites. This trend did not last for more than a few days, however, and completely dissipated later.

With the repeated bombings after that, especially in Haret Hreik, some of the residents of central Dahiyeh have started to consider, this time in earnest, to relocate outside the area.

Toufik Sinan, head of the Association of Structural Engineers, said, “Many families who own homes in the area started looking for tenants to lease their properties and began searching for flats to rent in the eastern suburbs of Beirut. Apartment prices in Dahiyeh have fallen by no less than 15 percent because of fear and anxiety.”

Sinan continued, “There are many things that families consider before making a decision. If a couple works outside Dahiyeh and needs to commute extensively to and from, there is a good chance the couple would decide to relocate. But if the couple have children who go to school outside Dahiyeh, then the move might become absolutely necessary.”

Meanwhile, according to Hassan Hijazi, an engineer, there are little to no new real estate projects planned in Dahiyeh at the present time. Hijazi has extensive experience in the construction sector in Dahiyeh, and he believes that supply is greater than demand for residential units. He said, “Demand for large apartments has declined sharply. This is due to the stagnation in real estate activity in general, but now also the fear factor from the bombings in recent months.”

The implications of this situation on the market are clear. Major players who can cope will survive after trimming down their activities, while small players can cope much less. This is despite the fact that overall real estate activity in the country did not collapse because major real estate traders have accumulated enough wealth to be able to weather the crisis.

According to Sinan, the real crisis will start to emerge during the coming months. He said, “Construction projects have a three-year cycle on average. Therefore, existing projects will be completed while no new projects are planned.”

Whatever the case may be, the decision to stay in or leave Dahiyeh is ultimately linked to the balance between income and price. This balance was already slanted in Dahiyeh, and hence, a mass exodus out of Dahiyeh may not yet materialize and lead to a major collapse in prices. But even if there were to be a collapse, real estate dealers have a great ability to cope, given the support this sector receives from the government, perhaps at the expense of other sectors.

Commerce and industry

The residential real estate market in Dahiyeh may reflect the overall conditions in the area, but commercial real estate and retail activity is a better indicator of consumer behavior and economic trends.

In this vein, Moawad Street is considered a weathervane of economic activity in central Dahiyeh, which are the areas surrounding Haret Hreik. Over the past few months, this busy street has shed more than 50 shops, down to 85 in total now, according to Issam al-Abdallah, chairperson of the Moawad Street Traders Association.

Not only is the street home to many clothing stores, but it also houses many garment factories. The total number of families who depend on businesses in Moawad Street is around 4,000, and a great amount uncertainty hangs over their livelihoods, with declining sales that rely in no small measure on customers from outside Dahiyeh.

This category of customers has stopped coming to Moawad Street, whose clientele now consists almost exclusively of locals. According to Abdallah, clients used to come from many regions in Lebanon, from the Bekaa to Mount Lebanon, to the eastern suburbs of Beirut.

Karout stores

The Karout chain of stores is a major engine of economic activity in Dahiyeh, particularly in the central district. Karout department stores are a major landmark in Dahiyeh, attracting both low-income and better off customers from outside the area, for the various types of consumer goods they sell.

According to Atouf Karout, CEO of Karout stores, many customers have stopped coming. He said, “Sales have declined by about 20 percent, but this would hit 60 percent in the immediate aftermath of the bombings, before recovering gradually afterwards.”

This article is an edited translation from the Arabic Edition.

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