Lebanon: Gulf Arabs Sell Off Local Properties
By: Mouhamad Wehbe
Published Monday, January 7, 2013
Starting a year ago, Gulf Arabs who own a substantial amount of real estate in Lebanon started selling off their property, ahead of what appears to be a full economic withdrawal driven by political motives.
Lebanese real estate agents have noted that beginning a year ago, Gulf Arabs – be they property investors, owners, or regular tourists in Lebanon – began to slowly withdraw from the country.
Even though the local real estate market has declined over the past few years, it has not prevented Gulf citizens from selling off their properties.
A local bank employee tells how his bank financed the construction of a palace for a wealthy Qatari in Broumana near Beirut. It was completed in early 2011, costing millions of dollars.
The employee was surprised to hear that the Qatari sheikh has asked the bank manager to sell the property, even at half the cost. The reason given was that the decision came from the Qatari leadership, instructing all its citizens to withdraw from the Lebanese real estate market.
The Saudi approach was more subtle and diplomatic – its citizens did not rush to pull out their investments in one fell swoop. The first step was to cut down on their visits to Lebanon, followed by a boycott of economic conferences and events.
Then, to the surprise of many Lebanese, major investors and real estate owners started to put up their properties for sale.
Local firms with Gulf connections noticed that large holding companies, like the Saudi Bin Mahfouz Group, which owns properties throughout Lebanon – particularly in downtown Beirut – was prepared to sell off anything it can at a profit.
Another Saudi firm, the Binladin Group, which owns 7,000 square meters of land in the Metn area above Beirut, also appears to be trying to sell the property.
More surprising was news that Saudis living in Lebanon were contacted by their embassy, asking them to stop paying their children’s tuition fees and leave the country as soon as possible.
These are not small property owners that have decided to pull out of the market. They are major real estate investors who contributed to tripling property prices in Lebanon between 2007 and 2011.
They started to sell their property before the real estate market took a nosedive, making tremendous profits after having pushed prices to record highs. In early 2010, for example, a $100,000 investment could yield up to a million dollars.
Seasoned real estate agents in Lebanon say that the Gulf Arabs realized then that prices have reached a ceiling and that it was time to sell before prices come tumbling down. At the time, however, the motivation was economic and not political, as is the case now.
After the outbreak of the Syrian crisis in early 2011, Gulf investors started to sell for different reasons altogether.
Since then, Gulf embassies in Lebanon began to lay the groundwork for an economic retreat in order to put pressure on the Lebanese government to take a strong position against the Assad regime.
A local architect who follows the real estate market closely notes that despite the downturn, Gulf sellers insist on asking a high price for their property, with little success. He wonders what is the strategy behind this exit from the Lebanese market by Gulf investors and how will they return, and at what price.
He points out that many of the buyers are rich Lebanese expats in Africa, who dream of owning property overlooking the sea or in downtown Beirut.
This article is an edited translation from the Arabic Edition.