Although Lebanon witnessed an economic slowdown in 2007, real estate activity during the year has proved to be quite resilient to the said trend prevailing in the country.
The rise in real estate activity can be attributed to several reasons such as the increase in population, higher demand by expatriate Lebanese, the relatively low taxes in Lebanon, the improvement made in terms of property transfer operations, and the facilitation of foreign ownership.
According to the Directorate of Real Estate, the number of property transactions reached 154,158 in 2007, up by 21.4% relative to 2006. Nevertheless, although the first half of the year saw a good 7% growth, the cumulative yearly double digit rate in mainly coming from a 38% increase in the second half of 2007 in comparison with the same period in 2006.
This half-year rise, in turn, mainly stems from an 82% surge in the third quarter of 2007 relative to the same quarter of 2006 that witnessed a freeze in real estate operations during the severe Israeli war, and to a smaller extent, from the 14% year-on-year increase in the fourth quarter of 2007, noting that in the last quarter of 2006, the number of property transactions more or less resumed its pre-war level.
Property taxes’ receipts increased by a significant 32.2% during 2007 to LP 459.7 billion, but this is again the impact of the 95.3% growth reported in the second half of the year that compares to the odd second half of 2006, which was largely shaped by the summer 2006 war and following events, whereas the previous six months the receipts went down 16.4%. The effect of this second half also changed the trend in the value of property sales which was down by 12% in the first half only to become 33.7% higher when comparing full year 2007 to 2006 and reach LP 6,329,056 million. As for the average value of property transactions, it went up by 10.2% during 2007 to LP 41.1 million per transaction, driven by 55.2% year-on-year increase in the average value of property transactions during the last quarter of 2007, thereby reversing the trend of demand for less expensive real estate that has been consistent throughout the first nine months of 2007 and resulted in a year-on-year drop of 8.1% in the average value of transaction during the said period.
The majority of collected property taxes in 2007 were in Beirut with 42.2% of the total amount. It was followed by Baabda with 19.0%, the Metn area with 15.8%, the Keserwan area with 9.3%, the South with 5.4%, the North with 4.8%, and the Bekaa area with 3.0%
