Central Bank: Lebanon real-estate industry not a bubble

By Seda Sezer and Massoud A. Derhally

Growth in Lebanon’s real-estate market, which has helped to spur economic growth, is unlikely to create a housing bubble, the country’s central bank Vice Governor Saad Andary said.

“Out of each 100 dollars spent on property acquisition, not more than 16 to 18 dollars are financed by banks,” Andary said in an interview in Istanbul today. “The rest is hard cash, mainly from Lebanese from abroad. We have no fear from a housing bubble.”

Real-estate transactions in Lebanon more than doubled in value in the first quarter, to $2.1 billion, from a year earlier, Banque Audi SAL-Audi Saradar Group SAL said in a report last month. The number of transactions climbed 41 percent to 22,059, the bank said.

Real-estate investment in Lebanon reached $7 billion in 2009 as a result of improved political and security conditions, Economy and Trade Minister Mohammed Safadi said last month. Lebanese buyers accounted for 80 percent to 90 percent of the market, Safadi said.

Lebanon’s economy weathered the global financial crisis, expanding 9 percent last year and 8.5 percent in 2008. The pegging of the Lebanese pound to the dollar, combined with high interest rates, helped local banks to attract more than $1.5 billion a month from abroad.

Banks kept interest rates on deposits in Lebanese pounds at about 7 percent, while rates elsewhere in the world tumbled. The inflow of funds enabled commercial banks to finance the fiscal deficit, estimated at 10.7 percent of gross domestic product this year; the central bank was able to reduce reserve requirements on lending for housing, health care, education, environmental projects and start-up businesses.

Real estate and tourism will help the economy to grow as much as 8 percent this year, Central Bank Governor Riad Salameh said in a June 9 interview. Credit leaped by about 16 percent in 2009 and is likely to rise by a similar amount this year, Salameh said in an earlier interview on Jan. 20. BW

  • Harveyiteju

    Real acreage and tourism will advice the abridgement to abound as abundant as 8 percent this year, Central Bank Governor Riad Salameh said in a June 9 interview.

    Northern Virginia Realtors

  • Anonymous

    Real acreage and tourism will advice the abridgement to abound as abundant as 8 percent this year, Central Bank Governor Riad Salameh said in a June 9 interview.

    Northern Virginia Realtors

  • 5thDrawer

    Hmmm … about 2 years late worrying about that.
    And yes, Leb banks do not loan money out easily … they do not trust anyone could be around tomorrow. And ALL hate when buildings are targets for RPG’s. So, Leb-banks have bigger ‘reserves’ than most in the world. Doesn’t help the citizens, but no ‘bubbles’ for Lebanon.
    I see ‘ads’ for lovely new places … they have to list as ‘quiet zone’ to have interested customers … and one wonders where that is.
    They do not tell you how much the generator costs each month, if you want the elevator to work.
    Water is another matter ….

    Now, if I could camp on the beach …

  • Anonymous

    Hmmm … about 2 years late worrying about that.
    And yes, Leb banks do not loan money out easily … they do not trust anyone could be around tomorrow. And ALL hate when buildings are targets for RPG’s. So, Leb-banks have bigger ‘reserves’ than most in the world. Doesn’t help the citizens, but no ‘bubbles’ for Lebanon.
    I see ‘ads’ for lovely new places … they have to list as ‘quiet zone’ to have interested customers … and one wonders where that is.
    They do not tell you how much the generator costs each month, if you want the elevator to work.
    Water is another matter ….

    Now, if I could camp on the beach …

  • 5thDrawer

    MMmm .. yes … cold still, but mostly peaceful. One could do worse.

  • 5thDrawer

    Yes … Wall street & American businessmen work to screw America. But does that sound familiar?