A review of the housing market in Beirut between 2005 and 2019

Abstract

This paper examines the housing market in Beirut between the beginning of 2005 to the end of 2018, focusing in particular on the slowdown in the early to late 2010s. It will be shown that this slowdown is partly attributable to a mismatch in the supply that private developers have introduced to the market and the actual demand from potential homeowners. The analysis reveals that the most at-risk assets are opportunistic developments targeting high-income buyers and that despite political and economic instability, property owners have continued to realize returns on real estate. At the time of writing this paper, there are no formal metrics to track the movement of real estate prices in Beirut. Two indices are constructed using transaction data to address this using the hedonic and repeat sales models. Finally, the different factors that have affected the real estate market are explored, including slow wage growth that has prevented homeowners from keeping up with housing prices, massive public debt that has paralyzed subsidization programs, and a high cost of debt that has made it difficult and unattractive to finance both new construction and homeownership.