I worked in real estate for a few years in Lebanon. I still follow up with the industry’s audacious activity and its bizarre business stories. My passion in real estate parallels my passion for writing. But where the passions differ is the generations of real estate practice in my family. After all, who doesn’t love real estate?

In every country, real estate is an economic bedrock. Individuals of any society use real estate as a means of achieving financial wealth. They welcome real estate practices with open arms. The opposite is true in Lebanon. Real estate developers, agents, and market players alike receive a lot of scrutiny. I never truly understood why that was. Eventually it became clear to me that people took the sector’s few rotten apples and used them as the poster child for the industry as whole. But that would be like generalizing that all Doctors partake in child organ trafficking.  While distrust and disdain is common in Lebanon, it was unfair to the honest property investors.

Let’s rewind the clock back a bit. It wasn’t long ago that the real estate sector was going through its own existential crisis. In 2008-2010, the Lebanese real estate sector enjoyed an unprecedented boom as a result of huge inflows of foreign currency coming from Lebanese expats and Gulf investors. But when the war in Syria broke out, the sector undoubtedly took a hit.

The slump reached an all time low at around 2018 when the supply in the market hugely outstripped demand. Luxury towers remained vacant as Gulf money dried up, and local demand opted for smaller, more humble apartments. Rather than incentivize the market, and help get it back on its feet, the Central Bank and the banking sector doubled down on the real estate sector’s woes. Through the allusiveness of the phony interest rates, would-be investors dismissed any notion of investing in the property sector, and instead opted to park their cash in the bank for “interest”.

This proved controversial for developers, as they became increasingly strapped for cash and had to put a lot their projects on hold. Another problem was that many developers had taken loans from the banking sector. Which is why it made no sense that these same banks would further tighten the noose around their own client’s neck. Faced with bankruptcies, developers had no choice but to default on their loans; have their properties seized.

Lebanon’s banking crisis

served as a blessing in disguise

for Lebanon’s real estate crisis.

Fast forward to today and the tables, to put it kindly, have turned. Today the Banks wear the villain’s black hat. As for real estate developers, they are viewed as safe haven providers for that same depositor that chuckled at the notion of buying property only a year ago. Lebanon’s banking crisis served as a blessing in disguise for Lebanon’s real estate crisis.

Early on in the crisis, as Banks begun to enforce illegal capital controls, depositors sought whatever means possible to funnel their money out of banking jail. A prime target for desperate depositors was the real estate market. It was a match made in financial heaven, or hell, depending on how you look at it. Depositors needed to get their money out of the banks, into more tangible (at the very least visible) assets. Developers needed to clear a huge chunk of debt off their books. So in the spring of 2020 Lebanon saw a spike in real estate sales activity as checks were being issued but not cashed, and properties were being sold, but not occupied. This frenzy of issuing checks, selling real estate, unloading debt, carried on for a while, and saw many BIG NAME players take part in the action. To try and comprehend just how ginormous this activity was: just recently local real estate conglomerate, Solidere recorded a net profit of $49 million in 2019. How much did Solidere register this same time last year, before the Banking crisis? $116 million…in net losses.

“The loser, unquestionably, has to be the banks, as they are the ones left holding the one instrument deemed worthless in all of this, the Bankers check.”

Today, after clearing their books, and becoming privy to the dire state of the banking sector, real estate developers battened down the hatches, and in the most absurd turn of events, have become the ones rebuffing deals. The loser, unquestionably, has to be the banks, as they are the ones left holding the one instrument deemed worthless in all of this, the Bankers check.

If you walked into a real estate developer’s office a year ago, you would’ve found businessman in a wrinkled up suit slumped over a large wooden desk, ready to sell you his kidney to strike a deal. A scene that would suggest he would soon be out of business. Now if you walk into that same office, you would find the reappearance of his smug smile, a scent of triumph in the air. Maybe, even, the return of the proverbial cigar. You can’t really blame him. For a long time, it was him, and others like him, who received the short end of the stick. Until today, where in Lebanon, real estate is once again king. Proving that the age-old idiom still holds true: “when there’s blood on the streets, buy property.”

Writer’s Note: I know I’m making it out to seem that real estate developers are Saints in all this but that is definitely not the case. Developers are capitalist and business people in their purest form. They exploited market trends and customers just as much as anybody. But you can’t ignore that during the Banking Sector and Real Estate sector cold war of 2015-2019, a lot of real estate developers lost their businesses and money as a result of absurd interest rates that diverted investment away from the real estate sector. In the end those interest rates ended up benefitting no one and had the Banks let the market take it’s course, we would’ve seen a better, more natural market correction today, instead of this “if you pay cash the price is X, if you pay check the price is 2X”. If you like the content, type in your email, and sign up to the website, where you will get an email every time I post an article.

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