International briefs

Boom cools in Beirut, but prices remain high

Eden Gardens, a six-story residential and retail project in downtown Beirut, being developed by Lebanon-based A&H Construction & Development.
Eden Gardens, a six-story residential and retail project in downtown Beirut, being developed by Lebanon-based A&H Construction & Development.
A real estate surge in Beirut that led to prices in some neighborhoods more than tripling over the past five years has peaked, yet values and rents remain among the highest for the region, recent reports and industry insiders said.

That flattening, however, is not due solely to the global financial downturn. Regional brokers blamed uncertainty between Lebanon and its neighbors such as Israel and Syria for some of the loss in momentum.

“In light of the liquidity issues in the [Gulf states such as the United Arab Emirates and Saudi Arabia] and the geopolitical situation in Lebanon, the market has cooled down and some price adjustments have been noticed,” Joumana Baroudi-Eid, CEO of Beirut-based brokerage firm Lead International, said.

Fadi Moussalli, regional director for the Middle East at Jones Lang LaSalle’s international capital markets group, said prices could fall in the coming year.

“My predictions are that at best it will stabilize from where we are today. Otherwise one might see a little correction of 10 to 15 percent,” Moussalli said.

He added that there was less development on the horizon, even as construction cranes still dot the city skyline.

“I would say today given the lack of transaction volume, there is for sure [fewer] launches of new projects,” he said, but added that projects under construction are not being mothballed.

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Bank Audi, a leading lender based in Lebanon, issued a report last month covering October showing a decline of 3.4 percent year over year, to approximately $640 million in property sales for all of Lebanon. But for the first 10 months of the year, the total value of property sales in Lebanon was 51 percent higher than 2009.

Beirut has the most expensive retail in the Middle East, driven in part by strong tourist traffic. Cushman’s annual global retail survey, released in September, showed that Beirut was the world’s 30th most expensive city overall. Manhattan was the most expensive. The top shopping neighborhood in Beirut was the Central District, with retail rents of about $167 per square foot.

Baroudi-Eid said in certain subsections of the district, rents were higher. For example, in the Foch-Allenby submarket, which has tenants such as Gucci, Louis Vuitton and Celine, businesses paid between $186 per square foot and $232 per square foot. However, those prices remain far below rents of around $1,850 that were being paid on Fifth Avenue.

Hong Kong residents take to the water

Hong Kong residents are moving to the water to get more square footage for their money, the Wall Street Journal reported last month. There are essentially no open spaces for new boats in Hong Kong’s three live-aboard marinas, and the managing director of Saffron Marina, Gary Smith, estimates that 350 residents of Hong Kong live on a boat as their primary home. Marina berths and swing moorings, where a boat is attached to a buoy instead of land, are also in high demand. Michele Cameron, owner of boat agency HK Boat and Homes, sold an open berth in November for 2.3 million Hong Kong dollars (US $296,000), which she said would have sold for HK$400,000 five years ago. A three-bedroom, 1,600-square-foot boat, with the berth, currently for sale in Discovery Bay is listed for HK$3.8 million, while a two-bedroom, 856-square-foot apartment on land (in the Discovery Bay area) is listed for the same price.

Compiled by Adam Pincus and Lisa Euker