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In Lebanon, violent clashes are increasing between protesters and the police as the protest movement has entered its fourth month. The country is hit by the most serious economic and financial crisis in its history. Paradoxically, the real estate sector, in crisis for years, seems to know a revival of vitality.
From our correspondent in Beirut ,
Tens of thousands of Lebanese have lost their jobs since the popular protest began in October and hundreds of businesses have shut down. According to the World Bank, within two months, more than 50% of Lebanese will fall below the poverty line. The Lebanese pound lost 30% of its value against the dollar and the prices of consumer products rose by 40%.
The real estate market benefits from the crisis
Experts do not rule out state and banking bankruptcy, and already basic necessities are running out. Paradoxically, real estate, which has been in crisis for years, seems to be experiencing a revival of vitality. The explanation is simple and logical. Since last November, the Lebanese can no longer freely dispose of their savings because of an informal capital control imposed by the banks. Currency withdrawals from ATMs and ATMs are done drop by drop. Barely a few hundred dollars a month, in a country where 70% of bank deposits are dollarized. There is also the fear of a haircut , as happened in Cyprus in 2012-2013 , when the state deducted part of the deposits. The safest way to save savings is therefore to invest it, by buying a property, by bank check. Many Lebanese have turned to real estate. Dozens of apartments unsold for years found a buyer in the space of a few weeks.
Real estate as liquidity
This renewed interest in real estate also benefits banks to a certain extent since by selling apartments, property developers, some of whom demanded debt restructuring or were even in default, can now reimburse part or all the loans they took out with the banks to carry out their project. This phenomenon makes it possible to settle a part of the bad debts which were plaguing the balance sheets of certain banks. This is good news, but its impact remains very relative, since these real estate transactions amount to a few tens or hundreds of millions of dollars, while Lebanon has an immediate need of 10 billion dollars in fresh money to curb the collapse of its economy and finances.
Experts believe that if the crisis continues for a few months, and the shortage of dollars worsens, the Lebanese could consider selling part of their land. Profiteers are already rubbing their hands at the idea that people in need can sell off their wealth. Millions of dollars worth of land could then be sold for a handful of tickets, like in the days of the Civil War.
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