In 2014, Marwa Malaki, 30, a Lebanese citizen, decided to borrow a loan from the bank to buy a house for her young family, and at that time she found nothing but this way to acquire a house, so its price reached about $ 135,000, after the apartment prices went up in the last two decades. Record levels that exceed twice the purchasing power of the Lebanese.
Marwa tells Al-Jazeera Net the story of her house, which she sold months ago, and considers that she took risks of repaying its price over 30 years with high interest, "because I thought that borrowing to own a house is a safe option in Lebanon, before the crises that made the loan a heavy burden hit, and I began to search for Way to get rid of it. "
After the popular protests in Lebanon on October 17, 2019 and the ensuing economic and living collapses in the country, Marwa was affected, like the rest of the Lebanese, by the crisis, after the dollar’s circulation gradually jumped from 1,500 to 8,800 pounds, and the tight restrictions imposed by Lebanese banks on the movement of depositors ’funds.
Marwa thought of selling the house after her salary had eroded and was barely enough to secure her basic needs, so she was able to find a client seeking to release his retained deposits in any way. On the black market, to pay off the rest of the loan to the bank.
Thus, the customer bought her house for about 30 thousand dollars (between check and cash), so he released his deposit by owning a property, while Marwa got rid of her home loan in exchange for a check that she could not get its actual value in dollars, so she deposited it in the bank in the hope that the depositors' crisis in Lebanon would be resolved.
Deposits in the banking sector fell by 19 billion dollars in the first 11 months of 2020 (Reuters)
This is one of thousands of stories of the Lebanese who, after the banking crisis, made the largest sale and purchase in the real estate sector, as it represented their only resort to dispose of their money held in banks, as the latest estimates show that the total sales of real estate increased by about 115% in the first 10 months of the year 2020 compared to the period Same as 2019.
Formally, the banking economic crisis has backfired on the level of the real estate sector recovery, but some experts found in it a fake and temporary recovery that paves the way for the catastrophe of the sector, and many expected that its reversals would appear between 2021 and 2022, and that real estate investment would begin to decline this year as a result of the saturation of the sector.
What happened in 2020 was an expected result of the banks ’crisis that prompted their customers to convert their retained deposits into real estate units, so real estate developers benefited from the crisis, while bank checks theoretically raised the price of the property, but reduced it by paying in cash dollars.
This is what the Secretary of the Real Estate Developers Association, Massad Fares, goes to, who explained in an interview with Al-Jazeera Net the nature of the transformation that the real estate sector in Lebanon witnessed, in mid-2019 the real estate market began to move relatively after a significant slowdown that lasted from 2011 until early 2019, to witness the momentum of its movement in 2020 when it started The banks ’decisions regarding imposing tight restrictions on the movement of their depositors’ funds in hard currencies are successive, so they automatically resorted to the real estate market, and everyone buys according to the size of his deposit.
Thus, banks played the mediating role between depositors and real estate developers, and they benefited from the crisis by reducing about $ 15 billion in real estate debts owed by them, according to Fares.
He said, "The real estate sector funds in late 2019 were about $ 21 billion in banks, of which about 11 billion were for real estate developers, and $ 9 billion for the general public, between housing and individual loans from commercial banks or the housing institution, but now the funds of this sector in banks have declined to about 6 or 7 billion dollars. "
And between late 2019 and 2020, the stock in the real estate market ranged between 50 and 60 thousand housing units, of which only about 7 thousand remained, according to Fares.
He pointed out that most of the used units were sold, and it does not rule out the existence of old, unregistered sales contracts whose fees were paid in 2020, as about 10 thousand apartments were also officially registered.
Through his observation of the market, Fares noticed that major investors bought land or offices, because everyone sought to benefit from the developers' offers during the crisis, and some discounts reached 40%, especially since the developers were rushing to sell to pay off their bank debts.
With the end of 2020 and the beginning of 2021, this situation did not last after the developers saw that the demand for real estate purchases is still great, so they began to reduce their discounts, and some of them even raised real estate prices by 30% if the purchase was through a bank check due to inability to dispose of it.
The Lebanese are buying real estate at fake prices to free up their withheld deposits (Al-Jazeera)
For his part, Nassib Jibril, a financial expert, head of the economic research and analysis department at the Byblos Bank Group, believes that the banks witnessed during 2020 a kind of attack on the real estate sector, because they believed that real estate is a safe investment to preserve the value of money, which led to an artificially high price.
Jibril points out that billions of dollars went out from the banking sector during 2020, most of them for investment in real estate, and the tendency was to buy land and apartments more than commercial stores because of the difficulty in launching economic projects.
He said that this situation led to a kind of "risk management". First, the depositor benefited from the release of his money, and secondly: the developer benefited from the disposal of his stock, and thirdly, the banks got a large percentage of the value of their loans.
In a statement to Al-Jazeera Net, the expert reveals some bank figures, as in 2020 the number of real estate transactions reached 82,202 transactions registered with the real estate departments, an increase of 63% from 50,352 real estate transactions registered in 2019.
It is noteworthy that the total real estate operations amounted to 14 billion and 400 million dollars in 2020, which is 110.4% higher than 6 billion and 840 million dollars in 2019.
Also, deposits in the banking sector decreased by 19 billion dollars in the first 11 months in 2020, and from the beginning of 2019 to the end of November 2020, the outcome was a decline of 33 billion dollars in deposits, and half of them are real estate loans that were repaid, not from real estate developers only, Rather, it is from commercial companies and private individuals.
The real estate market disaster
It seems that the real estate market will return to slowdown starting from 2021, especially as it will face the repercussions of the actual crisis, in light of the absence of new bank loans on the one hand, and the pricing of the cost of imported building materials in dollars on the other hand, and some reports have talked about a decrease in the total area of new building permits. To about 61% in 2020.
This is confirmed by the head of the Engineering Syndicate in Beirut, Jad Tabet, who told Al-Jazeera Net that the decline in the total number of building permits began gradually, to record an unprecedented number in 2020, as the licenses included only about 4 thousand square meters, while in 2017 they amounted to about 11 thousand square meters.
Tabet expected that the decline will continue to the level of near-absence of new construction projects in light of Lebanon importing construction materials by 100%, while real estate project owners are unable to secure the cost of purchasing them in dollars.
For his part, Nassib Jibril rules out the continuation of the real estate boom, because real estate developers have paid off their debts, and whoever has empty housing units will not sell them for a check, but will demand the cash dollar.
Musaad Fares agrees with this view, describing the reality of the real estate market in 2021 as "very difficult", especially after the interruption of the relationship with the Lebanese banks, which were pioneers in the field of securing housing and personal loans.
Fares is likely that the relationship between the seller and the buyer in the real estate market will become complicated in the following manner: The non-indebted developer does not rush to sell at a low price, and the buyer will not pay a high price during the current crisis.
Fares expects that the slowdown will continue until early 2022, at which time real estate prices may decline, and small investors will become resilient to selling as a result of their need for money in light of the scarcity of income in Lebanon, and the matter may extend to a decline in the prices of small units without witnessing a complete collapse in prices.