On the drive back to Beirut from the Bekaa Valley, as we wound through the distinctly Lebanese landscape of apricot orchards, potato farms and military checkpoints, my driver Khaled described a sort of mania that has overtaken the country's capital.
The source of the frenzy was not the usual candidates, such as politics or football, but something arguably more universal: soaring property prices.
"It's crazy!" he said. "In the last five years, prices have gone up 500 per cent. Only last year, it was 150 per cent!"
Khaled confirmed what I had seen in Beirut with my own eyes, with dozens of cranes arrayed across the skyline, and heard with my own ears, waking in the morning to the ping of hammers on metal and the rumble of jackhammers driving through concrete.
Khaled said banks were lending generously to those wanting to build new homes, particularly in the suburban hills outside of Beirut, and owners were making huge profits on properties they owned for only a few years.
My travelling companion, who was visiting from the US, muttered under his breath: "Sounds like the United States a couple of years ago."
By most indications, Beirut is in the midst of a property bubble, even if Khaled's figures were slightly exaggerated. In the first quarter of 2010, real-estate transactions rose 27 per cent over the corresponding period last year, while the total value of those transactions jumped 87 per cent. A 200-square-metre flat in the upscale Achrafieh neighbourhood now costs an average of US$700,000 (Dh2.57 million). The city was recently ranked as the most expensive in the Middle East for expatriates to rent apartments, and the 10th most expensive in the world (even higher than Abu Dhabi).
I asked Khaled if he was worried about the bubble bursting and he dismissed the idea, saying that the city's established banking system was much more stable than those elsewhere.
"The financial crisis, it is not here," he said.
Not yet anyway.
Beirut's remarkable growth, only four years removed from Lebanon's last war with Israel, is a by-product of the crisis felt so dramatically in the UAE. When the Dubai property market collapsed, a huge pool of liquidity in the Gulf went in search of growth possibilities and found a big one in Beirut, which was ripe for investment as the city was slowly being restored to its legendary, pre-civil-war splendour.
The city's downtown is now clean and almost exceedingly commercial, thanks to major investments from the development company Solidere.
All of this is only possible, of course, through continued political stability, which even the city's most bullish fans acknowledge could disappear overnight.
Politics aside, there is something eerily familiar about the profusion of billboards painted with happy families and floor plans.
As we walked the gorgeous streets of Beirut, in front of a rising apartment tower with views of the Mediterranean, my friend brought me up to date on his real-estate nightmare, which began in an era that was similarly decorated.
In 2004, he bought a two-bedroom condominium in Washington for $173,000. Only two years later, it was valued at more than $300,000. Like many property owners at the time, he was counting on a nice windfall when he sold, even if there were whispers that prices were due for a minor correction (virtually no one was predicting a full-on housing bust).
In the meantime, he bought another flat nearby that had recently been built, using equity he withdrew from the first property. He lived in the newer one and rented out the other, an arrangement that worked just fine until the bubble burst.
Property prices began to slide and when he listed the flat for sale, there were few interested buyers because other owners were rushing to sell at the same time, leaving the market flooded. Banks tightened their lending standards as the homes they effectively owned through mortgages tumbled in value. About the same time, my friend's tenant stopped paying her rent.
My friend spent months untangling the mess, eventually gaining a judgment against the tenant in court for back rent. After much haggling, he persuaded his bank to allow him to sell the flat for slightly less than he owed on the mortgage. He was finally free and clear.
"That was a happy day," he said.
It is too early to say if Beirut's bubble will also end badly and, speaking as someone who recently had the pleasure of enjoying the city's revival, I certainly hope it does not. But of late there has been a particularly ominous sign: in a handful of separate news reports, local developers and government officials keep insisting that the building boom is based on rising demand and not mere speculation. "I view this as a normal progression of prices," Solidere's general manager said this week, to cite one example.
Based on the experiences in recent years in the US and the UAE, property owners and investors should be very worried.
