Once soaring, Lebanon's property sector is falling back to earth.
Politics puts squeeze on Lebanon property
The political deadlock over Lebanon's cabinet, coupled with unrest in other parts of the region, has started to take a toll on the country's once booming property sector.
Figures released this week by the country's Directorate of Real Estate show the number of property sales transactions declined by 21.3 per cent to 23,563 in the first four months of this year compared with the same period last year.
"The contraction in real estate activity is attributed to the prevailing political tensions in the country and to the regional turmoil that is negatively impacting investor sentiment at large," said Bank Audi, in its Lebanon Weekly Monitor note to investors.
"This is attested by the yearly drop of 31.9 per cent in sales transactions to foreigners over the first four months of this year."
Lebanese expatriates and Gulf nationals invested more than US$4.5 billion in property last year, prompting developers to raise the prices of properties to record levels.
Lebanon has been under a caretaker government for more than four months after the cabinet collapsed due to a dispute with the Hizbollah movement over a UN inquiry into the killing of Rafik Hariri, the former prime minister.
Further complicating matters, Hassan Nasrallah, the leader of Hizbollah, yesterday pledged support for the Syrian government, saying an end to the regime of Bashar Assad, the president, would only serve US and Israeli interests.
The decline in demand for property in Lebanon during the first four months of this year was also accompanied by a 16 per cent fall in the value of property sales.
A minor consolation is that the drop is smaller compared to the slowdown in volume.
Lebanon's economy is expected to grow at about only 2.5 per cent this year, from an average of 8 per cent in the past four years, the IMF said in a report last month.
If political uncertainty continues, growth will be zero to 2.5 per cent, the country's central bank governor said yesterday.