Priced out of Beirut
Skyrocketing housing prices in the Lebanese capital have sent families scurrying to the suburbs, where apartments sell for less than half the cost compared with downtown.
March 18, 2010 6:15 by Katherine Azmeh
Skyrocketing house prices in Beirut have sent many locals scurrying to the suburbs – where the 10km commute to the city center means that apartments sell for less than half the cost as in downtown.
Beirut’s eastern suburb of Bouchrieh is a prime example of the increasing popularity of the ‘burbs. Situated in the heart of Lebanon’s Metn region, the area remains a dynamic sector for residential investment, with developers in the area expecting more robust activity through 2010.
“This is a popular area for business and families, since residents here have ample access to retail outlets, goods and services, schooling options, and affordable housing – all just minutes from downtown Beirut,” Elie Lebbos, general manager for Beirut’s Al-Haykal construction firm, tells Kipp.
Lebbos explains that working families are flocking to suburbs that offer proximity to downtown Beirut, but at more affordable prices.
Bargains are certainly scarce in central Beirut. In downtown areas such as Ain el-Mreisseh, for example, luxurious new residential units are selling for $1 million and upwards; in trendy Ashrafieh, even the smallest flats are priced in excess of $300,000 – well out of reach for most local families.
And so, as residents are priced out of central Beirut, a mini construction boom is taking place out of town. Suburbs like Bouchrieh, Dora, and Jdeideh remain appealing business prospects for residential and commercial developers.
“Land is being snapped up in Beirut suburbs now,” explains Bechara Bouchedid, an architect and developer based in Lebanon.
“Populations are growing in these outer suburbs because residents enjoy convenient access to downtown without the high prices. Strong demand persists from developers and prices continue to increase,” he added.
Contrast Ashrafieh’s $300,000 apartments with a comparably sized flat in Bouchrieh, where new constructions may be priced below $1,000 per square meter. Families can reasonably get into a new home in suburbs like Bouchrieh for around $100,000.
But what you save in mortgage, you pay for in commute and ambience: overcrowding and traffic congestion are part of the trade-off.
The municipality that incorporates Bouchrieh covers a total area of roughly six square kilometers. This densely populated suburb is now home to more than 200,000 residents. Nearly two dozen public and private schools are located in the area, along with diverse commercial and industrial enterprises.
Long-time real estate developer Charbel Abdel Massih, who is based in the heart of Bouchrieh, is keenly aware of the challenges involved in the emerging suburban sprawl. “This is a heavily industrialized and populated area – finding the space to provide adequate parking is essential to its commercial success,” Massih tells Kipp, highlighting one of the challenges facing developers in this area.
Many of the common areas of Bouchrieh that were originally intended as residential parking, were sold in the 1970s and 80s as commercial space – sometimes illegally – creating excess street parking in the area, Massih explains. Availability of adequate parking is critical for good business, and significantly impacts rent and sales prices of commercial properties in the area.
But despite the challenges, suburban development remains the logical solution for most middle-income families. Local banks are responding to the need for affordable mortgage financing with more flexible and competitive terms. ‘No money down’ financing is becoming available, along with promotional introductory interest rates and preferential terms for residents versus non-residents. Thirty year terms for repayment are also widely available.
And so the flight to the suburbs looks set to continue, with buyers gravitating towards areas with good access to the city center, and which offer good schooling options and plenty of retail and commercial services. For this reason, successful suburban developers are most often incorporating a mix of both living and retail spaces in their building designs.
“You can be assured that developers are mixing their construction projects – introducing a combination of commercial and residential spaces at the same time,” Elie Lebbos explains.
“On the one condition that the developer provides the project with the necessary parking spaces,” he is quick to add.