BAABDA
A Reigning District
March 2021
By Eng. Anthony Mitri
+961 1 566 666 | www.hayekgroup.com | Saifi,Beirut
I would like to give my sincere thanks to the working team that
never failed to support me and provide me with all the necessary
resources. There are plenty of people who have helped me bring this
report to life, and I am grateful for all of them.
First, I have to thank Ms. Sarah Lee Habchi for her constant followup and encouragement. Her accuracy and time management skills made
it easier for me to deliver the work on time.
I definitely wouldn’t be able to present this report without Eng.
Maura Azar who worked on all the statistical analysis in the paper, and
also Eng. Elie El-Moussa, Elias Rady, Roger Khoury and Marie-Lynn
Chamoun for their real estate assessment. It wouldn’t have been the
same without their provided help.
Lastly, I would like to thank copywriters Rita Camilos, Jeremy
Tawedian and Christelle Abi Samra for taking the time to edit and
proofread the report to make it mistake-free.
Excellent work requires a strong team, and without the unified
work of all members of this group, I would have never been able to
deliver such a delicate and intricate piece of work.
Lebanon is a country located on the eastern shore of the
Mediterranean Sea. It is considered one of the smallest states in the
world. On November 22nd, 1943, Lebanon achieved its independence
from the French mandate, with Beirut as its capital. Lebanon is
bounded to the north and east by Syria, to the south by Palestine,
and to the west by the Mediterranean Sea. Lebanon consists of 851
cities. The top ten cities with the largest number of residencies are
shown in the table below.
Distribution of the Population Across Lebanese Cities
| City |
Population |
| Beirut |
1,916,100 |
| Baabda |
500,000 |
| Tripoli |
229,398 |
| Sidon |
163,554 |
| Tyre |
135,204 |
| Nabatieh |
120,000 |
| Habbouch |
98,433
|
| Jounieh |
96,315
|
| Zahle |
78,145
|
| Baalbek |
30,916 |
| El Naquora |
24,910 |
| Jbeil |
20,784 |
| Batroun |
10,852 |
Table 1: Lebanese Population Count
Lebanon stood tall against all the hardships that it faced. From
wars, to economic crises, and a global pandemic, this country still
stands on its feet to maintain its continuation. This paper will focus
on the importance of Baabda on the general economy of Lebanon
and on its real estate market.
Baabda is the capital of the Mount Lebanon Governorate. It is the
home of many embassies such as the Italian, Japanese, Jordanian,
Polish, Ukrainian, Romanian, Indonesian, and Spanish. The
residence of the presidency of Lebanon is also located in Baabda,
which was built in 1956. The population of Baabda district is
distributed along several cities. The table below shows the most
populated cities of Baabda District.
Distribution of the Population Across Baabda District
| City in Baabda District |
Population |
| Ghbeireh |
28,000 |
| Bourj el-Barajneh |
25,000 |
| Hadath |
20,500 |
| Chiyah |
17,000
|
| Furn el Chebbak |
17,000
|
| Baabda |
9,000 |
| Ras El Matn |
8,000
|
| Abadiyeh |
7,900
|
| Hammana |
7,750
|
Table 2: Lebanese Population Count
Due to the high population density of these cities, they will play a
major role in both the economy and the R.E. market of the district.
It is known to a certain extent that the higher the quality of
infrastructure, the higher the level of economic development is in
the city. Therefore, more investors would be attracted to it. This
also implies a lower level of poverty or the absence of refugees.
According to the Lebanese Center of Policy Studies, there is a large
variation of allocation of projects in Lebanon across all districts. The
projects are composed of 269 infrastructure projects in eight
different sectors: water (124 projects), wastewater (82), transport
(24), electricity (17), infrastructure for tourism and heritage (11),
telecommunication (8), infrastructure for industries (2) and solid
waste (1). The allocation of the project values is shown in the chart
below.
Chart 1: Lebanese enter of Policy Studies (2019)
The cost of projects was the highest in Mount Lebanon ($6.3
billion), half of which is allocated for transportation. The figure
below shows the distribution of projects along sectors and their
cost.
Chart 2: Lebanese Center of Policy Studies (2019)
Both the value of allocated funds for the projects and its
representative number exhibit significant variations within
governorates and across districts. In fact, within each governorate,
there is one main region that will receive most of the funds that are
given. The chart below explains how the funds will be divided along
districts and sectors.
Chart 3: Number (Left) and cost in milliob of USD (Right) of CIP projects by qada and sector. Lebanese Center of
Policy Studies (2019)
As shown in the graph above, Mount Lebanon has received the
highest amount of funds, representing one third of total CIP
projects. This amount is mainly divided between Metn and Baabda
districts.
A lot of projects are done to improve Baabda’s economic situation.
The overview of top projects, their respective costs, and number of
phases in Baabda district are shown in the table below.
| Sector |
District |
Cost in
Million $ |
Description |
| Solid Waste
&
Waste Water |
National
(Baabda
Included) |
1400 |
Solid waste management
to cover all of Lebanon
including collection,
sorting, treatment, and
landfill sites
|
| Transport
(Périphérique
highway)
|
Beirut, Metn,
Baabda
|
486 |
Beirut Périphérique
Highway (Phase 1)
|
| Transport
(Périphérique
highway)
|
Beirut, Metn,
Baabda
|
496 |
Beirut Périphérique
Highway (Phase 2) |
| Transport
(Périphérique
highway)
|
Beirut, Metn,
Baabda
|
648 |
Beirut Périphérique
Highway (Phase 3)
|
Table 3: Lebanese Center of Policy Studies
As noticed, Baabda district is very busy economically since the
government has given it more resources for infrastructure projects.
However, further studies are necessary to fully understand the extent
to which technical, institutional, and political factors determine the
distribution of projects across all sectors and regions. Nonetheless, the
Baabda region is an important factor in Lebanon’s economy. This
directly reflects on the local real estate market, as better infrastructure
gives a better living condition. Hence, investors would be more
attracted to check out this district.
A study done by BankMed in 2018 detailing the volume evolution of
real estate transactions shows that most districts in Lebanon
maintained their share in terms of real estate demand between the
years 2010 and 2018, with a small drop of 15%. Nonetheless, Baabda
still makes up the highest share of the total volume in the market,
accounting for 23% in 2010 and 21% in 2018. The chart below shows
the variation of real estate transactions across major regions.
Chart 4: Source: BankMed (2018)
During the first quarter of 2019, the average value of property
transactions in Lebanon fell by 5.05% to LBP 202.84 billion
(US$134,676) from a year earlier, according to the Directorate of Real
Estate and Cadastre. When adjusted for inflation, property prices
declined by 8.78%. Quarter-on-quarter, property prices rose by 2.8%
(1.6% inflation-adjusted) during the latest quarter.
Specific regions in Baabda had a higher number of housing permits
issuing. This is mainly because of the high population in this district.
Below is a graph showing the summation of housing permits across the
regions of Baabda. Although Chiyah and Baabda did not have the
highest population number (Table 2), the two regions managed to
have the highest numbers of housing permit issues between the years
2009 and 2018.
Below is a graph showing the summation of housing permits across the
regions of Baabda. Although Chiyah and Baabda did not have the
highest population number (Table 2), the two regions managed to
have the highest numbers of housing permit issues between the years
2009 and 2018.
Chart 5: Order of Engineers and Architect - Beirut (2020)
It is also important to study the number of building licenses issued per
area across Baabda regions. Chiyah and Baabda are expected to have
the most building licenses across areas, as these districts had the
highest amount of housing permits. The graph below represents the
issuing of Building Licenses Across Baabda Regions between the years
2009 and 2019.
Chart 6: Order of Engineers and Architect - Beirut (2020)
After studying both housing permits and building licenses across Baabda
districts, it is important to take a look at the variation of prices across
some areas in Lebanon.
According to Global Property Guide in the Middle East, the variation of
property prices by region are as shown below:
• In Beirut, which has the most expensive housing in Lebanon, property
prices fell by 1.32% (-6.97% inflation-adjusted) to an average of LBP
768.5 million (US$ 509,659) during 2018.
• In Metn, property prices fell by 6.01% y-o-y (-11.38% inflationadjusted) to LBP 306.61 million (US$ 203,345) in 2018.
• In Baabda, property prices fell by 1.35% y-o-y (-6.99% inflationadjusted) to LBP 203.93 million (US$ 135,245) in 2018.
• In Kesserwan, property prices rose by 4.21% y-o-y (10.53% inflationadjusted) to LBP 228.27 million (US$ 151,388) in 2018.
Beirut and nearby areas, including Baabda and Metn, accounted for the
largest share of total market activity in 2019 with a combined 65%
share, but Beirut’s properties are considered exceptionally high (about
4 times the average price). This all caused investors to move out of
Beirut and consider living in a cheaper place that can still provide a
similarly attractive way of living. Less expensive areas nearby, such as
Baabda, Metn, and Kesserwan accounted for almost 50% of total sales
in the first eight months of 2018, an increase from 47% in 2007.
The number of constructions permits in Lebanon decreased. The chart
below shows the construction permits approval in Beirut from 2003 till
2018.
Chart 7: Order of Engineers and Architect – Beirut (2020)
Chart 8: Order of Engineers and Architect – Beirut (2020)
Construction activity is falling nationwide:
• In Beirut, the area where construction permits are given, fell by more
than half to 348,000 sq. m. in 2018 from a year earlier
• In North Lebanon, the area where construction permits are given, fell
by 33.7% y-o-y to 132,600 sq. m.
• In Baabda, the area where construction permits are given, fell by
25.2% y-o-y to 4.55 million sq. m. in 2018
• In Bekaa, the area where construction permits are given, fell by 23.4%
y-o-y to 1.15 million sq. m.
During that time frame, Baabda was one of the cities least impacted by
the national-level decrease of construction permits.
The real estate sector was heavily impacted by the financial crisis.
Investors believe that this sector is one of the easiest and safest
routes for investments, considering it a way to release their deposit
from the bank.
In Baabda, according to the data extracted from the General
Directorate of Land Registry and Cadastre (LRC), the number of Real
Estate (RE) transactions rose by 55.81% yearly to stand at 68,881
transactions by November 2020.
The value of total RE transactions stood at $12.27B by November
2020, compared to $5.74B in the same period last year, up by
113.78%. As such, the average value per transaction increased from
129,949 in September 2019 to 178,296 in the same period this year.
The graph below shows the yearly change of real estate transactions
in Baabda.
Chart 9: Bankmed
A regional analysis of real estate activity published by BankMed in
2020 revealed that the demand on Real Estate was distributed across
the different regions of Lebanon during this month. For instance, a
substantial 1,309 transactions (or 16.37% of total RE transactions)
were concentrated in the region of Baabda alone in the month of
November 2020. Metn, Keserwan and South follow, each grasping
the respective shares of 12.71%, 11.73%, 6.62% of the total RE
activity in November 2020.
It is well known by now that living in Beirut has become very
expensive for the average person. Maintenance cost is relatively
high, and the prices of apartments have been skyrocketing for the
past few years. Middle-class families are leaving the city to move to
nearby suburbs in search of more affordable options.
This is not the only reason that is leaving Beirut streets empty. The
tragic explosion that hit Lebanon’s capital was a key cause for people
to leave, especially the ones who were left without a home.
Most working people will move from the economic hub of Beirut to its
eastern and northern suburbs in Alay, Baabda, Matn, and Keserwan.
According to the General Directorate of Land Registry and Cadastre
(GDLRC) at the ministry of finance, in the past 22 months (until
October 2020), there was a major uptrend in the real estate activity
of Beirut, Baabda, Matn, and Keserwan despite all the problems that
hit Lebanon one at a time. The table below shows the real estate
transaction increase between 2019 and 2020
Chart 10: Source: Real Estate General Directorate
As shown in the graph above, Baabda remains one of the most popular
regions for middle class families to move to.
To give extra proof as to why citizens are leaving Beirut to live in the
suburbs of Lebanon, the sales and taxes of Beirut and Baabda were
compared. Most people believe that living in the capital of Lebanon is a
strategic way of life, hence it is thought to have the highest number of
sales operations amongst all Lebanese districts. However, in comparison
to Beirut, Baabda bloomed in sales operations. Below is a graph that
shows the sales operations in Beirut and Baabda for the past 10 years.
Chart 11: Hayek Group (2020)
Real Estate General Directorate
The graph clearly shows the big difference in sales operations and the
preference of residence for the citizens of Lebanon.
It is known that sales operations and taxes are directly proportional,
hence an increase in sales operations will lead to an increase in taxes.
Below is a graph showing the sum of taxes in Beirut and Baabda over a
period of 10 years.
Chart 11: Hayek Group (2020)
Real Estate General Directorate
The graph shows that even with the high sales operations of Baabda,
Beirut remains one of the highest districts in taxes. This is one of the
main reasons why people now prefer living in the suburbs of Lebanon.
Lower taxes are a major attraction for buyers that’s why districts like
Baabda are blooming in sales operations in comparison to Beirut.
The unfortunate events that hit Lebanon between 2019 and 2020 were
very harsh. A lot of people immigrated from the country, and a good
portion of the population is either considering immigrating or wishing to
but cannot.
Despite all of that, the real estate market in Lebanon still stands on its
feet. Amid the ongoing financial crisis, investors are using real estate as
a possible solution to release their money from banks. The number of
R.E. transactions almost doubled from 2019 to 2020. The COVID-19
pandemic accelerated suburbanization, which shed light on another big
R.E. market.
According to all of the data presented in the report, Baabda is one of
the major districts in the Real Estate sector, since it has a very high
budget for infrastructure projects, in addition to investors who are
interested in buying properties in its regions.
Construction companies are providing investors with new and unique
solutions in order to keep their attraction to Lebanon. For example,
Hayek Group is investing in fractional real estate. This new project will
permit property owners in Lebanon to issue shares for sales through a
platform provided by Hayek Group.
Small investors can take an advantage of this opportunity to become
partial and silent owners of the property, which further allows them to
be involved in cash flows and real estate appreciations. All of the
solutions above will keep the real estate and construction sector
blooming in Lebanon, especially in its suburbs.
Atallah, S., Dagher, G., & Mahmalat, M. (2019), “Investment Plan:
Scrutinizing the Allocation of Projects and Funds Across Regions”,
Retrieved From:
https://www.lcps-lebanon.org/publications/1570528735-policy_brief_46_blu_eng.pdf
De Guzman, M. (2019), “Lebanese Property Market Remains
Depressed”, Retrieved From:
https://www.globalpropertyguide.com/Middle-East/Lebanon/Price-History
Fattah, N., Hariri, Z., Nehme, R., & Soueid, M. (2018), “Analysis of
Lebanon’s Real Estate Sector’, Retrieved from:
https://www.bankmed.com.lb/BOMedia/subservices/categories/News/20170531091923395.pdf
Hayek, A. (2019), “Fraction Real Estate Ownership”, Retrieved From:
https://hayekgroup.com/services-more/fraction-real-estate-ownership
Hayek, A. (2020), “BEIRUT REAL ESTATEBILITY - A METROPOLITAN EXODUS”, Retrieved From:
https://hayekgroup.com/newsletters/93
Nasrallah, T. (2020), “The Real Estate Research Blog”, Retrieved From:
https://blog.blominvestbank.com/38893/number-of-real-estatetransactions-up-yearly-by-55-81-to-68811-by-november-2020/
