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    Beirut Has the Most Expensive Small Apartments in Arab World

    Small luxury residences in capital are more expensive than in Dubai, Berlin, Lisbon

    The Global Property Guide has said Beirut has the most expensive 120-meter apartment in the Arab world, adding that the prices of properties rose sharply in less than two years.

    According to the report, Beirut ranked in 33rd place among 92 markets globally in 2010, compared to 52nd place in 2009, and in first place in the Arab world in terms of the price of a 120-square-meter apartment.

    Globally, the price of such an apartment in Beirut was $4,258 per square meter, higher than in Dubai, Berlin and Lisbon, and slightly lower than in Andorra, Warsaw, Ljubljana in Slovenia and Prague, as reported by Lebanon This Week, the economic publication of the Byblos Bank Group. The guide said that Lebanon has seen a spectacular boom in property prices over the past few years. It indicated that a 120-square-meter apartment in Beirut that had a price of $60,000 in December 2004 would now cost more than $510,000. It added that rents have been rising during this period, but not as rapidly as prices. It noted that Beirut is now less attractive for property investment, as gross rental yields have fallen from over 11 percent six years ago to under 3.5 percent currently. Further, yields on larger apartments are even lower at below 3 percent.

    The report offers the tools needed by foreign and non-resident investors to buy income-generating property overseas. It said the properties surveyed have to be in excellent condition, have good facilities, and have been refurbished or redecorated within the past five years. The Global Property Guide’s valuation data is based on upper end apartments in prestigious areas that appeal to foreign investors or renters. It said that figures for Beirut cover the areas of Achrafieh, the Beirut Central District, Hamra, Jnah, Ramlet al-Baida, Ras Beirut and Verdun.

    Beirut ranked in 67th place in 2010, down from 53rd place in 2009 and 38th place in 2008 among 82 markets globally and in last place among six markets in the Middle East and North Africa (MENA) in terms of Gross Rental Yield, which is the annual rent relative to the house price. The survey said the G.R.Y. is the return-on-investment before taxes, maintenance fees and other costs, and is a key figure for investors. Globally, Beirut had a higher G.R.Y. than Phom Phen in Cambodia, Hong Kong, and Shanghai, and slightly lower than in Paris, London, Tel Aviv, and Vilnius in Lithuania. Beirut’s Gross Rental Yield was 3.3 percent in 2010 compared to 4.18 percent in 2009, 5.13 percent in 2008 and 7.46 percent in 2007, and significantly lower than the MENA average of 5.7 percent and the Arab average of 6.1 percent.

    Further, Beirut ranked in 16th place, up from 27th place in 2009 and 35th place in 2008 among 82 markets globally, and in first place in the MENA region, in terms of the price of an apartment relative to its rent, or the price-to-rent ratio. This ratio reflects the years of rent that are required to recover the purchase price of an apartment of 120 square meters, and is typically used for measuring the undervaluation or overvaluation of real estate prices.

    Globally, Lebanon’s capital Beirut tied with Tel Aviv, ranked ahead of Paris, London, Vilnius and St James in Barbados, and came behind Limassol, Shanghai, Honk Kong and Phom Phen. Lebanon’s price-to-rent ratio was 30, up from 24 in 2009 and 19 in 2008, and higher than the regional average of 20 and the Arab average of 18, indicating that it takes 30 years of rent to recover the purchase price of a 120 sqm apartment in Beirut.

    Beirut ranked in 25th place, up from 45th place in 2009, among 82 markets globally and in first place among six markets in the MENA region in terms of the rent-per-month of a 120 sqm apartment. Globally, monthly rent in Beirut was more expensive than in Dubai, Warsaw and Auckland in New Zealand, and slightly less costly than in Luxembourg, Vienna, Sydney and Cape Town in South Africa. Beirut’s rent-per-month was $2,342 for a 120 sqm apartment, up from $1,488 a year earlier, and higher than the regional average of $1,715 per month and the Arab average of $1,593 per month.

    Further, Lebanon ranked in fourth place among eight Arab markets in terms of roundtrip transaction cost, which reflects all costs of buying and reselling a residential property, expressed as a percentage of the property value. Such costs include registration costs, real estate agents’ fees, legal fees and sales and transfer taxes. The cost of buying a property in Lebanon was lower than in Jordan, Morocco and Egypt. Roundtrip transaction costs in Lebanon were higher than the regional average of 8.73 percent.

    The Daily Star

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