According to Real Estate consultancy company Ramco Real Estate Advisers, 954 apartments in Ras Beirut are currently for sale by developers. This stock represents a pre-negotiation market value of approximately $ 1.5 billion.
Unsold apartments are a widespread phenomenon that now affects every neighborhood of Ras Beirut. Of 155 buildings under construction or completed since 2013 in Ras Beirut, 106 (or 68%) still have unsold apartments. The total number of unsold properties stands at 954. However, this figure does not take into account resale offers by investors who have bought properties off plan and are currently seeking to liquidate their assets.
There are a variety of reasons for the increasing number of unsold properties, including slowing demand from Lebanese expatriates, a lack of interest among Gulf nationals, inconsistent sale prices and the poor construction quality of some apartments. Today, potential buyers have the opportunity to be choosy. In one neighborhood, potentially even on one street, they have dozens of options. It's up to them to compare prices and the pros and cons of each apartment.
In total, the unsold stock represents 283.200 m2 of residential space out of a total of 1,040,622 m2 when considering buildings built since 2013, which puts the sale rate at 73%. While the unsold apartments are valued at approximately $ 1.5 billion, this figure does not take into account the fact negotiations take place when selling an apartment, meaning that the price might vary by as much as 10 to 30%.
Of the 106 buildings with unsold apartments, 8 still have more than 40 million dollars worth of apartments for sale. The average size of the unsold apartments is estimated at 295 m2, meaning that the unsold apartments are bigger than those currently under construction in the same areas (229 m2).
This data confirms that developers are struggling to sell large apartments and that they are more affected by the drop in demand. The majority of Ras Beirut’s unsold properties are located in the neighborhoods along the coast (from Aïn Mreisse to Ramlet el-Baida).
This stock represents 283 apartments worth an estimated $ 777 million.
One building near the Pigeon Rock, for example, has 36 apartments for sale, each with an area of 540 m2. The building was completed in 2015. Some units have been sold to Gulf nationals, but with a starting price of approximately $4 million, local demand was negligible. Other neighborhoods, like Verdun, are also affected by this trend. Three buildings around the Goodies delicatessen, totaling 38 apartments, are still on the market, some have remained unsold since 2009.
Despite price adjustments, the owners have been unable to sell. One of the owners even went as far as reducing the price from $ 5,500 per m2 in 2012 to $ 3,000 per m2 in 2019 for apartments on the first floor.
The increasing number of unsold apartments puts pressure on the owners, who are forced to revise their prices to appeal to potential buyers. However, some owners are standing firm. . Many developers consider the sale of the final apartments in an already amortized project as a bonus and they do not seem in a rush to sell. However, many of these developers make no effort to maintain these unsold properties and sometimes leave them semi-abandoned. A result, it is often easier to get a good discount on an apartment that is under construction where the developer is hungry for fresh cash rather than on an apartment that has already been completed and has been left unoccupied for several years.
UNSOLD APARTMENTS IN RAS BEIRUT *
283.200 m2 of residential space
295 m2 average size
$ 1.48 billion, market value (pre-negotiation)
$ 1.55 billion average value of unsold apartments
* The study covers 18 neighborhoods in Ras Beirut.
Source: Ramco Real Estate Advisers - July 2019.