Real estate has become a safe haven in Lebanon amid the dire economic crisis after a significant number of investors have shifted their money to the sector over the past year.

According to Lebanon’s Central Bank, only one sector out of 11 monitored for economic activity showed growth over the first few months of 2020 and that was the value of property sales in the country.

The central bank data revealed an increase of 137.5 percent over the first seven months of 2020 when compared to the previous year’s corresponding period.

Since October 2019, the financial crisis has triggered a run on dollar deposits. In fact, customers tried to withdraw their money from their deposit accounts amid fears that the banks might become insolvent.

However, while some depositors preferred to transfer their money abroad or even keep cash - which is reflected in the significant rise in currency in circulation - others preferred to use their frozen assets and pay back their loans or even buy fixed assets such as properties and real estate.

So buying properties in Lebanon has become a trend to unlock dollar bank accounts in light of tight capital controls imposed by Lebanese commercial banks to restrict withdrawals of dollar banknotes.

Investors have been buying up real estate at levels not seen for years in Lebanon’s previously stagnant property market.

Property transactions posted a noticeable rise of 113.1 percent year-on-year to attain a total of $8.4 billion in the first eight months of 2020, according to statistics published by the General Directorate of Land Registry and Cadastre.

Sarah Hadchiti, a research analyst at Blominvest Bank, (pictured above) told Arabian Business: “Generally, during an economic recession we expect a drop in investments and therefore a decrease in the value and number of real estate transactions. However, this was not the case in Lebanon. While lending to real estate and construction declined, real estate transactions across Lebanon rose starting November 2019.

"In fact, some of the big depositors at Lebanese banks sought to diversify their investment risk via investing in realties, land and/or properties while contractors took advantage of the situation and paid back their loans by selling their properties.”

The average property value increased from $126,478 in the first eight months of 2019 to $186,230 in the first eight months of 2020.

Most of the regions recorded an increase in the value of sales transactions, with the most significant movements coming out of Kesrouan, Beirut and Baabda, the data showed.

Investing money locked in banks into property has also helped a lot of building constructors and real estate promoters to get out of debt.

“Local depositors freed-up some of their trapped bank deposits by buying land and/or property in Lebanon. Thus, the higher demand pushed real estate prices up. The increased demand on Lebanese real estate translated into significant annual upticks of the value of property sales,” Hadchiti added.

According to the central bank, the number of sales rose from 31,131 in the first eight months of 2019 to 45,047 in the first eight months of 2020, while property taxes recorded a strong increase of 91.4 percent to reach $356.8 million despite a fall in sales to foreigners.

The real estate rush has created a new demand for vacant apartments. Over the past three months, many developers have sold a stock of apartments that they have been unable to sell for years, according to real estate brokers.