If you are seeking international real estate opportunities, then looking at Lebanon for investment means that you are a forward thinker. Although Lebanon’s economic growth has been slow and its domestic differences with Syria are not over, the property prices have increased when they are adjusted for inflation. As a matter of fact, according to real estate reports, housing prices in several parts of the country doubled during the period from 2008 to 2012. This increased demand came from GCC investors after the oil price surge of 2008.
Moderate Levels of Growth
Because real estate prices are fairly high, homebuyers are moving out of the capital of Beirut to seek cheaper housing. The less expensive areas—Baabda, Metn, and Kesrouan—accounted for over half of the real estate sales for the first seven months of 2015. The economy in the country is expected to grow by small percentage in the upcoming years.
Indeed, things have changed when it comes to Lebanon real estate returns. In 2013, for example, an investor would be lucky to get a return of 4% on his property. Larger properties had yields of about 3.5%.
Moderate Rental Earnings
In 2013, central Beirut apartments were priced at around US$3,700 per square metre. That is quite a difference from US$1,200 in 2004. Therefore, prices have definitely escalated over the past several years. In turn, the rental tax is taxed at rates of 4% to 14%. No capital gains taxes are featured in the market. Different tax rates apply to employment income versus business income. The rental income is relatively moderate in the country, especially when compared to its European counterparts.
Reducing Transaction Fees
In addition, the purchasing costs are also fairly moderate. Round-trip costs, or the total expenses of purchasing and selling a property, amount to about six percent of the total purchase amount. This normally includes a five percent transfer tax. Some of the fees can be avoided if a lawyer is not secured or if the real estate is registered directly with the Land Registry (without the benefit of a notary public).
If you buy property to rent, a tenant, who signs a one-year agreement, is in his right to hold onto the real estate for a period of three years straight. After that time, the landlord can either end the contract or choose to renegotiate.
Foreign ownership of real property is permitted in the country. Foreigners may own up to 3,000 square metres of land. A decree from the Council of Ministers is needed to acquire more property. Therefore, foreigners may only own up to three percent of the land in the Lebanon. If you choose to buy in Beirut, you can obtain up to ten percent of the total metro area.
An Agreement to Buy
A lawyer, as indicated, is not necessarily needed in real estate purchases, with the exception of more complex transactions. If two parties agree on a sale, a sales agreement can be created and drawn up by a qualified facilitator or notary public instead of a lawyer.
When registering a property, a seller obtains a Real Estate Certificate from the country’s Land Registry. Other paperwork may also be produced. However, not all of the forms are absolutely necessary. These documents include an urban plan certificate, official cadastral map, and tax clearance from the municipality.