Investing in commercial real estate in Lebanon can be a very profitable move. This is especially true as the economy gradually recovers and demand for commercial space continues to grow. Lebanon remains one of the important economic hubs in the Middle East. Choosing the right location for your purchase can bring significant dividends. However, in order to successfully invest in commercial real estate, you need to consider factors such as property selection, rental or sales strategy, and legal nuances.
In this article, we will provide investors with basic tips for making money on the purchase of commercial offices in Lebanon, including financing options, choosing a partner, and strategies for subsequent sale or lease.
Time to invest: How to choose the right moment to buy an office
Choosing the optimal time to invest in commercial real estate is one of the important steps. The right moment to buy can determine the level of profitability in the future. Lebanon, with its economic instability, requires close attention to changes in the political and economic situation. The best time to invest is during a period of recovery after a crisis, when the market has not yet peaked but demand for offices is already growing. The ideal time to buy is when prices are still affordable but demand is increasing. Changes in the political situation and economic forecasts can significantly affect market stability, so it is important to monitor these factors.
For example, after the last economic downturn in 2019, prices for commercial properties in Beirut fell by 30-40%. This was a great moment for investors who bought properties at lower prices and were able to sell them a few years later when the economy recovered.
Choosing a reliable partner: How to work with brokers and real estate agents
Finding a reliable partner is an important step in the process of buying a commercial office in Lebanon. Choosing a qualified broker or real estate agent will help you navigate the market and find the best investment options. It is important to choose a partner who has experience in commercial real estate and understands the local market. Reputable brokers can also provide advice on the legal aspects of the transaction and reduce risks. In Lebanon, real estate agents typically receive 1-3% of the transaction value, which is important to consider when budgeting.
For example, popular agencies such as A1 Properties offer specialized services for investors, providing support from property selection to contract signing. Brokers can tailor individual options for each investor, depending on budget constraints and requirements.
Overview of possible financing options for purchasing an office in Lebanon
Financing the purchase of a commercial office is an important part of the process, as it determines your ability to buy the property you want. In Lebanon, there are several financing options that allow you to make a purchase even on a limited budget.
- Mortgages through Lebanese banks: Banks such as Fransabank offer mortgage loans for the purchase of commercial real estate. Interest rates on such loans are approximately 6-8% per annum, with a repayment period of 10 to 15 years. The minimum down payment is usually 20-30% of the property value.
- Leasing: For those who want to avoid large initial costs, leasing office space is an option. For example, companies offer leases with an option to purchase after a few years. This option is suitable for small businesses that do not want to make a large one-time investment.
- Attracting investors or partners: Joint financing is a popular option among large companies. It allows you to reduce the financial burden and risks. In Lebanon, there are business platforms such as Lebanese Private Investors that help investors find partners for joint financing.
- Private financial companies and loans: It is possible to obtain loans from private investors or financial companies. They can offer individual terms that are convenient for buyers who cannot obtain a bank loan. For example, companies may offer loans for 3-5 years at an interest rate of 5-7% per annum, depending on the terms.
How increased demand for commercial real estate can positively affect the price of your office
The growing demand for commercial real estate in Lebanon can significantly affect prices and guarantee high returns for investors. Given the improvement in infrastructure and economic growth, the cost of commercial space is trending upward.
We predict that commercial real estate prices in Beirut could rise by 10-15% over the next 5 years if the market continues to recover from recent periods of crisis. For example, office space in Beirut that was purchased in 2015 for $1,200 per square meter can now be sold for $1,800-$2,200 per square meter, representing a 50-70% increase in value over 5 years.
In addition, infrastructure recovery, including the construction of new business centers and transport routes, will also increase demand for real estate in areas such as Jounieh and Sabra, where commercial space values are expected to increase by up to 25% over the next 3-5 years. However, less developed areas such as Tripoli, although they have great potential benefits, may grow by 10-12% as their market remains less dynamic compared to more prestigious regions.
Investment return forecast
In the long term, investors can expect stable returns from commercial real estate in Lebanon, which, depending on the location, can range from 6% to 10% per annum based on rental income. Given further infrastructure development and economic growth, this could lead to significant profits from reselling premises in 5-10 years.