Lebanon’s Real Estate: When safety replaces profit

Source: Nida Al Watan

Amid the profound transformations Lebanon is undergoing under the weight of war and its economic and social repercussions, the real estate sector is no longer insulated from these shocks. Long considered a safe haven and a barometer of national stability, the sector now reflects the anxiety and uncertainty shaping the decisions of individuals and investors, as confidence erodes and visibility fades.

As priorities shift and living pressures intensify, the behavior of buyers and tenants has changed significantly. Profit and investment are no longer the primary drivers; instead, safety, stability, and access to basic services have moved to the forefront. Between a cautious sales market and rental prices rising under the pressure of displacement, a new real estate landscape is emerging, one that mirrors the depth of Lebanon’s crisis.

Massad Fares, Secretary of the Lebanese Real Estate Developers Association, explains that “the market is no longer driven purely by investment logic. The war, internal displacement, declining tourism, and the absence of housing finance have all reshaped people’s priorities. Buyers and tenants are no longer asking first about price or return, but about security: Is the area safe? Is it accessible? Are electricity, water, and services available? Is the property immediately livable?”

This shift, he argues, is fundamental. “Real estate in Lebanon was always seen as a safe asset, especially during periods of currency or banking instability. Today, however, safety is no longer tied simply to ownership, but to location, legal clarity, usability, and the ability to rent or occupy the property when needed.”

A market divided by war

According to Fares, the ongoing conflict has effectively fragmented the market. Demand has declined in areas exposed to security risks, while increasing in regions perceived as safer or better serviced. This has created noticeable pressure on rents in parts of Mount Lebanon and inland areas, not because of strong market fundamentals, but due to urgent housing demand driven by displacement.

Data from the International Organization for Migration indicates that more than one million people were internally displaced in Lebanon by April 2026. This alone explains the abnormal rise in rents in certain areas. “Displaced families are not looking for investment opportunities,” Fares notes, “but for immediate shelter, even if temporary. Part of this increase is therefore circumstantial, tied to war and fear rather than real economic growth.”

A slowing sales market

The picture in the sales market is markedly different. Prices have not collapsed, but activity has slowed considerably. Many property owners are reluctant to sell at lower prices unless forced, while buyers have become increasingly selective, seeking legally clear properties in safe locations, reasonably priced and ready for use or rental.

Properties in unstable areas or those facing legal or structural issues have become significantly harder to sell.

Market data confirms this cautious stance. In the first quarter of 2026, property transactions dropped to 11,949, down nearly 29% compared to the same period the previous year, while transaction values declined to around $1.25 billion. In March 2026 alone, as the conflict escalated, transactions fell further to 3,095, reflecting a climate of hesitation and fear among buyers and investors.

Tourism, once a key support for the real estate market, particularly in Beirut and coastal regions, has also declined sharply. In March 2026, arrivals through Beirut airport fell to fewer than 50,000, weighing on furnished apartments, small hotels, commercial shops, and restaurants, and reducing demand from expatriates and visitors.

As a result, Fares emphasizes that “the real estate sector is not benefiting from the war. Some landlords may temporarily gain from rising rents in safer areas, but overall the sector is suffering. War undermines confidence, delays purchasing decisions, weakens investment, and shifts priorities from profit to secure housing.”

Financing crisis and the shift to renting

The most critical challenge, however, remains the absence of financing. “The market is now driven primarily by cash, dollar liquidity, or remittances from abroad,” Fares explains. “This restricts property purchases to those with immediate capital or to expatriates. For the middle class and younger generations, homeownership has become increasingly out of reach, especially without effective housing loans.”

This reality has pushed much of the market toward rentals. Families are postponing purchases due to uncertainty, owners are holding onto properties to avoid losses, and displaced populations require immediate housing. While this makes rentals the dominant force in today’s market, it also creates significant social pressure on low- and middle-income households.

A market holding on

Fares concludes that Lebanon’s real estate sector is “not collapsing, but neither is it healthy. It is resilient, yet strained, cautious, and divided between active and nearly frozen areas. Well-located, reasonably priced properties will continue to find demand, while overpriced or poorly located assets will remain difficult to sell.”

Looking ahead, he stresses that recovery requires more than waiting for the war to end. It demands a clear housing strategy: simplifying property registration, protecting ownership rights, restoring housing finance, regulating rents amid displacement, and preparing a serious post-war plan.

“Real estate is not just a commodity,” he concludes. “It is a reflection of people’s confidence in their country. And in Lebanon, this sector will not return to normal without the restoration of security and stability.”