I am sorry to have to say this but Mr. Andary leaves me no choice but to say that his statement is irresponsible and actually amateurish. I am utterly shocked to hear a Vice President of a Central Bank claim that there is no bubble in a certian field since the money is not borrowed. That is rubbish.
A bubble in any field is simply the fact that prices are not sustainable whether the initial financing is borrowed or not.
Once the real estate prices are no longer within the reach of the general public then there is only one way for the prices to go and that is down.
Given the level of income and the level of prices in Beirut and many of its environs then it is clear that the affordability index is low and getting lower all the time
Aajor real estate comparative study was done last year for most of the major cities in the region. The data reflected that rental yield in Beirut is the lowest of all cities in the study which means that since rents cannot go up then the prices are already too high. The higher the prices then the greater is the probability that prices will have to drop in order to clear the market.

I am sorry to have to say this but Mr. Andary leaves me no choice but to say that his statement is irresponsible and actually amateurish. I am utterly shocked to hear a Vice President of a Central Bank claim that there is no bubble in a certian field since the money is not borrowed. That is rubbish.
A bubble in any field is simply the fact that prices are not sustainable whether the initial financing is borrowed or not.
Once the real estate prices are no longer within the reach of the general public then there is only one way for the prices to go and that is down.
Given the level of income and the level of prices in Beirut and many of its environs then it is clear that the affordability index is low and getting lower all the time
Aajor real estate comparative study was done last year for most of the major cities in the region. The data reflected that rental yield in Beirut is the lowest of all cities in the study which means that since rents cannot go up then the prices are already too high. The higher the prices then the greater is the probability that prices will have to drop in order to clear the market.

This is the most irrational statement coming from a senior central bank figure.

Every year our trade deficit is getting bigger and bigger and the government and central bank are hoping to offset this through foreign inflows.
The foreign inflows are directly invested in the Real estate, High TB bills and Tourism services.
If you guys notice this is an unhealthy and highly unsustainable trend. Sooner or later we will whitness a crisis.
Finally, Mr. Karam, I think Federal Reserve Chairman Ben Bernankee must come to Lebanon and teach Mr Andary a few lessons about the symptoms of a bubble in any economy.
If you notice Federal Reserve Chairman few years ago was in complete denial about the prospect of US housing bubble. We all know what happened next.

Ben Bernanke collapsed Americas economy. All these guys including alan greenspan etc are manipulating the markets for their own interest in the present and past. Up, down, up again. Depressions and revivals. It’s all a big game man. I can’t believe he even got person of the year. They’re rewarding down statistics and promoting people who should be tried in court for severe fraud. But next thing you know he becomes one of obama’s financial advisors. Obama was quoted saying behind closed doors that he appointed him since he helped create the mess and he will help fix it. He forgot the federal reserve is an unconstitutional private institution whose loyalty lies outside the US and its only purpose is putting people in debt and cunningly absorbing peoples money and inflating and inflating and inflating! Talk about obama studying the constitution in college or knowing much about an ideal economy.
It’s a good thing Lebanon wasn’t affected by the global economic depresison much since we didn’t have many investments in America like the gulf countries. Stay out of that realm of the american economy or be ready to loose everything except your silver and gold.

If we want our banks and economy to succeed then we should do the exact opposite of what caused americas economy to fail(what is it like the the 4rth time it happens)?! Someone must be working real hard at ***** it up.

Ben Bernanke collapsed Americas economy. All these guys including alan greenspan etc are manipulating the markets for their own interest in the present and past. Up, down, up again. Depressions and revivals. It’s all a big game man. I can’t believe he even got person of the year. They’re rewarding down statistics and promoting people who should be tried in court for severe fraud. But next thing you know he becomes one of obama’s financial advisors. Obama was quoted saying behind closed doors that he appointed him since he helped create the mess and he will help fix it. He forgot the federal reserve is an unconstitutional private institution whose loyalty lies outside the US and its only purpose is putting people in debt and cunningly absorbing peoples money and inflating and inflating and inflating! Talk about obama studying the constitution in college or knowing much about an ideal economy.
It’s a good thing Lebanon wasn’t affected by the global economic depresison much since we didn’t have many investments in America like the gulf countries. Stay out of that realm of the american economy or be ready to loose everything except your silver and gold.

If we want our banks and economy to succeed then we should do the exact opposite of what caused americas economy to fail(what is it like the the 4rth time it happens)?! Someone must be working real hard at ***** it up.

I disagree partially with Mr Ghaassan Karam and I think that Mr. Andary is not completely wrong. This is because if there is any future crash in the real state market, the effect on the banking sector will be much less because they gave only 16-18% of this money. On the other hand, if the banks were to suffer huge loss of loans, this fact by itsely would create a vicious circle which will worsen even more the real state market and the whole economy.

I disagree partially with Mr Ghaassan Karam and I think that Mr. Andary is not completely wrong. This is because if there is any future crash in the real state market, the effect on the banking sector will be much less because they gave only 16-18% of this money. On the other hand, if the banks were to suffer huge loss of loans, this fact by itsely would create a vicious circle which will worsen even more the real state market and the whole economy.

I agree with Mr. Andary. In comparison with the crisis in Europe and the US, Lebanons Real Estate market is not based on big loans.

I agree with Mr. Andary. In comparison with the crisis in Europe and the US, Lebanons Real Estate market is not based on big loans.

Hi Rabih,

First of all, I just want to quote the influential British economist John Maynard Keynes who once famously said” the market can stay irrational longer than you can stay insolvent”

This theory can be applied in all kinds of asset prices.
My friend Rabih the difference between the US and the Lebanese real-estate market is the former’s dependence on too much leverage and predatory lending standards.
The Lebanese real-estae market, however, has indeed shown signs of bubble.
One possible cause of bubble is excessive monetary liquidity in the financial system. Simply put, economic bubbles often occur when too much money is chasing too few assets, causing both good and bad assets to appreciate excessively beyond their fundamentals to an unsustainable level.
Finally, Rabih during the so called real-estate boom in US from 1998 till 2006 the Price versus Income in real estate assets peaked by 4.6 times.
Whereas, in Lebanon that same ratio today between Price versus Income has already exceeded 15 times.
Now the only real reason this trend has not yet popped in my opinion is the continuous capital flaws from rich Gulf Arabs and Lebanese expatriates. Like I said buddy this trend is neither healthy nor sustainable in the medium to long term periods.

I bow to your knowledge guys, but regardless if the average Lebanese cannot afford a property in his/her country, then we do have a problem.

I bow to your knowledge guys, but regardless if the average Lebanese cannot afford a property in his/her country, then we do have a problem.

Rabih/Michael/John,
The discussion of whether there is a bubble or whther there is no bubble is an argument that has nothing to do with other personalities and other central bankers. It is an issue that must and ought to be addressed accurately and objectively.
The method of financing a transaction is not to be confused with an economic bubble that is best described as a klevel of prices that is irrational. Whay is that important ? At least for two reasons: (1)Bubbles inevitably lead to a tremendous misallocation of resources. When it appears that prices in a certain field are increasing at a rapid rate then this will act as a magnate and capital that would have gone into other areas will be attracted into this bubble under false assumptions.
(2) Bubbles never end without major negative implications for the economy since when prices drop then many who have invested in the field in question wind up with great losses which will inhibit investments in other areas. Bubbles, once they burst, destroy capital.

If Mr. Andary wishes to argue that there is no real estate bubble in Lebanon then he should use different arguments than those of financing. I hope that the prices do not drop but that is highly unlikely. One builds so that others can buy. The typical Lebanese family with an income of $20,000-30,000 cannot afford a bungalow in Beirut where half of the Lebanese live or even within a 15-20 mile radius of beirut where homes sell for a $1000 a square foot. If the bubble is to be averted then one is advocating two Lebanons, one that is expensive and highly developed but owned by foreign nationals and retiring expats and one that is poor and underserved where 90% of the Lebanese live.

Rabih/Michael/John,
The discussion of whether there is a bubble or whther there is no bubble is an argument that has nothing to do with other personalities and other central bankers. It is an issue that must and ought to be addressed accurately and objectively.
The method of financing a transaction is not to be confused with an economic bubble that is best described as a klevel of prices that is irrational. Whay is that important ? At least for two reasons: (1)Bubbles inevitably lead to a tremendous misallocation of resources. When it appears that prices in a certain field are increasing at a rapid rate then this will act as a magnate and capital that would have gone into other areas will be attracted into this bubble under false assumptions.
(2) Bubbles never end without major negative implications for the economy since when prices drop then many who have invested in the field in question wind up with great losses which will inhibit investments in other areas. Bubbles, once they burst, destroy capital.

If Mr. Andary wishes to argue that there is no real estate bubble in Lebanon then he should use different arguments than those of financing. I hope that the prices do not drop but that is highly unlikely. One builds so that others can buy. The typical Lebanese family with an income of $20,000-30,000 cannot afford a bungalow in Beirut where half of the Lebanese live or even within a 15-20 mile radius of beirut where homes sell for a $1000 a square foot. If the bubble is to be averted then one is advocating two Lebanons, one that is expensive and highly developed but owned by foreign nationals and retiring expats and one that is poor and underserved where 90% of the Lebanese live.

Guys, This is the real Rabih (I will start using my full name). I did not post the comment above. I do agree with some f it and ill clear that up. I dont think we have a financial issue in lebanon where banks will fail and the economy slow down because people and businesses can not borrow to spend or hire. The market will slow down because of a simple law in business economics called the law of supply and demand. Once land prices are stable ( and they have been ) and all the purchased land is being developed we will see the market slow down and prices drop. Our economy depends on a lot more than just real estate and since the money being spent on real estate is not from loans from banks in lebanon the financial market will remain strong when real estate slows.

Guys, This is the real Rabih (I will start using my full name). I did not post the comment above. I do agree with some f it and ill clear that up. I dont think we have a financial issue in lebanon where banks will fail and the economy slow down because people and businesses can not borrow to spend or hire. The market will slow down because of a simple law in business economics called the law of supply and demand. Once land prices are stable ( and they have been ) and all the purchased land is being developed we will see the market slow down and prices drop. Our economy depends on a lot more than just real estate and since the money being spent on real estate is not from loans from banks in lebanon the financial market will remain strong when real estate slows.

I personally dont think that a bubble will pop in libon because the money being dumped in is from the gulf and expats but I do agree with Ghassans point>

” If the bubble is to be averted then one is advocating two Lebanons, one that is expensive and highly developed but owned by foreign nationals and retiring expats and one that is poor and underserved where 90% of the Lebanese live.”

Lebanons top areas have been gobbled up by khalijiyi and wealthy expats and are in no need to sell them anytime soon

I personally dont think that a bubble will pop in libon because the money being dumped in is from the gulf and expats but I do agree with Ghassans point>

” If the bubble is to be averted then one is advocating two Lebanons, one that is expensive and highly developed but owned by foreign nationals and retiring expats and one that is poor and underserved where 90% of the Lebanese live.”

Lebanons top areas have been gobbled up by khalijiyi and wealthy expats and are in no need to sell them anytime soon

Dear Maria, these khalijiyi and wealthy expats are in need to make more and more money just like anybody else. More money brings more natural “greed” to more and more and if they just feel the bubble is about to burst they will be the first to sell. At the end, the wealthy and the poor, nobody wants to lose money.

Harout Constantine
Abu Dhabi

Dear Maria, these khalijiyi and wealthy expats are in need to make more and more money just like anybody else. More money brings more natural “greed” to more and more and if they just feel the bubble is about to burst they will be the first to sell. At the end, the wealthy and the poor, nobody wants to lose money.

Harout Constantine
Abu Dhabi

Hi guys,

I have a couple of points I’d like to comment on:

1/ the vice governor says that only up to 18% of financing come from bank loans. when you see in “developped countries” how official statistics are massaged and we all know the lack of hard and reliable data in the lebanese economy, i doubt the accuracy of that number

2/ up to 18% of purchase financing…may be, but certainly much higher ratios for the building industry in lebanon and that might be a problem and a credit bubble issue if prices head down

3/knowing that the lebanese real estate counts, for a large part,on capital inflows from expatriates and arab. what would happen if a double dip recession hits the world and that is a high probability, these inflows will be greatly reduced because of lower oil prices and expatriate unemployment. ie, the trigger can come from an external source and not necessary from within the lebanese economy.

cheers
roger, UK

Hi guys,

I have a couple of points I’d like to comment on:

1/ the vice governor says that only up to 18% of financing come from bank loans. when you see in “developped countries” how official statistics are massaged and we all know the lack of hard and reliable data in the lebanese economy, i doubt the accuracy of that number

2/ up to 18% of purchase financing…may be, but certainly much higher ratios for the building industry in lebanon and that might be a problem and a credit bubble issue if prices head down

3/knowing that the lebanese real estate counts, for a large part,on capital inflows from expatriates and arab. what would happen if a double dip recession hits the world and that is a high probability, these inflows will be greatly reduced because of lower oil prices and expatriate unemployment. ie, the trigger can come from an external source and not necessary from within the lebanese economy.

cheers
roger, UK

Well, if real estate prices and others keep on rise, it is not just advocating 2 Lebanon but stimulating immigration. It is not just real estate, no health care system, no retirement programs, nothing to be proud being Lebanese and living in Lebanon for an average yearly income of 25000$. i hate saying that i was lucky to buy at low prices and see future friends worry.

Well, if real estate prices and others keep on rise, it is not just advocating 2 Lebanon but stimulating immigration. It is not just real estate, no health care system, no retirement programs, nothing to be proud being Lebanese and living in Lebanon for an average yearly income of 25000$. i hate saying that i was lucky to buy at low prices and see future friends worry.

Actually I am planning to appeal to the Canadian embassy to speed up the processing of my application for immigration since my own country doesn’t want me to live in it. Me and my husband we make >4K a month and what we are getting in return is an indecent 2 bedroom appartment, I would rather invest in a 3 floor house including front/back yard, and who cares about the cold, global warming is taking care of it. Investigate the weather in Canada for this year.

Actually I am planning to appeal to the Canadian embassy to speed up the processing of my application for immigration since my own country doesn’t want me to live in it. Me and my husband we make >4K a month and what we are getting in return is an indecent 2 bedroom appartment, I would rather invest in a 3 floor house including front/back yard, and who cares about the cold, global warming is taking care of it. Investigate the weather in Canada for this year.

Real acreage and tourism will advice the abridgement to abound as abundant as 8 percent this year, Central Bank Governor Riad Salameh said in a June 9 interview.

Northern Virginia Realtors

Hmmm … about 2 years late worrying about that.
And yes, Leb banks do not loan money out easily … they do not trust anyone could be around tomorrow. And ALL hate when buildings are targets for RPG’s. So, Leb-banks have bigger ‘reserves’ than most in the world. Doesn’t help the citizens, but no ‘bubbles’ for Lebanon.
I see ‘ads’ for lovely new places … they have to list as ‘quiet zone’ to have interested customers … and one wonders where that is.
They do not tell you how much the generator costs each month, if you want the elevator to work.
Water is another matter ….

Now, if I could camp on the beach …

MMmm .. yes … cold still, but mostly peaceful. One could do worse.

Yes … Wall street & American businessmen work to screw America. But does that sound familiar?

Yes … Wall street & American businessmen work to screw America. But does that sound familiar?