Central Bank Steps in to Boost the Real Estate Sector | FFA Real Estate
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Central Bank Steps in to Boost the Real Estate Sector

Wed, 2016-07-27 17:23 -- admin

In June Lebanon’s Central Bank issued Circular 427 in what has been widely welcomed as a move to boost Lebanon’s real estate sector. The initiative comes after a period that has seen the sector, one of the traditional drivers of Lebanon’s economy, witnessing a slowing down or relative stagnancy.

“This circular will inject life into the real estate sector and give developers some breathing space,” said Mireille Korab Abi Nasr, FFA Real Estate’s Head of Business Development, who sits as a board member at REAL (the Real Estate Syndicate of Lebanon) and REDAL (the Real Estate Developers Association). The main target of Circular 427 is to boost sales of existing new real estate stock that remains unsold. The circular provides an incentive by allowing banks in Lebanon to offer credit facilities to companies, funds or special vehicles for the purpose of acquiring real estate with a view to selling it at a later date, subject to certain conditions. Credit is available up to 60 percent of the value of the purchase with the remaining 40 percent financed by the purchaser from their equity excluding debt. For Mireille Korab Abi Nasr, it is this 60 percent credit facility that makes the circular of particular appeal, acting as a stimulus for new companies or funds to be formed with the express intention of buying up existing real estate built stock in a firsthand sale. “This will alleviate the burden on developers and it will also help diversify and lessen the risk for them too,” said Mireille Korab Abi Nasr, who shared more industry viewpoints of Circular 427 during the economic segment of LBC/LDC primetime news on July 15th.

The circular was issued following a year and a half of discussions between the Central Bank and REAL and REDAL. “The circular is a good start and certainly opens the door for REITs,” said Mireille Korab Abi Nasr. “We, REAL and REDAL, will continue to lobby and to work to improve on it. For example, what would really give a plus to this circular would be to see a subsidized interest rate offered by the banks. There is definitely room for enhancement.”

Click below to watch the interview:


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