Beirut, Apr 11 (IANS): The development of Lebanon's real estate sector is slowing down, with demand for properties falling by around 80 per cent in 2022 and 2023 compared to the years before the ongoing financial crisis which first erupted in 2019, according to economists.

Nassib Ghobril, head of the economic research department at Byblos Bank, told Xinhua news agency that demand for properties has dropped by at least 80 per cent in the four years after the crisis, due to the lack of market liquidity.

In 2020 and 2021, buyers could still pay for their properties through cheques, which were needed by the real estate developers to settle their bank loans, said Ghobril.

However, after paying off most of their bank debts, the developers only accepted cash, making it very difficult for Lebanese buyers to afford properties as the bankrupt banks froze tens of billions of dollars saved in their accounts, he noted.

Adnan Rammal, a real estate developer and representative of the trade sector in the Economic and Social Council, attributed the decline in demand to Lebanese buyers' reduced purchasing power following the devaluation of their currency as a result of the severe financial crisis.

Before the crisis, according to Rammal, around 60 to 70 per cent of properties sold were small apartments priced at approximately $150,000.

However, buyers of these apartments, mostly employees paid on wages, saw their purchasing power decreased a great deal during the crisis.

Making matters worse, the collapse of the banking sector made those employees who relied significantly on loans no longer had access to them.

According to developers, the sharp decrease in property demand in Lebanon led to a price drop of around 50 per cent from pre-crisis levels.

Developers have stressed the necessity for the government to take urgent measures to revive the real estate market and some other sectors of the economy.

Rammal said that the banking sector must be restructured in order for it to provide loans to buyers as before.

The economic and financial crisis that started in October 2019 has been further exacerbated by the dual economic impact of the Covid-19 pandemic, and the massive Port of Beirut explosion in August 2020, according to the World Bank.

Of the three, the economic crisis has had by far the largest (and most persistent) negative impact.

In July last year, Lebanon was reclassified by the World Bank as a lower-middle income country, down from upper middle-income status.

Unemployment has also increased from 11.4 per cent in 2018-19 to 29.6 per cent in 2022.

Earlier this month, the Lebanese currency collapsed to 100,000 LBP per US dollar for the first time in history.

Lebanon's economists have been calling on authorities to elect a new president and form a new cabinet to end the political deadlock and allow the country to implement necessary reforms and stop the collapse.