By Natacha Yazbeck

BEIRUT, Jun 17, 2010 (AFP) - As property markets around the world struggle to recover in the wake of the economic crisis, Lebanon's real estate sector is at an all-time high, leaving many people desperate for affordable housing.

Amid a rare political detente in the normally turbulent Mediterranean country, property sales jumped 41 percent in the first quarter of 2010 compared with the same period last year, to a record 3.2 trillion Lebanese pounds (2.1 billion dollars, 1.7 billion euros), according to the Directorate of Real Estate.

Mortgage rates are currently between four and six percent.

Much of the demand stems from abroad as the liberal Middle Eastern country is a popular attraction for clients from the oil- and cash-rich Gulf nations seeking holiday homes, as well as from Lebanese expatriates.

Lebanon lays claim to a large diaspora, estimated to be at least twice its resident population of four million, and remittances from expats -- a hefty six to seven billion dollars annually -- are a lifeline for the country's economy.

"There's a clear rise in both local population and emigration," said Marwan Hamadeh of the Beirut-based Sogetim realtors.

"Those who leave are generally qualified people. Their salaries here were 3,000 dollars and abroad they're making at least double that," Hamadeh told AFP.

"And they are still Lebanese -- they want to maintain their roots here so they in part are setting market prices."

But as the financial success of a growing expatriate community fuels rising demand, many resident Lebanese are left struggling to find homes.

"I myself want to own property, but I do not," said Rami Babik, a financial analyst based in the capital.

"I've been looking for a while now and it's just too expensive even outside Beirut," he told AFP. "I tried to find something in or just outside the capital, but prices are hilarious."

Prices in the "golden triangle" of the capital -- Ras Beirut, Ashrafieh and the central district -- now start at 3,000 dollars a square metre for a first-floor apartment and can run as high as 15,000 dollars.

A hard-to-come-by 150-square-metre apartment in that area may sell for well above one million dollars as demand far outstrips supply.

"There are small flats for sale across Beirut," Hamadeh said. "The difference is that they now sell for double the average price per metre or more."

Outside the business and university hubs, in the traditional Gemmayzeh quarters, a small flat sells for close to half a million dollars as investors fight for space in an overpopulated city of a mere 18 square kilometres (seven square miles).

And while the government has no plans to control property prices, experts including central bank governor Riad Salameh continuously argue that the rising valuation is no bubble.

"The growth of Lebanon's real estate is natural and normal and will not collapse," Salameh said in a recent conference.

Hamadeh agrees: "There won't be a collapse, first because no one is borrowing money to build, so they do not have to compromise their prices and there is no risk of bankruptcy.

"Sales have more than doubled in the past four years," he added in reference to the end of a devastating 2006 war between Hezbollah and its arch-foe Israel, which destroyed much of the country's major infrastructure.

But despite Beirut's comeback, many are still hesitant to invest in a country they fear could descend into anarchy and war at any given moment.

"We would never move back to Lebanon to live there permanently," said Hiba Sahyouni, who lives with her husband in Vancouver in Canada. "There are too many factors against moving back or owning property."

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Copyright AFP 2010.