Lebanon crisis may force developers to re-think

The frightening escalation of the crisis in Lebanon has had most people glued to their TV screens over the last week. It will also have given many developers with plans of regional expansion, pause for thought. What seems to have taken most people by surprise was the speed with which the conflict has escalated in just a few days.

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By  Sean Cronin Published  July 22, 2006

|~||~||~|The frightening escalation of the crisis in Lebanon has had most people glued to their TV screens over the last week. It will also have given many developers with plans of regional expansion, pause for thought. What seems to have taken most people by surprise was the speed with which the conflict has escalated in just a few days. Living in the bubble of security that is the UAE, it is easy to forget that the threat of war is very real elsewhere in this region. Despite the stoicism of some of the larger players in the market, many developers and investors will be re-assessing their risk profiles in the weeks ahead as the dust, hopefully, settles. Both Emaar and DAMAC have launched major schemes in Lebanon and both will be taking a long hard look at their future development plans in the country. That the events of the last few days will have an impact on planned foreign investment seems unquestionable — particularly in the construction and real estate sectors. The real question seems to be how significant and enduring that impact will be? As the Dubai development market approaches maturity, developers are now looking to export the winning real estate formula of the emirate to other countries — and Lebanon, along with Iran and Syria have been targeted as potentially lucrative growth markets. In Lebanon, the case for investment in real estate has perhaps been more pronounced than anywhere else in the region. Over the last three years, property prices have more than tripled in some locations around Beirut — and the business climate of Lebanon has proved to be very resilient to political upheaval on both sides of its borders. Now the property investment prospects of all three markets will be put under scrutiny as a result of the bombing campaign. Although Lebanon endured the crisis that followed the assassination of former premier Rafiq Hariri last year surprisingly well, this current crisis may have a longer legacy in terms of investor confidence. Lebanon has proved to be remarkably resilient to the threat and the reality of war in the past. This latest crisis that the country is facing will test that resilience to the limit. ||**||

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