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Foreign Investment Structure

In 2016, the economic slowdown of GCC countries and the war in Syria took a toll on the Lebanese economy. There was a general “wait and see” attitude that was reflected in the number of foreign ventures in Lebanon.

 

Despite this challenging situation, around 36 foreign investment projects and foreign partnerships were announced in 2016, a number slightly lower than 2015 figures.

 

The European Union is maintaining a close investment relations with Lebanon. In fact, European companies were the main investors in Lebanon, accounting for more than 43% of the foreign companies in 2016 (Figure 1). The main European countries are the United Kingdom with the largest share of 27%, followed by France with 5%, Switzerland, Italy, Bulgaria and the Netherlands with 3% each of total foreign companies.

 

The second largest share of investors is distributed among North American countries (USA and Canada) with 8 American projects and 2 Canadians.

 

Arab investors‘ share of foreign companies in Lebanon decreased in 2016 to reach 16% from the total investor base, distributed as follow: Iraq with 5%, and Kuwait, Bahrain, UAE and Algeria with 3% each of total foreign investments in Lebanon. The reduction of investments flows from Arab countries were mainly attributed to the weak economic performance of oil-exporting countries, substantially affected by the slump in oil prices.

 

The remaining investors were from Asian countries (Singapore, Hong Kong and Turkey) with 11% and one African country (Nigeria) with 3% of total foreign companies.

 

DISTRIBUTION OF FOREIGN COMPANIES BY COUNTRY OF ORIGIN (% share|2016) 

DISTRIBUTION OF FOREIGN COMPANIES BY COUNTRY OF ORIGIN (%share|2016)

Source: Ministry of Economy & Trade, fDi Intelligence

 

In terms of distribution by sector, the traditionally service-driven sector has attracted around 41% of foreign direct investments in 2016 compared to 34% in 2015. Four financial companies opened either a branch or representative office in Lebanon. These investments reflect the confidence of foreign investors in the Lebanese financial sector which has shown resilience due to the Central Bank policy of maintaining high foreign currency reserves that cover almost 80% of local currency money supplies.

 

Moreover, 4 construction and real estate companies opened representative offices or branches to prepare the ground for the reconstruction efforts in Syria.

 

Four media companies opened rep offices or branches to provide digital and press coverage for Lebanon and the Middle-East.

 

A trend worth noting is the increase in investments in the Information Technology (software development) accounting for around 5% of total foreign projects.  

 

DISTRIBUTION OF FOREIGN COMPANIES IN LEBANON BY SECTOR OF ACTIVITY (2016)

DISTRIBUTION OF FOREIGN COMPANIES IN LEBANON BY SECTOR OF ACTIVITY (2016)

Source: Ministry of Economy & Trade, fDi Intelligence


In addition to including to the traditional components of FDI (including equity capital, re-invested earnings) the UNCTAD includes real estate investments of a private, non-business nature covering recreational facilities, vacation homes and residences owned by non-residents for personal use or leased to others should, in principle, in foreign direct investment calculations.

 

The real estate sector has always been one of key attractive sector for foreigners. Despite the relative slowdown in the real estate market prices have remained stable with Arab investors remaining committed to maintaining businesses in Lebanon.

 

According to statistics of the General Directorate of Real Estate Affairs, the value of real estate transactions by foreigners reached around USD 555.4 Million in 2016 up from 2015 and distributed among 5 main districts.

 

EVOLUTION OF REAL ESTATE ACQUISITIONS BY FOREIGNERS IN LEBANON (million USD)

EVOLUTION OF REAL ESTATE ACQUISITIONS BY FOREIGNERS IN LEBANON (million USD)

Source: General Directorate of Real Estate Affairs

 

Beirut grasped the lion share with 47.87% of total real estate acquisitions by foreigners in Lebanon. Arab nationals renowned for their consistent demand for luxurious spacious flats in Lebanon. Those apartments are usually above 220 square meters and are very well located mainly in Beirut.

 

DISTRIBUTION OF FOREIGN INVESTMENTS IN THE REAL ESTATE SECTOR IN LEBANON BY DISTRICT (2016)

DISTRIBUTION OF FOREIGN INVESTMENTS IN THE REAL ESTATE SECTOR BY DISTRICT (2016)

Source: General Directorate of Real Estate Affairs


As for the distribution of the real estate acquisitions by foreign nationalities, Syrian continued to seize seized the largest portion of real estate acquisitions in 2016 (14.17%). The presence of Syrian in Lebanon (around 1.01Million registered refugees by UNHCR) explains this high share of acquisition. Saudi Arabia came second with 7.40% of total real estate acquisitions.

 

DISTRIBUTION OF REAL ESTATE ACQUISITIONS BY FOREIGNERS IN LEBANON (% share|2016)

DISTRIBUTION OF REAL ESTATE ACQUISITIONS BY FOREIGNERS (% share|2016)

Source: General Directorate of Real Estate Affairs

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