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BEIRUT: Property-tax income has dropped markedly this year compared to 2006, reflecting a dearth of large-scale commercial development and a swoon in sales of high-end real estate, industry insiders told The Daily Star on Wednesday. The Directorate of Real Estate collected tax income of $42 million for the first two months of 2007, down 31 percent from the $60.7 million rung up in the same period last year. The 2006 amount works out to a monthly average of over $30 million, still higher than the March 2007 tally of $26.2 million. The office has not released April's results.

A major reason for the drop - and the nationwide economic malaise - is that the unending political and security disturbances have driven away buyers and made developers reluctant to undertake big projects.

"Definitely there are less larger transactions happening," said Raja Makaram, managing director of the Ramco real-estate firm. "Most of the transactions are smaller than usual."

For example, Solidere, the behemoth landowner of much of Beirut's Downtown, unveiled a number of big-ticket projects last year before the summer war with Israel, but no headline-grabbing developments have been announced in 2007.

Sales of top-end apartments have also plummeted, another factor contributing to the decline of tax income.

"They're not selling $5 million apartments in Downtown Beirut - that's a fact," said

Elie Harb, president of Coldwell Banker.

Property sales have centered more on mid-level flats, which run from $70,000-$200,000. The profile of buyers has also changed - Gulf Arabs have largely abandoned the Lebanese market, so locals remain almost the only source of demand, with expatriates driving the market for higher-end properties.

"There are transactions going on, but they're mainly going for the Lebanese expatriates," said Maha Atallah, VIP real-estate officer at Century 21. "At the moment, most of our clients are Lebanese expatriates."

Despite the clear absence of big projects, the state's figures should not be taken as a flawless barometer of market trends. Many transactions are never registered, and many of those that make it into the official records are registered for a fraction of their real value, said Harb. With rifts deepening across political and sectarian lines, the property-tax chicanery might be rising even further.

"It could be that there are more hands in the cookie jar," Harb said. "People are more desperate."

The market has not yet felt any effects from the recent spasm of violence, sources said. Ramco's Makaram said his clients had not this week retracted any offers made in the past two weeks. Clientele and markets in Lebanon are not easily shaken - despite last summer's war and the ensuing political turbulence, a sell-off of homes and properties has not materialized.

"People have become more used to the instability we are observing," Makaram said. "We are even surprised that, given the war, we haven't been observing any rush for sales."

On the contrary, the real-estate landscape here remains a seller's market - land and home prices have steadily risen as construction materials have become more expensive. Steel prices have more than tripled in the past five years, and cement prices have been volatile thanks to market distortions caused by far-higher price levels in Syria. Would-be purchasers hoping to buy low in the unstable atmosphere will be disappointed.

"Bargains are not there," Atallah said.

Values have also stayed high here because, despite the country's chronic unpredictability, Lebanon continues to hold its attraction as a business location. Rents spiral ceaselessly higher in Dubai, one of Beirut's chief rivals when big companies look for a regional outpost, and multinationals can find the same employees here as in the Gulf.

"There is always an interest in commercial property in Lebanon, regardless of the situation," Safa said.

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