Spotlight: Lebanese depositors try to invest in real estate, gold to escape possible haircut

The Lebanese have been desperately trying to invest their bank deposits in real estate and gold to escape a possible haircut in the near future.

Lebanon has witnessed in the past few months a shortage in U.S. dollar, caused by an economic slowdown and the drop in cash injections from the Lebanese abroad.

Hence, banks have imposed restrictions on the withdrawals of depositors and the conversion of the Lebanese pound to the U.S. dollar, creating great panic among people about the future of their savings.

“Demand for real estate has increased tremendously since the start of the dollar crisis,” Mazen Moharam, CEO of Moharam and Itani Developers, told Xinhua.

But the luck in acquiring an apartment or any other real estate property depends, to a great extent, on developers’ need for money, Moharam said.

“If developers are indebted to banks, they may accept checks … and deposit these checks in their accounts to settle their loans to banks,” he explained.

However, developers not in need of money are not selling for fear of a possible haircut of their deposits, said Raja Makarem, chairman and founder of Ramco Real Estate Advisors.

“In this case, developers prefer to keep their properties instead of depositing higher amounts of money in banks,” he added.

Meanwhile, people in Lebanon have also been trying to invest in gold but jewellers say they refuse payments by credit card or check.

“We have a great demand for gold but we cannot sell gold in return for virtual money such as checks or credit cards,” Yasser Younes, owner of a jewellery shop in Verdun, told Xinhua.

“We only sell for cash,” he said.

Two other jewellers, respectively in Hamra and ABC mall, also confirmed the cash-only payments in gold transactions, adding credit cards and check payments are only accepted for regular fashion jewellery items such as pendants.

For experts, diversified investments should be made in such uncertain times.

“It is not advisable to invest in one specific item. Diversification is good,” Riad Obegi, chairman and general manager of Banque BEMO, told Xinhua.

“Gold is not the ultimate protection in my opinion because history shows that prices of gold have been volatile,” he said.

Obegi suggests investment in items with a stable value such as real estate and successful companies.

Hassan Khalil, a local economist, also said the best investment for the time being is the real estate.

“This is the best recommendation for now because developers can settle their debts to banks while clients succeed in investing their money in real estate. It is a win-win situation,” he explained.