The number of construction permits experienced a yearly plunge of 19.26% to reach its lowest level in 6 years at 5,816 by May, compared to a higher level of 7,203 in 2014. In this context, the construction area authorized by permits (CAP) recorded a 20.57% year-on-year (y-o-y) decline amounting to 4.84M sqm by the first 5 months of the year, compared to 6.09M sqm by May 2014.
Noting that permits are usually issued at least 6 months after applications are filed, the fall in construction activity is due to the declining drift in demand that has started in 2011 following the eruption of the Arab spring. In fact, the six-month moving average of the number of construction permits shows a declining trend that coincides with that of demand, starting in 2011 when the Syrian clashes broke out.
The average area per transaction dropped by May 2015, from 845.63 sqm/permit in 2014 to 831.85 sqm/permit, despite the fact that only large developers are mainly in the market.
In May alone, the number of permits stood at 1,195, a 14.03% y-o-y drop from May 2014’s level. CAP also revealed a 25.08% yearly slump to 1.05M sqm from 1.40M sqm registered in May of last year. In terms of regions, Mount Lebanon grasped 42.85% of total permits, while South Lebanon and Nabatiye took respective shares of 14.64% and 13.39%.
Monthly Number of Construction Permits
Source: Orders of Engineers in Beirut and North