Syrian markets, an opportunity for Lebanese construction material sector

Low product demand in construction material industry draws the companies towards rebuilding Syria.

construction material, Lebanon, Project Lebanon, Saad Hariri
Lebanon's Prime Minister Saad Hariri visiting Project Lebanon 2018 © Dalati Nohra

Lebanese construction material sector is facing 40% reduction in demand for their product. The said sector is going through a struggle, said the exhibitors of “Project Lebanon 2018”, which ended on Friday.

Rousse Trading is a material manufacturer for constructions, whereby its Sales Executive, Elie Farhat stated:
“Demand for our products declined by 20 percent compared to three or four years ago because there are no new construction projects in the country”.

Project Lebanon takes place every year, whereby bringing “hundreds of exhibitors” from sixteen nations together in an event to exhibit the “novelties” of the construction material industry. CC Tenchique is another such company and its sales representative, Hadi Mahrouk reported that his company faced a 40% slump for their materials’ demand as construction projects have dropped down in number.

Furthermore, there is a problem with timely payments, which becomes an issue with the contractors, while the “shortage of cash flow” forced many construction projects to come to a standstill. Lebanese citizens’ weak demand for office spaces and houses is at the root for dropping number the construction projects be it commercial or residential, which eventually promotes “lower demand” for construction materials. The Byblos Bank Group’s Chief Economist and the Head of the Economic Research and Analysis Department, Nassib Ghobril said:
“Demand for housing in Lebanon declined sharply in the first quarter of 2018 due to the suspension of interest rate subsidies on housing loans at the beginning of the year”.

In February, the Central Bank of Lebanon gave a “500 million U.S. dollars” fund to banks which was allocated towards “housing loans” for the Lebanese citizens. However, the said fund was exhausted within a month’s time. At present, the banks are giving house loans which have an interest rate of “six to seven percent on loans in U.S. dollar” while the subsidized loans had only “three percent” interest rate.

In Ghobril’s words:
“Most Lebanese found themselves priced out of the market without any subsidy support, which significantly impacted their decisions to buy or build a house”.

In an attempt to cover up the losses, the construction material as well as the construction sectors hope to join in the rebuilding movement of Syria. While, Mahrouk:
“When reconstruction in Syria begins, Lebanese companies will expand their businesses by opening factories there in addition to exporting their locally made products to this market”.
“We will start exploring our opportunities in Syria soon”.

There are other optimists like, Mahrouk who see Syria as an opportunity. Similarly, the Ricci Ceramica’s Marketing Manager, Mohammad Rizk thinks taking part in Project Lebanon was the first step for the company to enter into the markets of Syria. In his words:
“We are meeting lots of Syrian people here at the exhibition asking about our products”.

CEDRE Conference was another subject of optimist among the exhibitors, as the said conference obtained “11 billion dollars in soft loans and grants” from “international donors”. The fund is aimed for bolstering Lebanese economy besides revamping its infrastructures crumbling beneath the weight of ailments. Primo Group’s owner, Fady Najm thinks that CEDRE conference would generate “demand for his products”. While, Najm stated that these loans may come with conditions.

At the beginning of Project Lebanon, the Prime Minister designate of Lebanon, Saad Hariri said that the conference will provide the opportunity to his country’s companies to join in “new big projects”. While, the Chairman of the “International Fairs and Promotions Group”, Albert Aoun said that “Lebanon will witness the launching of several construction projects after the conference”.