Bloomberg News

Damascus Property Market Picks Up as Syrian Pound Tumbles

June 20, 2013

Syrians Seeking Safety Drive Demand in Damascus as Pound Tumbles

A member of the Syrian army checks the identification card of passengers at a checkpoint in Damascus on June 17, 2013. Photographer: Louai Beshara/AFP/Getty Images

As Syrian authorities try to stem a currency collapse, real-estate agents in Damascus say business has never been better since the civil war began.

Hussein Youssef, manager of Aram Real Estate, received more queries in the past two months than he got in a year at the start of the uprising. More than 60 potential customers contacted him after the black-market exchange rate hit 130 Syrian pounds to the dollar in April and sparked demand in areas spared destruction for buyers with hard currency. It since depreciated to more than 200 per dollar this week.

“This is an excellent number at this time of crisis,” Youssef, who sold one apartment in a “Class A” Damascus neighborhood, said by telephone from the Syrian capital. “We’ve been surprised at the amount of queries we’ve been getting.”

The plunging value of the Syrian currency from a prewar 47 pounds to the dollar hasn’t been matched by a similar rise in property prices. Three real-estate agents reached by phone in Damascus said apartments in the capital’s prime locations that have seen little violence have risen by between 20 and 40 percent since the beginning of the conflict in March 2011.

“Those with dollars can now afford the property of their dreams,” said realtor Nabil Sukkar, who gets a lot of calls these days from Syrians asking how much their property is worth now. “It’s all because of the crash of the Syrian pound.”

Pound Panic

The Syrian pound has depreciated to a record this year, dropping more than 40 pounds on the black market in a few days. It changed hands for 180 or 190 a dollar in Beirut this morning, according to a money changer who asked not to be identified.

The sudden slide caused panic among Syrians struggling with soaring prices of commodities as inflation hit 40 percent, according to central bank Governor Adib Mayaleh.

The Syrian pound will continue to decline against the U.S. dollar and other major currencies this year, because of the European Union embargo on imports of Syrian oil, the Economist Intelligence Unit said in a June 18 report.

“Sharply lower oil exports, coupled with a fall-off in tourism and a substantial decline in foreign investment, will worsen the existing shortage of foreign exchange,” the EIU said.

Reducing Pressure

Monetary policy makers moved to try to address the decline, intervening in the market yesterday to sell $8 million to banks at 175 pounds to the dollar to fund imports, Mayaleh said in a statement to state-run SANA news agency. The central bank will also sell 50 million euros ($67 million) to exchange companies to finance non-commercial transactions and “meet citizens’ needs,” according to the statement.

Mayaleh said late on June 17 that the central bank has set up a mechanism to use a $1 billion credit line from Iran to “finance a big part of the local market’s need, which will contribute to reducing the pressure” on the exchange rate.

Deputy Prime Minister Qadri Jamil, who oversees Syria’s economic affairs, told state-run television yesterday the government intends to strengthen the pound’s exchange rate to between 100 pounds and 120 pounds to the dollar.

The government steps are “expected when your currency looks like it’s sliding rapidly,” though they may not change much, said David Butter, Middle East analyst and associate fellow at foreign policy research group Chatham House in London.

Iran Alliance

The line of credit is “not dollars that the Syrian government has discretion over to do anything with apart from to import goods from Iran,” Butter said. “This is a potential balance of payment support to Syria but it’s not something that’s going to make a short-term difference.”

Iran is an ally of President Bashar al-Assad’s family, which has ruled Syria for more than four decades. Hezbollah, the Iranian-backed Lebanese militant group, is fighting with the president’s forces against rebels.

Damascus had been spared most of the violence that gripped other big cities such as Aleppo until late last year. Since then, it has been hit by mortars and bombs and residents can hear fighting. In the city’s center, some restaurants and pubs are still doing business though closing earlier.

The latest monetary crisis caused confusion among buyers and sellers, realtor Sukkar said. He said three possible sales have been put on hold until the exchange rate stabilizes.

‘No One Knows’

Youssef and Muwaffaq al-Zoabi, an architect and a real estate agent, said most of the interest is coming from Syrians living abroad who are looking for opportunities.

A main challenge to those who want to buy is paying for the property, al-Zoabi said. Banks sell dollars at the official exchange rate, which is roughly half that of the black market rate, a disadvantage to the buyer, al-Zoabi said.

Youssef, whose company sold an average of 10 properties a year before the crisis began, said those considering buying a property in Syria should think hard.

“They should keep in mind they’re taking a risk even if they can now afford a better property because no one knows how this will end,” Youssef said.

To contact the reporter on this story: Donna Abu-Nasr in Dubai at dabunasr@bloomberg.net

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net


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