The Boom Before the Boom

If there's one topic that ignites the imagination of Beirutis and Tel Avivians alike, it's real estate prices.

An Israeli and a Lebanese man meet up for coffee in a European capital. What will they talk about? The risky business of forging passports? The Iranian nuclear program? The war clouds gathering over the horizon? No. If there's one topic that ignites the imagination of Beirutis and Tel Avivians alike, it's real estate prices. According to the Central Bureau of Statistics, the value of apartments in Tel Aviv surged 37 percent in 2009. By all accounts, prices in the Lebanese capital continue to soar.

The Lebanese man begins the conversation by carping about his predicament. "Even with half a million dollars you can't buy anything in Beirut anymore," he says. The Tel Avivian mockingly retorts: "Half a million? Don't make me laugh. If you want to live in the same neighborhood as Ehud Barak or Galia Maor, get ready to pony up at least 2 million."

Now it's the Lebanese's turn to heap scorn. "Who's talking about your minister of war? He isn't even worth one millionaire from the Persian Gulf. They come here on flights from Dubai and Abu Dhabi and drive prices sky high. They want the best apartments, with a concierge and parking, and they aren't deterred by the price. Now that oil's expensive again, they don't care. One square meter in Beirut now costs $5,000, in some cases even $8,000. They simply buy it all up and we, the Beirutis, are pushed out of the city and into the suburbs."

The Tel Avivian bursts out in laughter. "People from the Gulf? Give me a thousand just like them. Our problem is the French. For them, it's not just a matter of liquidity, but also ideology. They come here with their money on their charter flights from Marseilles and think that Zionism means buying expensive apartments in Tel Aviv. They pay any price for a balcony with a view of the sea and they leave us with a few tanning beds on the beach."

The conversation about the first Hebrew city, which still likes to think of itself as New York, at least in terms of price per square meter, continues. So does the talk about Beirut, which has regained the title of the Paris of the Middle East, at least when judging by real estate prices.

Backers of the Olmert government cite "the doctrine of refusal," characterized by a disproportionate response to an act of war instigated by the enemy (and which resulted in the wholesale destruction of Hezbollah's Beirut stronghold, the southern neighborhood of Dahiyeh). They cite this as a war story that changed the face of the Middle East. If it didn't yield a long-term psychological change, then at least Israel benefited from a few years of quiet, proponents of this argument claim. On the surface, the attendant leap in apartment prices in Tel Aviv and Beirut supports this claim. Both cities, which are vulnerable to destructive attacks, have become magnets for investors who view them as islands of normalcy and a kind of stability.

On the surface, this flourishing real estate market bodes well. Money, both foreign and local, that shows confidence in the sturdiness of these two vibrant cities on the Mediterranean is supposed to be the answer to the announcements coming out of Damascus, Tehran and Jerusalem. As long as Mahmoud Ahmadinejad and Bashar Assad, and even Minister Without Portfolio Yossi Peled, make threats against the cities, real estate prices will just keep going up and buyers will multiply. Still, nobody can ensure that an imbalance exists between the prices and the nervousness among the forces on both sides of the border.

It's worth asking whether this is the best of times or the worst of times for these semi-twin cities. Are those who have benefited from the real estate bonanza on the Mediterranean simply sticking their heads in the sand because of the war drums that are once again beating within earshot of Beirut and Tel Aviv? Will one boom, that of real estate, dissipate when the other far noisier boom happens?