Commercial real estate prices in Damascus are skyrocketing, putting the city on the list of the most expensive cities in the world in terms of commercial realty, not far from capitals like Paris, London and Moscow.
 
Only recently, American consultancy company Cushman & Wakefield released a study showing the Syrian capital was in the eighth place in the world in terms of the cost of commercial real estate.
 
The study examined more than 200 cities in 57 countries worldwide, and discovered that Hong Kong was the most expensive with a price of some $2,276 per square meter.
 
During the year of 2008, the commercial real estate prices in the Syrian capital rose by some 14%. For a square meter in an office in Damascus one must pay an average of $1,274, two and a half times the price in the Lebanese capital of Beirut, where people pay for an office an average of $520 per square meter.
 
Prices in some areas tripled
In an interview with the Syria Today magazine, Syrian real estate expert Nabil Marzouk tried to explain the sharp rise in real estate prices in Damascus. According to Marzouk, the problem stems first and foremost from the lack of organized urban planning.
 
The failed planning of the city, he said, has led to a shortage in commercial real estate areas. There are currently almost no office building projects in Damascus.
 
According to Marzouk, the past two years saw an increase in investments by companies from the Gulf states operating in the Syrian real estate market. The demand for real estate rose, while the supply remained limited, sending the prices up in a significant manner.
 
Arab companies which have entered the Syrian market since 2006 did not find it difficult to pay a lot of money for real estate properties, causing the prices to triple in some areas.
 
Marzouk added that the real estate price hike has begun to trickle in the past few months from Damascus to other Syrian districts. According to the Syrian expert, the real estate prices in the capital do not decline like in other cities as a result of the global crisis, due to their individual ownership.
 
According to Marzok, in other places in the Arab world companies usually own the property and are therefore affected by the global financial crisis. "In Syria, the ownership over real estate belongs to individuals and they are not interested in the financial crisis, which does not influence them," Marzouk told the paper.
 
Doron Peskin is head of research for Info-Prod Research (Middle East) Ltd