Real Estate's Titanic

Some of our readers from the real estate sector, as you can see from their 'loaded' comments, don't seem to understand how Capitalism works, and believe that they should make a guaranteed 30% annual return on their capital, year, after year, after year, ad infinitum.

Here's how Capitalism actually works:

You deploy capital in a project. This capital is at RISK, which means that sometimes you make money, sometimes you lose money, with the expected annual return being X%, let's call it 30%, for now*. However, too many amateurs are crowding the sector recently, and those have never been in a recession or real estate slump, like the one in the 1990's. Therefore, today, when they've entered the beginning of a real estate slump, they're shocked and don't know what to do, so instead of lowering prices and making less money, or losing a little bit of money, they'll just hold on to the Titanic and sink with it. They'll just keep waiting for the hoards of Gulf tourists to come back, or the plane loads of expats from the so-called 7 million Lebanese in Brazil, who are all just dying to move back here (as if the reasons they emigrated in 1890 changed today), or the ones in Africa, who can't even transfer their depreciated local currency out of the country, or the ones in the Gulf, whose bonuses were slashed by 2/3 (proportionally to the drop in oil).

By the way, when we say beginning of the recession, we mean it. In a couple of years, you'll look back to today, which is the worst day of your life, as the good times.

Here's our advice to you: Sell now at any price or YOU WILL GO BANKRUPT.

For any of you still fooled by those charlatans, and contemplating buying today, just fast forward a few years and think about all the empty unsold apartments today, and all the ones in the pictures we posted (which are maybe 0.01% of the new supply coming in), and look at the state of the economy, and the geopolitical security situation, and try to guess which way prices are heading.

Oh, and one more thing. For the guy still constructing, instead of cutting his losses and exiting. When you see your colleagues with completed projects not being able to sell hardly any units, and having to massively lower their prices, WHAT ON EARTH ARE YOU THINKING?

* On a side note, and to show you their ridiculous assumptions, if someone made 30% a year for 30 years, $100,000 would turn into $262 million. So all anyone has to do is to take the money his parents would have paid for his college education, plough it into real estate development for the next 30 years, and retire with $262 million at 58 years old

ٍSource: Real Estate in Lebanon