With businesses closing and people having less access to their money, it’s absurd to think that people would be rushing to buy luxury items and investing in real estate.
However, interestingly enough, many Lebanese people with substantial savings are investing in luxury items such as gold, real estate, and luxury cars because they believe that they will lose their money through devaluation or a ‘haircut.’
They are paying for these luxury items using cashier’s checks. The idea behind this is that if they invest their money in valuable items before it loses its value, they can then avoid losing their savings during the current bank crisis.
Even though there are capital control measures taking place by the banks in Lebanon, people with large sums of money are able to write checks in order to purchase luxury items.
One car dealer said to Naharnet that even though car sales have generally decreased, customers are fetching over $400,000 to purchase Lamborghinis and Bentleys.
Companies are encouraging Lebanese through social media and billboards to invest in overseas properties to diversify their assets.
As one real estate company posted on Facebook, “Secure your savings with a property investment in Greece that you can pay for in Lebanon.”
According to Karl Kanaan, a Beirut-based real estate broker, the sales of real estate have tripled since November. The demand for real estate had increased.
Although at first glance it might seem counterintuitive to be needlessly spending money on luxury at a time of crisis, it makes sense when you consider the fact that at a time where people’s savings have been losing their value, having other assets could offset your losses in this crisis.
These luxury items will increase their relative value to a faltering currency, which keeps people from losing their savings. This means they can later sell or rent them for a higher price when they’re in need of money.