Progress in Beirut may be tracked in the history of its car parks. The 1975-90 civil war created many of these dusty spaces where buildings had once stood. Solidere, the company responsible for rebuilding the Lebanese capital, created one big car park in the historic centre of the city before reconstruction began.

More recently, during 18 months of political and security upheaval, anti-government protesters led by the militant Hizbollah movement occupied large open areas downtown.

These and other vacant spaces are slated to disappear as investors, mainly from the Gulf region, prepare to pour money into Beirut once again.

“As long as there is no violence in the streets, we are going ahead,” says Salah Almayyal, the Kuwaiti managing director and part-owner of Levant Holding. He is building a $1.7bn mixed development, to include a hotel, shopping mall, offices and residential properties, at the bottom of Martyrs’ Square – part of which is currently a car park.

The turnround in sentiment has been astonishingly quick after fighting between pro-western and pro-Iranian, pro-Syrian factions brought the country to the brink of another civil war in May.

A Qatari-mediated agreement and the subsequent election of a president have gone a long way to restoring confidence. And this week a newly formed broad-based government of national unity has gained the confidence of parliament.

Nabil Itani, head of the Investment Development Authority of Lebanon, is elated by the changes. From his office in downtown Beirut he gestures to a neighbouring car park. “There was a protest camp there just recently and now they are going ahead with a big project,” he says.

This is the Beirut Landmark, another big Kuwaiti-financed mixed development, which will have a hotel designed by Jean Nouvel, the French architect. Mr Itani says the project, which has been frozen for several years, has just received its final licence and is going ahead in central Riad el-Solh Square. More than $2bn worth of projects are underway in Lebanon, he says.

But Mr Itani is not all smiles. He laments the time Lebanon has lost in the past three years when other countries in the region have taken steps to attract oil windfall from Gulf countries. “Here, security and politics were the priority, not investments,” he says.

Lingering risks in the country were underlined yesterday when a bomb exploded in the northern city of Tripoli, killing 18.

Nothing daunted, the IDAL has proposed a series of reforms that include changing incentives that can be provided to investors. But the new cabinet has only nine months until the next elections and Mr Itani says he can only hope ministers will find time to deal with his proposals.

The changing role of the IDAL itself illustrates the rollercoaster nature of Lebanon’s fortunes. It is involved in only an estimated 10 per cent of total investment in the country, and the authority did not broker any new projects in the first six months of this year. Its total for 2007 was $127m; in 2006 it participated in $123m of projects; and in the last good year, 2005, IDAL shepherded $510m in investments into the country.

But in the month since interest was revived, the authority has had credible applications for $150m in projects, Mr Itani says.

Mr Almayyal confirms the enthusiasm for Lebanon in the Gulf. “We are getting a lot of interest from investors to participate in the [Martyrs’ Square] project,” he says, sitting in the lobby of Beirut’s Phoenicia Hotel, a favourite for visitors from further east. Levant Holding’s part of the development is to be called the Phoenician Village.

The hotel has been his second home for three years while he has been waiting for Lebanon to stabilise. This summer he judged the situation safe enough to bring over his family from Kuwait, to a house in the mountains outside Beirut.

But villages in the mountains are filling once more with visitors from the Gulf, recalling the time before Hizbollah’s war with Israel in 2006. Bhamdoun is where most Kuwaitis go. Saudis and Qataris gravitate to the Druze town of Aley. Others go to Christian Broumana and various villages that are closer to Beirut.

“I didn’t come for three years because of the instability,” says a Kuwaiti tourist who is taking an early evening stroll with his family in downtown Beirut. “We like it here better than in Europe – it is more oriental.”

A Saudi visitor boasts that he and his family remained true to Lebanon throughout its difficulties. The family owns a house in Broumana and even came back shortly after fleeing the 2006 war with Israel. As for investing in the country, the Saudi says: “Our house is an investment.”

Investing in real estate has remained a good deal in Lebanon, according to Mr Almayyal. “While we were waiting for the situation to stabilise, the land that we had bought quadrupled in value,” he says.

And he only expects prices to continue to increase