Executive talks to Abdul Hafiz Mansour, CEO of Horizon Management, the real estate company, established in 2003, to oversee and develop the Hariri Group’s real estate portfolio, about projects in Lebanon and abroad.
E What are the most important projects Horizon has been working on so far?
We have been working on three projects to date. First of all, there’s the project codenamed V5, which will be one of the three most important shopping destinations in Beirut. It will be built on the site of the former Karmel St. Joseph School opposite Dunes in Verdun. While the fragmentation of ownership in Lebanon and the strength of the country’s property law often make it difficult to develop such a large area, we did not face any of those problems. Secondly, there is the Raouche Hotel, which is a 270-room, high-end luxury hotel, which will be built next to the Coral Gas Station in Raouche, one of the last available plots of land on that side of the Beirut seafront. Thirdly, there is the project codenamed V2, which will be built next to the Bristol Hotel, on a 7,000m2 plot of land. This project consists of two high-end residential towers with apartments of some 540m2 each, next to a suites hotel with one, two and three-room luxury apartments. There will be a small retail component that will not exceed 10% of the overall project. We have several other projects in the pipeline, but I prefer not to talk about things prematurely.
E What are the investments worth?
Including the price of land, which is worth between $3500 and $4500 per square meter, the V5 project is a $200 million project, while the Raouche Hotel is worth some $85 million. I cannot yet give any financial details regarding the V2 project.
E Is Horizon Management solely responsible for these projects?
For the V5 project and Raouche Hotel we work with our partner, United Real Estate Company, which is part of the Kipco Group, one of the largest investment companies listed on the Kuwait Stock Exchange. Regarding the V2 project, we are developing this property on our own.
E Can you tell us a bit more about the main characteristics of the V5 shopping mall?
The V5 will stand on a plot of land of about 18,000m2, which is one of the largest plots of land in Beirut still available for development. The V5 has a more than 140,000m2 construction area, which includes the underground parking areas. The marketable area will be about 50,000m2, which will comprise retail and entertainment areas. We are still working on the tenant mix, but our aim is to create a destination area for the whole family.
E We’ve been hearing reports about the construction of the V5 mall for quite a while now. Why has it taken so long for the project to materialize?
In December 2004, parliament passed a new building code, which needed certain interpretive and regulatory government decrees to be put into effect. Normally that would not take more than a few months, but due to the extraordinary events of this year, the cabinet only approved those decrees much later, by the end of November, and they are not yet published as I speak to you today. So, we were delayed by some seven months, as our final concept has to conform to the new code. This was not a problem just for us, but for all development projects in the country. Now we can proceed in developing our concept and apply for all the necessary building permits.
E Without becoming too technical, could you give an example of how the new code affected building plans?
It is mainly regarding basements and superstructures in relation to the exploitable and non-exploitable areas. It will also clarify how to calculate the exploitable area with respect to land where you have differences in levels around the site.
E Lebanon’s retail climate has changed considerably over the last few years. Do you really think there is room for another mall? And how will this affect the market?
According to every estimate and study made on the issue, Lebanon still falls behind most countries in terms of available shopping space per capita. So yes, I do think there is room for growth. We think V5 will form a healthy triangle with the Souqs in downtown Beirut and ABC in Ashrafieh, each with its own character and catchment area. For V5, the catchment area is not only the immediate surroundings in Verdun, which is a densely populated, high-income area, but extends to the whole area from Ras Beirut to Corniche Al Mazraa. It will be the first shopping center facing the incoming traffic from the southern axis to Beirut. We are very confident of the suitability of the location for the mall. To be successful each mall should have its own character and its own specific attractions and magnets. And we will avail such distinctions to the V5 mall.
E What about the City Mall at Dora, the Metropolitan Mall and BHV/Monoprix in southern Beirut?
We don’t consider the City Mall a direct competitor, as we believe that the City Mall shall mainly serve the Metn area. Same is true for the Metropolitan Mall, which aims at hotel guests and residents from the region. BHV/Monoprix is a department store and hypermarket and does not have all the components of a mall. In this respect, the V5 will be filling a shopping gap in the catchment area we mentioned before.
E When the V5 and, in the future, V2 projects, are completed, what will be the consequences for Verdun and Hamra as retail areas?
V5 and V2 will complement and lift Verdun as a major retail area and hopefully increase the character of Verdun as a high street shopping area running from V5 to Concorde Square. Now, Hamra has of course considerably changed over the years, from a high-end to more mid-end retail area. In that sense, Verdun and Hamra do not directly compete and they could actually very well complement each other. Don’t forget that it is only a 5-minute walk from Concorde, and the future V2, to Hamra.
E Tourism saw a significant decrease this year. Are you confident tourists will return in the near future? And to what extent is that important for the success of the V5 mall?
These days, shopping is an integral part of tourism. Look at the Gulf nationals who come here. No matter how many malls there are in Dubai and Riyadh, they still go shopping here. Shopping has become an attraction in itself, so of course it is important to us. I think the current situation is but a transition phase. Given political stability, tourists will return in increasing numbers. The signs are there. The end of last summer was already better than the beginning. Look at the funds flowing into real estate investments that have been made this year.
Now, tourism forms an increasingly important part of the Lebanese economy. The bulk of tourists are not the kind who come for a few days to see the country’s main sites, but rather frequent visitors to the country, including those who have residence here and usually stay for two or three months a year.
E Dubai has developed very fast over the last few years. Are you not afraid of Dubai’s competition?
Dubai is a fact. It is good to have a success story in the region. Lebanon has been unfortunate in the recent past as it suffered from the Arab-Israeli conflict, but we have survived and we have the resources to create new opportunities and a new position for the country. Competition is only a good thing. It makes one work harder and be more creative. So, in that sense the success of Dubai will only help Lebanon.
E So, you remain positive about the future?
We are. We will no doubt miss the guidance of His Excellency, our late prime minister Rafik Hariri, who was an illuminated leader, who in a very short period brought developments to the country that astonished the world. I am confident that his successors will capitalize on his legacy and continue forward. Lebanon still has a lot of potential and untapped opportunities. I firmly believe that the Lebanese will be able to position Lebanon in the right spot regionally and internationally.