As the property market entered into a troublesome year, the Real Estate Association of Lebanon (REAL) began 2013 by celebrating its recognition as a syndicate aiming to unite real estate intermediaries under a code of ethics. Executive asked REAL President Massaad Fares about the body’s first achievements under the new status as well as its plans.
E REAL has been active as a full syndicate for around a year. What have been the main achievements in this period?
We were previously active as an association and incorporated into a syndicate, as you said, about a year ago. Our major activity was the signing of an agreement with the [American University of Beirut] for the first real estate course in Lebanon: introduction to real estate brokerage.
E How long does the course run, what does it entail, and why is it important?
It is eight weeks, three times per week and three hours each time. The professors are all AUB professors. We give the introduction at the beginning of the session but the rest is all given by AUB professors. It covers negotiations, marketing, finance and banking — all related to real estate. We hope to continue with this education so that we are getting more advanced and this is our achievement in this year.
E Has the membership in REAL increased this year?
Yes, we have about 30 new members in the past eight months.
E That sounds like a significant increase, given that the membership in 2012 was below 30 companies. But how do you see the state of business for real estate intermediaries in 2013?
2013 has been the worst year in the trade. The political and economic situation coupled with our cycle has made it really the worst year.
E The worst in how many years?
I have been in Lebanon since 1996. I think this year has been the worst for me, mainly because of the lack of confidence. Not the lack of money, not the lack of product.
E How did the situation of the Lebanese government and the state of the cabinet influence the sector?
This is [the root of] the confidence issue. If we have a new government today, you will see that the whole market will change. All businesses will be positively affected. Confidence is the basis of economics. If one does not have confidence in the economy, one is not enticed to do anything.
E How about the impact of government inaction on the side of regulations and urban planning?
This is a long story. Unfortunately the laws in Lebanon are very old, most [have been there] since 1965, and they vitally need to be updated. They have not passed parliament yet but I can tell you that we all say we need them. Nothing has happened.
E Are there laws or law projects that specifically affect the intermediaries?
A few laws were introduced but they did not so much affect the business. The industry needs a total revamping in order for us to be able to say that the laws affected the industry positively. The development business is one of the strongest sectors in the Lebanese economy, and developers come maybe in second place after the banks. Unfortunately, the government is not looking at them this way. The government is only looking at them whenever they want to gather some more money and say we introduce a new tax on real estate. This is not the way one does development. Real estate is in the long vision. Real estate must be looked at as a long-term business and a wealth–generating industry, not as a product like in a supermarket.
E How about the professionalism among intermediaries? I understood that one reason why you introduced the course at AUB is that there is a need to improve the professional standards of the people in real estate.
All over the world, many people who have no [related qualifications] work as real estate brokers. Lebanon is the same. But here many buyers were taken advantage of by these [unprofessional brokers]. Perhaps because they don’t know how to read the floor plan correctly or don’t know how to read a contract. Thus the buyers feel cheated.
E When you attend an event or a social function and introduce yourself as a real estate intermediary, do you ever have people complaining to you about how bad the intermediaries are?
Yes. This is exactly why I started the association. I was tired of people telling me, ‘in this business, you are cheating people’ and using the word real estate broker like an insult. I wanted to change this. I wanted to tell the people in the Lebanese market that their broker is [a person of confidence] like your lawyer, your banker. He knows the inside of your problem and can help you solve your challenges, can help you get to where you want. I don’t want the real estate person to be your enemy. I want the real estate person to be your friend.
E That sounds like a tough challenge.
It is. It is a tough challenge but the situation is changing. Now when I am with people at dinners they say, ‘yes, you now have an association.’ This is very good and we have many plans that I don’t want to talk about yet. We have, for example, an awareness campaign [about] what a real estate broker is.
E For the general public and not just for those people who want to enter the profession?
For the general public because we want people to know that if they need a real estate broker, they should go to the broker that is licensed by the syndicate. Don’t go to the hairdresser, the butcher or the concierge. Go to someone that can be accountable.
E There is no existing mandatory liability insurance for brokers?
No. We are working on a proposed law to [to ensure the] intervening of a real estate broker becomes mandatory in all real estate transactions.
E That would make the brokers established as intermediaries by law. But is there a law to protect the customers of brokers against errors, like they happen in every profession?
No. But this comes along with the [other law]. They go together.
E What you are saying highlights why you attach so much importance to educating intermediaries and having them acquire certification. How many people participated in the first course in AUB?
Each course is [currently] limited to 25 people.
E Were some of them regular students or were most participants real estate professionals?
All are members of the syndicate and we will not open the course to the public until we finished [educating] all [members].
E And the members have to pay for the courses?
We are offering the program free of charge to syndicate members. We are financing it.
E May I ask how much the budget is?
Our cost is $800 per person but this is a price that the AUB gave us with about 50 percent discount.
E What do you expect for the syndicate in 2014?
REAL is going to make everybody know what a real estate broker is and how important this job is. And it will make the real estate brokers be proud of their profession. This is our plan in 2014. We have several activities and all are focused on this: awareness of the profession, awareness of the need of the real estate broker. Parallel to this we are working on the project of the law.