Soaring property lending cause concern
Due to record high property sales in Lebanon during the first quarter of 2010, some analysts are urging caution for builders, developers and banks as easy credit increases in parallel to property prices. There was a total of $2.1 billion in sales in the first three months of the year, which is a 41 percent increase compared to the same period last year, with the number of transactions reaching 22,000, according to the latest report from the Directorate of Real Estate. It is not the amount of total residential lending, but rather the sharp rise in lending that worries International Monetary Fund mission chief for Lebanon, Andreas Bauer. Speaking at the presentation of an IMF report on Lebanon in mid-June, he said: “If credit growth accelerates further, the authorities should consider capping and gradually phasing out incentive schemes that provide exemptions to reserve requirements.” The pricing boom, driven by demand not short supply, shows no signs of plateauing, with most of the 350 new buildings to be delivered to the market by the end of 2010 valued at a minimum of $3,500 per square meter, according to a June study by Ramco, a Lebanese real estate service company. Both the Central Bank Governor Riad Salameh and Deputy Governor Saad Andary put down fears of a housing bubble. Andary told Bloomberg in June: “Out of each $100 spent on property acquisition, not more than $16 to $18 is financed by banks. The rest is hard cash, mainly from Lebanese from abroad. We have no fear from a housing bubble.” At the end of last February, loans to the sector totaled $12.2 billion when combining loans for construction, housing and rent. Pragma Group bets on Dubai
Betting on economic recovery in Dubai, the Lebanese firm Pragma Group announced in mid-July its plan to pour a total of $100 million into a major landmark in Dubai Media City, the Palladium, which opened last year. The family-run firm has already acquired the land and the building from a group of Emirati institutional investors, but won’t reveal the exact cost for the multi-functional venue, used mainly to host musical events and large gatherings such as weddings. Joe Tabet, chairman of Pragma Group, has plans to transform the Palladium into an all-inclusive entertainment center that includes a boutique hotel and several restaurants. He told The National: “A certain category of people… are not finding what they want in Dubai. They still travel to happening cities like London, New York, Kuala Lumpur to entertain themselves.” In Dubai, the group already owns The 400 Club and the Cavalli Club, and has restaurants and properties in Saudi Arabia, Syria and Jordan, in addition to Lebanon and the UAE.
Jordan’s real estate picks up
For the first time since the end of 2008 and the onset of the financial crisis in the region, the real estate market in Jordan has recorded a quarterly growth in the residential leasing and sales sector. Asteco, the Dubai-based property consultancy, released its ‘Jordan Report Q2 2010’ last month, showing that rents for three bedroom apartments increased 4 percent on average, while one-bedroom rents remained static in comparison to the first quarter of this year. The residential property market experienced a 1 to 3 percent rise in sales, depending on the location. The most expensive areas, Abdoun and Um-Othainah, each grew 3 percent in the second quarter, commanding up to $1,400 per square meter. Hussein Safadi, general manager of Asteco, revealed that the marginal increase was due to improved loan packages from banks. “In addition, improved and flexible mortgage facilities have gradually become available to individuals,” he said. The main reason for overall weak demand, he added, was high construction costs. Office rents have shown a quarterly decrease in rents of between 1 percent and 3 percent, depending on location.
Syrian hotel rooms set to double
By 2015, the number of hotel rooms available in Syria will almost double to 6,000, boosted by the entry of international chains such as Mövenpick, Kempinski and InterContinental in the next two years, according to a report by Colliers International. Damascus already boasts a Sheraton, Rotana, and Four Seasons, and Syria saw its tourism sector increase by 12 percent last year, with most tourists coming from Lebanon and the wider Middle East. The report stated that more foreigners are visiting Syria due to its fairly peaceful economic and political situation, adding that it is one of the few countries in the region that skipped through the financial crisis with relative ease. The government’s go-ahead to provide accommodating infrastructure is also part of the reason for the increase. Construction projects are taking place inside and outside of the capital. In Aleppo, for example, Accor will open and run two hotels, the four-star Novotel and the three-star Ibis, in the Taj Halab mixed-use district. Taj Halab is a 200,000 square meter real estate development, operated by Bena Properties and expected to finish in 2014. In addition to the Sheraton, Aleppo also is home to the Coral Hotel & Resort. The Martini Aleppo, another hotel by Emirates-based Coral, is already being built. The report concludes that, in the short to medium term, Damascus will only have a 70 percent increase in hotel rooms, but to satisfy demand predictions, the number of hotel rooms should increase by 90 percent, which will take more than two years. The report also claims that the capital’s hotel occupancy rate was 72 percent in 2009, and predicts that religious tourism will double in 2010.
Live the eco dream in downtown
The Lebanese development group Benchmark held a groundbreaking ceremony on July 16 at the site of their new residential tower, Developers are working on plans for an eco-friendly 130-unit tower in the Minet al Hosn area of Beirut’s central district. ‘Beirut Terraces’ will be designed by architects Herzog & de Meuron, and is set to include landscaping and open spaces weaved into each uniquely-dimensioned floor. The website for Beirut Terraces claims that the tower incorporates intricate, energy-saving systems that take advantage of the city’s climate. The thick floor plates in the 25-storey building store heat during the day and release it at night, reducing the need for air conditioning. Besides the architect, the other partners in the project are Bank Med and Khatib & Alami engineers. Bassim Halaby, the chief executive officer and chairman of Benchmark, said that 20 percent of the building has already been snatched up in pre-sales and that 70 percent of the buyers were Lebanese. “We view ourselves as equally accountable toward protecting the environment and we are therefore committed to creating a sustainable development,” said Halaby, adding that space is selling for less than $10,000 per square meter. According to Zawya the total project is worth $500 million. Tower owners Benchmark, founded in 2006, own residential assets of about $1.4 billion according to World Arab, spread out between Yemen, Saudi Arabia, Morocco and Lebanon.
Abu Dhabi’s urban policy redirected
Middle income households in Abu Dhabi will be the beneficiaries of a new housing policy, which forces new residential districts exceeding 75,000 square meters to allocate one fifth of planned housing units to this group. The emirate’s Urban Planning Council (UPC) announced in July that rents for various housing structures within the targeted districts, from studios to three bedroom apartments, will be limited to 35 percent of a family’s verified middle income. To qualify as such, the income ceiling has been set at $68,608 per year. The government policy, effective immediately, does not apply to villas and town homes within these planned developments, the earliest of which will be available to the market within the next two years. There are an estimated 73,000 new homes scheduled for Abu Dhabi’s market by 2013, meaning 15,000 will be reserved for this income group, according to The National. Falah al-Ahbabi, UPCs general manager, said “We consider the provision of quality affordable housing to retain and attract skilled professional workers as an important social component in the long term strategic development of Abu Dhabi.”
