Take a stroll down Mar Antonios street in Gemmayzeh,
Ashrafieh, and you feel the flavor of old Beirut – red sandstone
buildings, trailing plants, wooden shutters and a lazy fug
hanging in the air. People live here not just in an apartment but in a
street, in a quarter, and that’s what has attracted Karim Bassil, general
manager of La Constructa, to build two new apartment blocks in
the old architectural style. “I want to create something beautiful of this
small street,” says Bassil, “and I want others to follow my example.”
Cynics might say that Bassil is another idealist about to be
trampled by brute economic reality, but he has pre-sold six of seven
apartments in one building, way ahead of handover at the end of
the year, and nine of 15 in a second, which will not be ready until
the end of 2002. With high interest rates, low liquidity and estimates
higher than 100,000 for empty apartments in Beirut, Bassil is one
developer giving people want they want at an affordable price.
The seeds of the project were planted when he and his wife were looking
for an old house to live in and renovate. “We thought about sharing
with friends,” he said, “and found many people liked the idea
because they were fed up with modem designs.” Renovating old buildings
is expensive and can produce prices beyond market demand – a
major reason why developers opt for importing standard designs
that maximize built-up area
(BUA) and offer modem facilities
like parking. Building anew
in the old style is sometimes
cheaper than renovating.
Bassil has plans for Mar
Antonios street as a whole, but
has begun with two buildings
opposite each other. The first is
seven stories and the second
eight stories. The designs, by
the architects Dagher, include
wooden shutters, small balconies
and high ceilings.
Margins are tight. The base
sale price for the first building was $1,000 perm’, rising by $50 a floor.
The second building begins at $1,075, rising by $75 a floor: a 346 m’
apartment on the fourth floor, for example, is for sale at $449,800.
Bassil paid “well over$ I ,000” per m’ for both plots of land, and estimates
the land at $500/$600 perm’ of BUA: With construction costs
at $600 perm’, sale at $1,525-$ 1,450 allows little room for error
As his own contractor, Bassil is able to keep costs down. La
Constructa, formed in 1994, are builders. Its original link with Byblos
Bank (whose chairman Francois Bassil is Karim’s father) has now
reduced to around 30% of business. Contracts include work on the
new French Embassy, St. Charles Hospital and Chateau Kefraya.
The Gemmayzeh development is partly a way of keeping La
Constructa – which had a turnover of $15 million last year –
going as a building contractor. “As a real estate operation, there’s
no real profit in our Mar Antonios street development,” Bassil says.
“As the contractor we have a l0% margin on construction for profits
and overheads. This helps me keep the construction business
going when a lot of others are struggling with no work.” A second
factor that keeps costs down is that clients pay relatively early. For
the first building, buyers paid 50% up front and the rest on completion.
For the second, the payment scheme is more flexible, and
up to 70% of costs can be through bank payment of up to 15 years.
Bassil bought the first plot only when he had firm offers for 70% of
the apartments, 50% on the second. “This means I reduce my own risk,”
he says, “but it only works if the clients trust me. And that applies to
the whole project. I’m just starting out in my career, so I can’t afford
to make mistakes or break promises.” This is a matter of personal relationship.
Bassil goes over the plans face-to-face with potential residents.
The location of Mar Antonios street – just five minutes’ walk from
downtown – tempts comparison with Solidere’s Saifi project, a second
example of new build in the old style. Solidere’s prices are
around $700 perm’ higher, a difference which, for the buyer, could
mean an extra $250,000 on a large apartment.
Solidere has rebuilt Saifi village – as a mixture of renovated old
buildings and new build in a traditional style – because of the land use
requirement of the downtown master plan, and not for strictly
commercial reasons. Before the war, Saifi was part of a wider
residential community from which it is now divided by the Ring
and Georges Haddad Street. Despite the recession, Solidere
claims to have found takers for more than half of the 136 apartments
ahead of completion. “We’re going well,” says Naaman Atallah,
real estate sales and leasing manager, “with things picking up once
again because of the possibility of a change of government.”
The Saifi project, which comprises four blocks of 16 buildings
with a maximum height of 24 meters, is undeniably an attractive
design. The facades have been designed by the architect Francois
Spoerry, best known for Port Grimaud near St. Tropez, whose style
has been called ‘gentle architecture.’ Some of the restored buildings
in Saifi have been entirely refashioned from a shell, with stunning
craftsmanship throughout. The mix at Saifi has a high number
of one-bedroom apartments-38 against 71 two-bedroom apartments,
29 three-bedroom apartments and one four-bedroom apartment.
This is presumably designed to appeal to foreign executives
or Lebanese businessmen seeking a pied a terre, which is why the
typical one bedroom is fully 165m’ and has a maid’s quarters.
Solidere’s basic sale price of $1750- rising by $50 per floor and
individual apartment attributes – has proved high for the market.
In Gemmayzeh unmodernized property is available at $500 perm’
or less, and in Sursock top-end luxury sells for around $1600 per
m’ . Hence Solidere’s emphasis on rental. At just $85 to $110 per
m’, the yearly rental is 5% of sale price, not the I 0% usual in Beirut.
These prices are designed to be competitive with comparable
areas; Solidere acknowledged dropping its rental prices last year.
A two-bedroom apartment will cost $16,389 a year ($1,365 a
month) in rent; and a three-bedroom apartment $22,410 a year ($1868
a month). To buy, a second-floor one-bedroom, 165m’ apartment costs
$305,000, a two-bedroom 217m’ apartment $401,000, and a three-bedroom
325m’ apartment $601,000. It’s no wonder, then, that the bulk
of Solidere’s success with Saifi has not been in sales. “Lease-with-option
to-buy makes up half the total [ of apartments spoken for),” says
Atallah. “Sale is 30% and straight rental 20%.”
Solidere has held its sale price presumably because it believes
buyers will eventually be found. The profit/loss figures
are notional, because Solidere is not really buying
its own land, but the target sale price suggests
a low margin. Solidere quotes the price of land in
downtown at $1050 perm’ of BUA. Construction
costs of $600 perm’ would put the cost of Saifi residential
at around $1650 perm’, just$ 100 short of
the base sale price.
The long-term prices of residential are even less
predictable than office prices. Supply will increase,
a5 42% of BCD’s total 4.6 million m’ is zoned as residential,
but if the march of standard, imported
design of new build continues, the appeal of older
designs – even if built anew – may rise.
Karim Bassil and Naaman Atallah know each
other. Each argues his own project is the better
value. Bassil’s higher level of sales in percent
seems to provide the answer. But there’s another,
more interesting question: Why is nobody else
building new in the style of the old?
