The enterprise of the Zard Abou Jaoude family is a self-declared attempt at renaissance, as per the very name of its cornerstone property development company, Renaissance Holding. It is a venture that aims to prosper through rebirthing the Lebanese village.
At the heart of the tale is Georges Zard Abou Jaoude, an architect-banker and real estate tycoon whose life can be taken as case study to disprove the theory of homo oeconomicus — that man puts profit and self-interests above all else in making rational assessments.
“I never think about business. You cannot but think business when you go into cash flows, profitability, return on equity, but what drove me during my whole life was passion. I function like this, it is how I deal,” says Abou Jaoude. “It’s not the best way to do [business], but when you are built like I am, you cannot change. Sometimes you go wrong, but most of the time it helped me that I think with my heart.”
On the operational level, he is now working on estate projects in the Metn region with aspirations to expand from there, both in Lebanon and abroad. Structurally and internally, it is the story of a trans-generational family business which is organized into two privately held real estate development companies — Zardman and Renaissance Holding — plus side investments of passion in enterprises such as Virgin Radio and Lotus Cars.
Zardman will carry the majority of the projects going forward, Abu Jaoude explains in his home in Jal El Dib. It has built up a portfolio of some $200 million in projects under construction over the past four years and the company is now in a phase of consolidation after this period of furious growth.
A Modern Lebanese Village
Renaissance Holding is best known for developing BeitMisk, a master-planned community of 1,800 units located between the Metn Expressway and the Antelias-Bikfaya highway in the hills above Beirut’s northern suburbia. The BeitMisk project is progressing in line with its plan, albeit the costs of construction have gone up by 20 percent, Abou Jaoude says. This means that the total value proposition of BeitMisk is pointing today to somewhere north of the billion-dollar line. Numbers he gives Executive — namely averages of $2,500 per square meter and 300 square meters as size per unit — would put a theoretical standard unit at $750,000 and result in a total project value of $1.35 billion.
That number is likely to be the top-end assumption, with some possibility of variance since the value range per unit spans from $200,000 apartments to villas going at $3.5 million. But whether BeitMisk is a billion-dollar village or a billion-plus one, the more exciting question is if it can deliver on Abou Jaoude’s expressed aim to save the charm and magic of the Lebanese village, a vision that he sought to imprint on the project from its conception.
An even more open-ended question is if BeitMisk, as a modern, connected village, can provide its residents with social as well as financial returns on their investments. Can it engender so much human energy generation that it will grow into a profit center in the provision of social and economic equity?
This dimension, of reinventing community spirit and sustainable profitability as the aim of the new villages, is a familiar driver of utopian approaches to urban development and is palpable in the thinking behind BeitMisk. But irrespective of the intangibility embedded in this sort of concept, the project has successfully enticed some very potent commitments.
Banque Libano-Francaise (BLF) came aboard early on as main lender for the land purchase and development of BeitMisk, and Emaar Properties says on the website of subsidiary Emaar Lebanon that this unit was incorporated with one of its aims being “to contribute to the development of the BeitMisk project”. According to Abou Jaoude, Emaar is a stakeholder under an agreement signed with Renaissance Holding but not a shareholder.
From banking to building
An important factor in Abou Jaoude’s story is his move from his first love, architecture, into banking and how — after charges of money laundering and terrorism financing leveled by the United States forced the closure of Lebanese Canadian Bank — he is again focused mainly on the real estate side of Lebanon.
Both are crucial constituents of the Lebanese economy but when Abou Jaoude says that “banking is the heart of the economy” while real estate “is very important”, it is clear between the lines that his exit from banking was not at all planned in the form in which it played out.
He is still mystified by the chain of events and says it is not the time to talk about what transpired and instead wants to focus on going forward. This includes plans to institute a more formal structure for the development of Renaissance Holding and Zardman, Abou Jaoude says. “Growth was quite fast in the last three years, so we need a period of consolidation. Now, our main concern is to have all the procedures in place, all charts in place and get people to understand how we tackle all the problems. Parallel to this, we will be keeping up our growth. We have a lot of dreams [on] how to diversify. We have the Virgin Radio and a lot of different small activities. The sky is the limit, as far as you grow in a very healthy way.”
Surveying beyond lebanon
Projects on the Zardman books include its first international venture — a large development in Erbil, Iraq. According to Abou Jaoude, it has been revised to no longer include a shopping mall, but instead is going to be “a beautiful project”, one that has just seen the start of excavations and is set to be complete in three to four years. Internationally, the family group is looking at partnering for an even bigger project than Erbil with a Lebanese group in Lagos, Nigeria, and Abou Jaoude toys with the concept of a second African project, which he describes as something “risky, in a remote country”.He adds that he is not yet in a position to reveal details on either project.
As for the institutional structure of family holdings, some things still appear to be under consideration. “We are going into a family office, and God knows where we are going from there. All this is a little early to plan in detail,” says Abou Jaoude. “After my old experience, I wish not to go into other money projects — we hopefully will develop our own wealth slowly but surely.”
Closing some old chapters will likely help with the next steps in succession planning for the family holding, but one thing is clear, says Abou Jaoude: “Zardman [is for] the kids and son-in-laws, and Renaissance is me. In a later stage we will see what is best; the guys should sweat their asse[t]s and I should use my boat much more often.”
The aspiration to create a magically wholesome and sane Lebanon undeniably shines through when one sits and discusses property development with Georges Zard Abou Jaoude. He shared his views with Executive on Lebanon, green priorities and community building.
Do you agree that we face a gap between public sector infrastructure and planning on the one hand and the quality of the private sector developments on the other?
Whatever goes into public sector is lousy in Lebanon. Since 20 years I keep saying [that] to save Lebanon, you have to shrink the public sector.
When you embarked on the project, you needed a lot of infrastructure and access roads. As a private sector developer, how do you manage the need to develop infrastructure that otherwise would be provided at the municipal and national levels?
I’m not asking the government to execute the infrastructure for the private projects, but when you build the infrastructure [yourself], you have to give it back to the government. In this case, because of the lack of a lot of things on the public level, the maintenance of this [infrastructure] is going to be quite expensive.
What infrastructures are you developing privately in BeitMisk?
We are doing the sewage, water, electricity, the Internet, cables, fiber optics and we are cleaning the wastewater to use this water for the plantation. This is very costly.
What does this mean for the residents?
We are collecting maintenance fees from the residents and then they have to pay a little bit of money to the municipality, which almost makes it double. This is the cost of wellbeing in a very beautiful environment.
One aspect that you claim to be exemplary in BeitMisk is “green community”. How does that go together with the idea of property development in a previously undeveloped area?
Greenery for me, on a personal level, is something very important. Something like 10 or 12 years ago, we were the first institution [as Lebanese Canadian Bank] to ask people to join us in going green. For BeitMisk, I had to do roads. And some people criticized that, saying ‘How could you make roads and kill some trees?’ I made this promise to the community: I would plant 200,000 trees all over, even though I don’t think we took out more than 200 trees.
Is greenery something that you see as a necessary cost as a developer?
As far as our projects are concerned, greenery does pay. People think that planting of greenery does not get a direct return — it’s not true. You grow a beautiful environment, and you could get 10, 20, or 30 percent more in the pricing when you sell the properties. The least we can do for this country is to envelop it with greenery.
Is maintenance of the infrastructure and greenery something that people commit to when they buy a home and become residents of BeitMisk?
Yes, this is a commitment [coming] from ourselves. Even in electricity generation, we have installed a central power plant with large generators in one place instead of having one generator in each small area of BeitMisk. This costs us a lot of money because we transport electricity at high voltage and reduce the voltage for distribution to homes. We also still face many problems in [linkage with outside infrastructures]. There have been good steps to improve the legal frameworks but I wish for more practical solutions.
Is it part of the concept to incorporate BeitMisk as a township?
No, we don’t go into this. We deal with the municipalities that exist already. They’re helping us and at least at the level [where we are today], I’m happy with the two municipalities that I’m working with.
When you pass through any area of Lebanon’s hills, you want nature to be preserved. On the other hand, we face immense pressure to accommodate the need for more homes that the population needs. How do you attempt to strike this balance?
Let us try to not show a lot of concrete. If each one near his building grew three to four trees, then we could hide a lot of the constructions we have. This is what we are trying to do in BeitMisk.