Nabil Gebrael: Chairman of Coldwell Banker Lebanon
E: What should be done to achieve a more mature, transparent and regulated residential market?
Nowadays, anyone in Lebanon can operate as a broker, which creates confusion and mistrust in the market. I believe in regulating the market through licensing and continuous education. In a regulated industry, real estate professionals can easily conduct business with each other, while those who break the rules would be held accountable. Furthermore, licensed professionals can elect a national body, the Real Estate Brokers Association, to create and monitor a code of ethics and methods of operations for members to follow. The association will also approve educational courses for its members to take. This will benefit not only brokers, but also clients and the government. Education should be the responsibility of a national body, which would offer compulsory course to certify those working in the sector. They would subsequently be re-certified as well as kept abreast of new methods, regulations and trends in the market.
Secondly, to boost the real estate market, a multiple listing system similar to the one existing in the United States should be implemented. This system will allow all members to access and share property data with other brokers in the country. Brokers should not be afraid of loosing business, given that they will have exclusive contracts with their clients. Exclusive contracts allow brokers to share their properties with any other broker, and when sold, their commission would be protected (and shared) through the multiple listing system and the Real Estate Brokers Association.
Joseph Mouawad: Head of Mouawad Investment Group
E: How do you see the development of the residential market in 2005, given its modest performance in 2004?
I don’t think 2004 was a moderate year. On the contrary, we saw a lot of activity. Only in the last few months did it slow down a bit – following the dramatic events around the presidential elections, especially the attack on Marwan Hamadeh. People in Lebanon and the region are used to some political instability, but political insecurity is a different story. Insecurity is deadly for investments and the overall business climate. On the other hand, people tend to forget fast, so if things stay as they are now, I don’t think they will really affect 2005. First, because there is no alternative to Lebanon in the region. Second, as a consequence of the high oil price, there is a lot of cash in Saudi Arabia and the Gulf, and the Arabs still want to invest in real estate.
What’s more, they still believe in Lebanon as a holiday destination, a home, as well as an investment area. What we’re seeing now is that land is being sold and investments are being made in the areas directly surrounding downtown. In Gemazieh for example, where the price of land is about half the price of Solidere’s. One of the biggest problems we are facing is the amount of time it takes to issue construction permits. There is an enormous backlog at the Beirut municipality and this is why construction generally starts only one year after the sale of land.
Raja Makarem: Managing partner at RAMCO Real Estate Advisors
E: How will the increase in foreign visitors be reflected in the retail sector? Will we see more supply or do you expect a take up of existing retail space?
As the majority of foreign visitors are Gulf Arabs, their increase in numbers will surely be beneficial to the retail sector. They’re generally not the beach going type, but like to spend their time in hotels or mountain resorts and like to go shopping. Shopping to them is a true outing destination, which apart from actually buying goods includes entertainment, eating and drinking. For that reason, ABC was able to consolidate its sales last summer. However, in Lebanon, you can generally not plan a retail outlet based on the arrival of foreign visitors alone. Lebanon is not Dubai. Foreign visitors mainly come in summer and during the holidays, which is not enough to base year-round sales on. I think, though Lebanese retail will continue to develop, as there is still space to grow. The increase in foreign visitors by itself, however, will not lead to a significant increase in outlets.
Pierre El Khoury: Architect at Pierre El Khoury and Partners
E: What is the state of urban planning in Lebanon? What measures should be implemented by the public sector to play its role?
The Sannine Zenith project is symbolic of the state of urban planning in Lebanon. As an investment, the project is surely beneficial to Lebanon, but from a planning point of view it is highly worrying. Already too much of Lebanon’s virgin mountains and countryside has been destroyed. This project does not only touch upon one of Lebanon’s last remaining wild areas, but also upon the very symbol of the country, the mountains that gave Lebanon its name. Who wants to see buildings there? What’s more, Sannine is an essential part of the country’s water infrastructure. Who knows what will happen if you start building there? The CDR has been working on a detailed map of the country to come to a zoning strategy, in which urban and green spaces will be designated.
Unfortunately, the Sannine Zenith project came too early. When I was minister of housing in 1982, we already tried to introduce such a zoning system, but it didn’t work because of the war and because of the mentality of the people. The problem is that if someone lives in a green zone, he or she will not be allowed to build and thus his land will lose value. To tackle the problem, someone who constructs in a building zone should not only pay for the price of land per m2, but also for the right to build, with which neighbors can be compensated. In terms of planning, I think densely built areas should become more dense, while green spaces, parks and nature should be saved.
Michael Dunn: Chairman at Michael Dunn & Co.
E: How will the unveiling of recent high profile residential developments in the Gulf affect the way in which Lebanese developers are selling? Where does Lebanon sit in terms of regional commercial and residential real estate development?
We should learn from the way Dubai is marketed. Dubai is one big advertisement project. Billions and billions of dollars are spent each year on advertisement. I mean, let’s face it, Dubai is hot, flat, artificial, and you can only live there comfortably during a few months in winter. It’s the marketing teams who make the country attractive by campaigns all over the world. Today, you have Europeans buying a small apartment in Dubai for some $150,000. They go on a holiday there for a day at the races and a weekend of shopping.
Regarding the second question, in terms of shopping, Lebanon is light years behind the Gulf and Saudi Arabia, yet way ahead of countries such as Egypt, Jordan and Syria. Residentially however, Beirut and Lebanon are comfortably number one in the region, followed by Cairo. Beirut has the nice streets, the old quarters, the climate, the mountains, and has something to offer none of the countries have. And last but not least, let’s not forget that people living in an Islamic country going on a holiday, want something else: to taste other facets of life.