Gentrifying Gemaizeh

A world away from downtown, investors are cashing in on a quaint neighborhood steeped in the sentimentality of old Beirut

In the last two years, Gemaizeh, the neighborhood due east of the BCD, has seen property prices rise by an average of 50% across all categories, as restaurant owners, property developers and discerning homebuyers have identified the district’s commercial potential. At least $50 million has been invested in residential and retail projects in the area and, unlike other areas of Beirut, demand appears to be strong. It is arguably Beirut’s most dynamic district.

Gemaizeh’s renaissance can arguably be traced back to the renovation of the old glass café (Ahwat Azaz) in 2001 and the opening of Paul, the up-market bakery in February 2002. Before that the area was charmingly distressed but commercially comatose.

Today, land is selling at $800/m2 of BUA, an increase of more than 200% in two years and an accurate reflection of its proximity to the BCD where plots are selling for roughly $1,000/m2 of BUA. Residential rents for old building are now at a healthy $50/m2 per year mark, while retail rents have reached up to $500/m2, an increase of some 70% in the last two years. Prices are still cheaper than the neighboring BCD by roughly 50% across the board and this, together with the area’s charm, is what is convincing many investors of the area’s potential. Today, the façades and the historic St Nicholas Stairs have been restored, while food aficionados can buy French bread at Paul’s, sample fusion cooking at Food Yard, Spanish tapa’s at Louis’ jazz bar and traditional Lebanese cuisine at La Tabkha. Two art galleries, Fadi and Alice Mogabgab, have opened, while Torino Express will soon be serving Italian coffee and cocktails. Fady Saba, a leading player on the Beirut nightclub circuit, is one of the new generation to invest in Gemazieh. He opened the club/restaurant Central in September 2001 and at the end of 2003 he followed this up with by plowing $100,000 into Al Tabkha, a 50-seat Lebanese restaurant that serves home cooked-style food.

“Gemaizeh still has the flavor of old Beirut,” Saba explained. “For Central I was looking for an old house with spirit, which you just don’t find that in anymore downtown, which has become Lebanon’s own Disneyland. Still, I went there to look for a location for Al Tabkha but it was also too expensive for a small restaurant serving Lebanese food for $7 a head.”

So it was back to Gemaizeh, where Saba found an unfinished building in which he rented the 100m2 ground floor for $25,000 a year. “In downtown, I would have paid at least twice as much rent and much more on refurbishing,” he said. “It’s good there are regulations in downtown, but they’re overdoing it. They want to have a say on everything from the paint on the walls to the lighting.”

To real estate agent Michael Dunn Gemaizeh’s ascendancy doesn’t come as a surprise. “It’s close to the central district, it has a certain aesthetic value, but most importantly it’s relatively cheap,” he said. “In downtown you pay some $750 to $1,000 per/m2. A 120m2 restaurant with a small mezzanine costs around $150,000 a year in rent. On top of that comes an on average $100,000 initial investment without kitchen, plus 8.5% municipality tax. So, the initial costs of opening a restaurant in downtown lie between $250,000 and $300,000. In Gemaizeh the same place would cost you about a third.”

Local broker Elie Zeeny, general manager of City Real Estate in Gemaizeh, confirmed that increased demand had seen retail rent nearly double over the last two years. “Then you paid between $100 and $200 per square meter,” he said in his office facing Electricité du Liban, “while today that will be between $200 and $300. Still, compare that to downtown Beirut, where Solidere asks up to $1,000, and even more for a premises on one of the main streets.”

According to Zeeny, residential prices have also doubled, although 50% is probably more realistic. One resident who bought a 3-bedroom, 140m2 apartment on the desirable St Nicholas steps in 1999 for $62,000 says he could realistically expect to sell for at least $90,000 today. Few areas of Beirut can boast that level of growth. Zeeny quoted current asking prices at between $500/m2 and $800/m2 per square meter for old houses and between $1,000 and $1,200 for newer ones. “The further you move into Gemaizeh the less you pay,” Zeeny said. “Past the Electricité du Liban rents can be half or even a third of what you pay in the area closest to downtown.”

Not surprisingly Gemaizeh has also seen some significant brand new luxury residential developments as many Beirut yuppies flock to buy or rent. Developer, Jamil Ibrahim is taking on the 23-storey half-built concrete skeleton off Tabaris (untouched since 1975) and, with $10 million, intends to turn it into the Aïdi Tower. The property will offer luxury 425m2 apartments for an average of $2,000/m2. Another developer, Joseph Moawad is developing an 11-floor residential tower on the edge of Gemaizeh and Saifi. Apartments measure between 150m2 and 400m2

Arguably some of the most eye-catching developments have been Convivium I and II. Both are new five-floor apartment blocks, yet built in the style of Gemaizeh’s traditional architecture characterized by arches, big windows and high ceilings. With an average price tag of $1,200/m2 all apartments have been sold, prompting developer Kareem Bassil to spend another $19 million on Convivium III, IV and V, all in Gemaizeh.

“I just love the area, it’s a bit of old Beirut” said Bassil. However, seeing current developments, isn’t he afraid Gemaizeh will loose the very character he loves so much? “As long as Gemaizeh can keep the old houses and developers respect the environment they work in, the area will be fine,” he relied. “That’s why I didn’t built a tower, which I could have done, but kept it a low rise construction in tune with its surroundings.

Bassil warned that people should remain reasonable not to kill the area. “I bought the land for Convivium V for $950 per square meter, but I have heard people are asking up to $2,500/m2. This is ridiculous.” Fady Saba has similar fears. “Gemaizeh is going to boom,” he said, “I know many people who are thinking of opening up a place in this part of town. I just hope that the inhabitants here realize what’s happening. They shouldn’t become greedy. The day American chains like TGIF move in Gemaizeh will just become an extension of downtown.”

Gemaizeh’s renaissance is a typical example of urban gentrification with the BCD acting as a magnet for investment. However, still does not have as much pedestrian traffic as the BCD, so its retail sector – restaurants, shops, galleries and café’s – must have a well-defined formula to attract customers. It must also have ample parking spaces. This is one of the area’s weaknesses but those who have invested argue the situation is not that bad. “People should stop saying that, it’s just not true,” said Andreas Boulos, former manager of Pacifico and owner of Torino Express. “In a sense the area has a three level parking: Rue Gourand, the parallel street of lower Gemaizeh and an enormous car park in front of Marine Tower.” Nevine Emad works for the Association for the Development of Gemaizeh (ADG), which in its own way contributed to the gentrification of Gemaizeh by refurbishing and painting several old buildings, as well as the stairs. “We welcome investments,” she said, “as they bring life to the area and encourage others to invest. Don’t forget that until recently there were a lot of closed windows in Rue Gourand. But, on the other hand, Gemaizeh is a residential area and investors must respect its general atmosphere. Though we are not the police, we, the inhabitants and the municipality must play a guarding role.”

Luckily for Gemaizeh, its largely elderly inhabitants also care about the area. When Maher Chebaro wanted to name his Jazz hangout Bar Louie, local residents protested and signed a petition against it. Problem was not so much the place itself, but the use of the word ‘bar,’ which to many people was a euphemism for a brothel. Chebaro removed the offending word. His establishment is now simply called ‘Louie.’ With such a robust community, Gemaizeh may just hold onto its charm.

Peter Speetjens

Peter Speetjens is a Dutch journalist & analyst based in Brazil.