Market in Brief
Lebanon’s architecture and interior design sector is in today’s market, worth an estimated $40 to $45 million. It is an industry driven by fierce competition, where projects are scarce and registered architects – some 6,000 – in abundance. In fact, the value of construction in Lebanon is accounted for by only a handful of, often eye-catching, projects in and around Beirut. The narrow and high-end construction market is served by some twenty architectural firms, which employ a total of some 200 to 400 architects to design and execute most of the projects.
There are three firms that employ about 50 architects and boast a turnover of $5 million or more, followed by a dozen companies employing between 10 and 20 architects with an estimated turnover of $1 to $2 million. Hopes that there would be a boom in the construction and architecture market were resuscitated by the establishment of Solidere in 1995, but by the turn of the century, the market slowed down. Since the infamous events of 9/11, however, both sectors are picking up, as more and more Gulf Arabs have returned to Lebanon, both as tourists and investors, buying land and developing property. Most large hotels and residential projects are in fact developed partly or fully by Arab investors.
To work as an architect in Lebanon, one needs to register with the Lebanese Order of Architects and Engineers and a number of qualifications must be met. Most importantly, one has to be a graduate from an accredited Lebanese or foreign university and must be a holder of the Lebanese nationality for at least 10 years. Interestingly, one also needs to have a clean criminal record. Once registered, one pays an annual fee of some $400 for medical insurance and pension rights. After being registered in the order, an architect needs to obtain a license from the ministry of public works to perform to work in the profession.
A special committee, consisting of members of the Lebanese Order of Architects and Engineers, the university and the ministry of public works and higher education, examines and decides upon the request. There are currently over 5,000 architects who are members of the Lebanese order, as well as some 15,000 civil engineers, 5,000 electric engineers and 5,000 mechanical engineers. But because Tripoli has its own order and not all architects are registered, it is estimated that the number of architects is probably double that number.
There are currently eight accredited Lebanese universities that offer architecture as a major and each year, some 350 to 400 graduates enter the market. Most of them will stay in Lebanon, while others opt for a career in the Gulf and Saudi Arabia. Several of Lebanon’s topnotch universities, most notably ALBA and AUB, offer an education that is also valued abroad. Considering the figures listed above, it is no wonder that many students leave to work in the Gulf, Saudi Arabia or the United States, as soon as they have the chance.
Salaries & Fees
A fresh architect graduate will earn an average salary of some $500 the first year of employment, which will then increase by some 10% a year. Naturally, a top student being drafted by a top bureau will be able to ask for more. The standard fee for an architectural and engineering office is 7% of the project’s construction cost, excluding indirect costs such as permits. The 7% is broken down as follows: 2% for site supervision, 2% is for the work of civil, electrical and mechanical engineers, which leaves 3% for the architect’s fee.
Surprisingly, the bigger the project, the smaller the architect’s fee, relatively. In case of a $200 million project, for example, no developer will accept a percentage based fee and so a lump sum will be agreed upon, which on average amounts to half of the 7%. For a small project, however, the architect will refuse to work for a percentage, as the design of $300,000 villa can be as much work as that of a $30 million office block or hotel.
The lion share of Lebanon’s residential market is represented by the handful of high rise buildings that are set to appear in the BCD. Facing the marina, the Marine, Platinum and Beirut Towers are being built, while at Riad el Solh Square, the multi-use Landmark Building is set for construction. The combined overall value, including the price of land, is some $700 million.
The towers combine state of the art design, overwhelming luxury and a magnificent view of the sea and mountains and carry a price tag starting at $4,000m2. Still, most of the apartments have been sold mostly to Gulf Arabs. Together with a dozen of other, smaller apartment blocks and luxury hotels, up to $1.5 billion is being poured into the heart of Beirut, making it Lebanon’s hottest property by far.
Most of the buildings in downtown Beirut have been designed by foreign architects, with Spanish architect Ricardo Bofil signed on for the Platinum Tower and French architect Jean Nouvel responsible for the Landmark Building. With an eye on distinctive designs and future value, Solidere prefers so-called signature buildings by famous foreign architects. As a foreign architect is not allowed to work independently in Lebanon, after the initial design is submitted, all executable drawings and details will be taken care of by a local partner. It is for this reason that Bofil is working with Nabil Gholam on the Platinum Tower project, and ERGA group is executing the original French designs of Saifi Village.
Seeing the value of the projects in downtown, most architectural and engineering firms will receive a fixed amount of money, roughly amounting to 3% of construction costs. Other than in downtown Beirut, several high-end residential projects are being built in Verdun, Ramlet al Baida, Ashrafieh and Ras Beirut.
Generally, the further you move out of Beirut’s inner circle and its direct surroundings, the smaller and less valuable the projects being executed. The lower-end of the market for affordable middle class apartments with a price of $250 to $500m2 is virtually stagnant, which is partly due to the fact that the price of sand, cement and steel has doubled over the last few years, while government subsidies for social housing projects are non existent.
The result is a dozen of very expensive residential apartment projects that represent the main value of the overall market and that are generally being executed by a dozen or two high profile companies. The near future of lucrative residential buildings lies in the mountains, said one architect, where more and more new villas of Arab investors will appear. The real money however, he added, is to be made in Dubai and Qatar, not in Lebanon.
The market for design and construction of hotels in Lebanon is similar to that of the residential sector. The $140 million Mövenpick hotel and $100 million Four Seasons Hotel are both Saudi investments, the new $70 million Summerland Hotel and the proposed $125 million effort to rebuild the Hilton Hotel are combined Saudi-Lebanese investments, while the Metropolitan Hotel was built by the Dubai-based Habtoor Group. Most of the newly built hotels in the Aley-Bhamdoun area are also partly or fully foreign investments.
Responsible for hotel designs and execution of those designs are both local and foreign architects. For example, the “white waves” design of the Mövenpick Hotel, which was built over an already existing concrete structure, was largely designed by the ERGA group. The project’s overall price was $140 million, including the price of land. Construction costs roughly amounted to some $70 million, including the pools and a marina. The hotel itself, excluding interior design, cost some $20 million, for which the combined fee for architects, engineers and site supervision amounted to an estimated $600,000.
The market for the construction of office buildings is largely non-existent. With up to 60% of the offices in downtown Beirut remaining empty, there is just too little demand. The AN NAHAR building was one of the last major office blocks to appear in Beirut. It cost only $12 million to construct, as the design was kept extremely simple and functional, using only the most basic materials and leaving the interior design for the client to handle, which is why, on the third floor, pipes and cables are seen sticking out of the walls.
The building was designed by Pierre Khoury – who also signed on the ESCWA building and BLOM headquarters facing Commodore Square – for a lump fee of an estimated $100,000. Concerning the state of the market, it is significant to note that Khoury’s firm, which employs 15 architects, is also responsible for the design of Park View in the BCD. Originally, Park View was to become an office building, but it now will serve as a residential tower, with high-end luxury apartments, most of which have been already sold. Individual office buildings are being built, especially for banks, but as far as the overall market is concerned, most architects agree that it is absolutely essential for the downtown SOUQS projects to be completed, as it is hoped that the area will serve as a major catalyst to developing the surrounding office space.
Architecture and economics
Unfortunately, Lebanon generally does not have a lot of good architecture, which presents not just a problem from an aesthetic, but economics point of view as well. Bad architecture costs money, certainly in the long run. Take, for example, the overwhelming majority of apartment blocks that are just concrete boxes put on top of each other. They pop up everywhere in the country, spoiling the view and natural beauty, which – increasingly scarce – represent an increasing economic value. What’s more, many of the buildings are badly constructed, not able to withstand the withering effects of time let alone an earthquake, as contractors aim to save money by using less steel.
Then there are the office buildings that have been erected to emulate the predominantly glass structures in Dubai. Most architects agree that this is very suitable building style for colder countries, as the glass helps heat up buildings and thus saves money. In the Middle East however, the opposite is true. With the sun blasting over 10 hours a day, the building becomes a glass house, causing electricity bills to skyrocket because of the constantly running ACs.
Another major problem is the absolute lack of urban planning in the country. Basically, anyone can build anything anywhere: today, you have a view over the Mediterranean Sea, tomorrow it’s blocked by another building, while parks are virtually non existent. The only town in Lebanon that does have a policy of urban planning is Deir al Qamar, where Fadi Chiniara has formulated for free a set of basic rules that every new building needs to meet to get a construction permit – including requirements for height, roof and façade – to keep the town’s traditional character intact. With an eye on tourism, it will be no doubt a policy that pays off, certainly in the long run, which is part of the reason why Walid Jumblatt has approached Chiniara to do something similar for the Chouf.
It is impossible to indicate the value of the interior design market, as there is no regulatory body and basically anyone can work as an interior designer. As a general rule, the client indicates how much they want to spend on the interior of their home, hotel, shop or restaurant. Depending on the choice of material and luxury, the average price to execute a design varies between $500 and $1,200m2, which includes all accessories, such as furniture, tiles and carpets.
The initial design will cost some 10% of the interior’s overall cost, while the designer or architect responsible for the execution of the design will charge another 8% to 12%. Rumor has it that the future 3,000m2 interior of a Saudi official will cost no less than $500,000. The market leader of interior design in Lebanon is Cercle Hitti.
Its interior design department, led by Dory Hitti, employs some 15 interior architects and designers. It signs for both design and execution, yet not necessarily in the same package. The lion share of Cercle Hitti’s designs concern residential buildings, but the company does the interior of offices, showrooms, restaurants and hotels as well. Some of its notable clients are the Sheraton Coral Beach and Heliopolis Hotel.
The big advantage of Cercle Hitti is that the company also sells furniture, beds and lamps, which allows it to offer the client a package deal. Some of the other well-known designers operating in the market are Jean Luc Mengi and Dada, who do more classical interiors for mainly wealthy Lebanese and Arab clients, while Rony Fatte and Galal Mahmoud specialize in more modern designs.
Unlike the Lebanese Order of Architects and Engineers, there is no official regulating and protective body for interior designers. Working with an unreliable designer, qualified or not, can be costly; there are known cases of designers selling clients fake art works and antiques, or selling them for highly inflated prices.