Home Economics & Policy Ottoman chic

Ottoman chic

As Lebanon’s majestic old houses edge towards extinction, demand and prices for them have started to rise

by Marianne Stigset

Lebanon’s architectural heritage has had a rough 50 years. Ever since the economic boom of the 1950s, which spurred real estate growth, launching the era of concrete modern high-rises at the expense of turn-of-the-century old buildings, the latter have been dwindling. Those that withstood the civil war were subsequently threatened with demolishment, as owners without the financial means to restore them, realized they could make more profit selling them to real estate developers who would build modern apartment blocks. Activists did mobilize in the mid-1990s with the Association for Protecting Natural Sites and Old Buildings in Lebanon at their helm, drawing up a list of over 1,000 classified houses (Solidere managed to save 290 buildings from the pre-war era). Yet today “old” buildings represent a mere 2.5% of the real estate market. “In the mind of the Lebanese, any old building could be torn down and resurrected into a block of flats,” real estate consultant Michael Dunn, chairman of Michael Dunn & Co, said. “Everything has a financial value rather than an aesthetic value.”

Perpetuating the craze for modern real estate are the luxury high-rises mushrooming along the capital’s seafront, which for wealthy real estate buyers, be they Lebanese or from the Gulf, have become the investment of choice.

“Villas in the mountains are somewhat passé here,” said Dunn. “The current trend is to put your money downtown and buy a $5 million, 800m2 apartment in Marina Tower.”

Alternative urban trends

Yet on the sidelines, another trend has been burgeoning for the last few years. It is one which has transformed Gemaizeh from a gritty, genteel, lower-middle class area, into a hip and upscale one, much in the same way gentrification metamorphosed the meatpacking district in New York or the industrial area of Shoreditch in East London. The trend is driven by demand for more authentic, less commercialized and more affordable properties. “It is a process of gentrification,” said architect and AUB professor Rana Samara Jubayli. “The trend usually starts among the up and coming artists and students, who get there first, make the areas trendy, and then the rest of the population tends to follow, and this affects the market. Gemaizeh is a prime example of this. It is very much ‘in’ now.” Although the initial interest in old houses stemmed in part from those on tight budgets seeking lower rents, this has gradually evolved into the trademark of an upscale, fashionable lifestyle. “As in the rest of the world, you will have yuppies and young professionals looking for these types of residences,” Jubayli said. “They wish to live downtown, close to work, the commercial areas and where the nightlife is. It’s a lifestyle choice, a design requirement, more than a question of affordability. It’s a statement.” These new aficionados join a core group of faithful followers, who have long shown a preference for arched windows, high ceilings, mosaic floors and iron railings. They are mainly eccentric Lebanese aesthetes and Western expatriates. “The Europeans adore these types of houses. They understand the value of cultural heritage,” said real estate developer and entrepreneur Karim Bassil.

Emotional ties to the land

While Europeans rarely purchase property while living in Lebanon, and the young Lebanese moving into areas characterized by their preserved architectural heritage generally can’t afford to, Lebanese expatriates on the other hand, are increasingly investing money into old property.

“There’s a second trend happening at the non-urban level which is clientele driven – it’s people renovating their old family houses,” Jubayli noted. “I have been commissioned to restore traditional old Lebanese houses in Beit Mery and Marjeyoun for instance. “A lot of these people are either expatriates or people who are coming back and they actually attach more value to these houses because of the emotional or cultural connotations it has to them. They also have the finances to restore them properly, whereas the local population generally has lost the sense of value of these houses, due to financial restrictions. Conservation issues are not really a priority when you don’t have food on the table.” The majority of the old houses available on the market are found outside the greater Beirut area, either in the mountains or in the south. Those who buy generally hire an architect or an interior designer to renovate them.

The stunning old summer residence of the British ambassador in Abay was sold last December for an estimated $700,000 to a Lebanese doctor living in Beirut who will use it as a secondary home. He intends to invest in renovating it, installing central heating, air conditioning and other modern amenities.

Unlike in Europe and the United States, there are few developers who will speculate in buying, restoring and reselling what they hope will be seen as a jewel. This is partly due to the fact that renovation is fraught with financial and administrate pitfalls. Furthermore, the choice in the style of renovation remains highly individualized. Developers prefer not to second-guess the taste of the potential buyer and instead wait until a property is bought so they can work alongside the buyer restoring to his tastes and without burdening themselves with owning the property and then trying to unload it on a fickle market.

A restricted and exclusive market

Good properties are at a premium. Adding to the scarcity is the fact that most of the old buildings that are left are frozen out of the real estate market either due to inheritance issues or old tenants. The latter, benefiting from the antiquated rental laws which lock in rates, have little incentive to move out of a residence on which they pay the same rent today as what was agreed upon five decades ago. “It’s a very small market – there are very few buildings left to develop,” Bassil said. “Most of them at this point are in the mountains, like in Deir el-Qamar and Douma. Their scarcity is pushing the prices up further. The few houses that are put on the market are usually sold at very high prices and they tend to have a lot of problems.” The expensive renovation work which follows the purchase of an old residence contributes to the further squeezing out of a sizeable chunk of real estate buyers. “If you buy an old house on two floors of some 500m2, which usually will cost you about $500,000, you are looking at a minimum of $75,000 to $100,000 in additional restoration costs,” said Dunn. “Buying a house and restoring it is much more expensive than starting from scratch or buying a modern one,” Bassil added. “If you want to restore it so as to live comfortably in it, the overall price generally increases by 30% to 40%. In general terms, the cost of restoration lies in the $700 to $800/m2 realm, or $400 to $500/m2 if you keep it very basic. I just restored an old house in Dbayye for an emir, who wanted maximum comfort, that came to $1,200/m2.” “Many of these houses are not structurally sound, so you may have to do a structural re-enforcement, which is a huge financial burden,” Jubayli said. “Once that has been taken care of, you go into the architectural finishes. Are you going to keep the special integrity of the place? The finishes are directly related to the intentions people have for the building and the financing they are willing to put into it. You re-do the tiles, you re-do the bathrooms, you may put in a kitchen. It really varies.” Adding to the financial burden is the difficulty in setting a fixed budget for the renovation. “You can’t really budget for restoration,” said Jubayli. “There are so many surprises that come up along the way, so many hidden expenses that a lot of compromises need to be done.” If the client chooses to engage in restoration or reconstruction proper, finding the right material and workmanship adds another challenge to the process, and can easily bump up the final renovation bill by some 50%. Jubayli describes how for the renovation of a 600m2 house in Marjeyoun, the cost of which came up to $100,000, most of the material had to be sent down from Beirut and a 90-year-old tiler had to be brought in – the only person available who still had the know-how to adequately restore the old tiles.

If the client chooses to change the spatial partitioning of the house, or make any additions to it, he must apply for a restoration permit. This step can easily bring the renovation process to a lengthy standstill. One architect living in an old Gemaizeh villa is still waiting for the local municipality to grant him a permit to construct two bathrooms in his house, one year after he applied for it.

A niche for developers

Nonetheless, if the market for selling old houses remains a client-driven and restricted one, there is a niche for developing the rental market in old houses and buildings. The concept is not a new one – the Sursock Cochrane family has been making a substantial profit renting out old apartments in Gemaizeh for over three decades. But new developers are slowly moving in.

Bassil features among the successful ones. With his project management company Bassil Real Estate Investment, he is investing in renovating old buildings in the Gemaizeh area, as well as building new ones, in accordance with the local architectural style.

“I buy old buildings and restore them – I would never tear down an old building,” he said. “When I build modern ones, it is always from scratch, on empty land. In areas such as Gemaizeh, I respect the local architecture by never constructing buildings taller than five floors for instance. Instead of building 16,000m2, I am building 8,000m2 buildings.” Among his five ongoing and completed projects is a rehabilitated turn of the century house, which has been made into four apartment rentals. According to the developer, his apartments are going like hotcakes, at rather handsome prices – a 200m2 apartment will be rented out for around $2000 to $3000 per month. And as the neighborhood’s unique architectural character is preserved, it increases its overall value, bearing promises of even greater returns in the future.

“It’s more profitable to restore a building and start renting it out already within a year, rather than demolish it,” said Bassil. “Lady Cochrane is the perfect example of how it should be done. It is thanks to her that Gemaizeh is what it is today – she succeeded in preserving its identity, its charm, by not demolishing any of the buildings she owns and rents out. With the preservation of the cultural heritage of the area as a whole, it becomes more profitable – rents keep increasing.”

Support our fight for economic liberty &
the freedom of the entrepreneurial mind

Marianne Stigset


View all posts by

You may also like