Executive Magazine

Charting a path

by Mona Fawaz & Maysa Sabah June 18, 2015

written by Mona Fawaz & Maysa Sabah

Decades of research has shown that affordable housing is a cornerstone of urban livability and wellbeing. Beyond providing shelter, housing is a platform for improving health, education, economic activity and social stability. Affordable, good quality and stable housing is often associated with less stress and better overall health. Similarly, satisfactory housing can improve school performance by providing adequate space for study and minimizing the disruptions associated with frequent family moves. Investments in housing have numerous economic benefits through expenditures on construction, labor materials and services; increased local economic competitiveness, to the extent that lower housing costs are viewed as a comparative advantage by employers and workers; and financial innovations, such as the development of capital markets, bond markets and derivatives that enable investors to transfer risk, further increasing the supply of capital. The benefits of housing extend to neighborhoods where families have access to opportunities and support services they need, thereby contributing to overall social stability. As such, housing is among the most important public policy areas, and one of the most complex and challenging because it lies at the intersection of people and money; of public purpose and private assets.

A housing crisis

There is little doubt that Beirut lacks affordable housing. Even our notorious aversion to numbers fails to mask the scale of the housing crisis. Delayed marriages, extended family households and numerous other social patterns attest to this problem. Furthermore, long commutes, forced displacements and increasing social homogeneity indicate that Beirut is losing what is left of a once vibrant community, a community where residents of all ages, household sizes, and sectarian and socioeconomic backgrounds found opportunities to interact, develop ties and meet changing housing needs through different life stages, without losing social and family networks. The threat is further exacerbated by the eroding basis of middle income housing in the city’s central areas, as exemplified perhaps most eloquently by the numerous towers that now signal ongoing gentrification processes, as well as recent legislative moves to revoke the old rent law.

There is also little doubt that public sector interventions in the form of direct housing provision (in very rare instances) and credit facilities are insufficient. The brunt of the effort for housing provision has rested on middle and low income households who typically carry the heavy burden of financing developers through forward payments that require them to disburse installments over several years before they access the coveted apartment. Enticed by the large demand for affordable housing, developers have creatively looked for solutions to reduce costs by either building smaller apartments or introducing projects in locations outside the city proper where land prices are more affordable. Since 2006, the share of Beirut in total sales value has been gradually declining relative to other regions in the country, specifically in the Metn and Keserwan regions. Concurrently, commercial banks have been complementing the efforts of private developers by providing mortgage loans that cater to the needs of middle income groups. To boost these efforts, Banque du Liban has introduced stimulus packages over the past few years that supported the real estate sector by extending subsidized loans, capped at about $500,000, to eligible Lebanese. In addition, and since 1997, the Public Housing Corporation has provided subsidies that extend the period of housing loan repayment by refinancing housing mortgages over longer time periods for the lowest bracket of indebted households. Albeit important, these interventions have had a limited impact, particularly as they have focused on demand-side subsidies while the cost of housing supply (specifically land) has spiked. Real estate prices sharply increased during the first two decades following the end of the Civil War, widening the gap between the supply and demand of affordable housing in central locations. Between 2005 and 2010, strong demand and low interest rates led to a highly speculative real estate market in central Beirut that privileged high end housing and pushed prices up by 20 percent and 30 percent per year during the same period. These factors render the supply and cost of land a primary challenge for housing policymakers to target.

[pullquote]Our message is simple: middle income housing is not only desirable, it is attainable[/pullquote]

Practical steps towards affordability

Our message is simple: middle income housing is not only desirable, it is attainable. To this end, however, we need to draft a national housing strategy that would consolidate political commitment and positive imagination. It takes a governance system that embraces its role as the defender of a common, shared good, that includes both developers, builders, property owners and other stakeholders to address the housing problem across the lower and middle market segments. Middle income housing offers the potential for fruitful collaborations between the public and private sectors — unlike the lowest income housing market that requires deeper subsidies and a larger role for the public and nonprofit sectors. To this end, Lebanon — and particularly Beirut — possesses a unique asset in the vibrant and competent entrepreneurial financial and building sectors. Within the framework of a national housing strategy, it is imperative to engage these actors as partners in the production of affordable housing. Such a partnership will however require a more aggressive regulatory and planning role for public agencies, along the lines of the interventions proposed below.

1. Enlarging the radius of urbanization: The expansion of the urbanization radius provides the opportunity to increase the supply of affordable land. This expansion is in fact well underway, but it occurs at the ad hoc initiative of developers, and with numerous negative effects. Today, suburban dwellers incur long and taxing commutes, suffer from poor levels of infrastructure services, inexistent amenities (e.g. playgrounds), as well as a social stigma associated with ‘leaving the city’ and/or living in localities where they are seen as ‘outsiders.’ Other impacts are shared more widely and include sprawl, environmental degradation, pollution, the destruction of agricultural lands and others.

The integration of the current sprawling suburbs under a coordinated and organized Greater Beirut Authority has the potential to produce a larger, more livable urban agglomeration that responds better to the housing needs of the city’s growing population. The first task of such an authority would be to define the boundaries of the metropolitan city limits, identifying the most adequate zones of urban expansion. Within zones earmarked for urbanization, incentives (e.g. higher exploitation ratios, infrastructure developments) can be introduced to encourage development. The public authority could also encourage mixed use community developments that include a mixture of housing, office, retail and/or other amenities integrated into walkable neighborhoods, improving the quality of life and reducing the need for travel. The Greater Beirut Authority should furthermore make the introduction of public transportation and Transit Oriented Developments (TODs) one of its main priorities, improving connections and mobility, and integrating the territory into a unified network. Given that research has shown unequivocal positive correlations between the proximity of households to transit and positive health indicators, improvements in air quality and reductions to levels of greenhouse gas emissions, investment in shared infrastructure should be a main priority.

2. Introducing incentive schemes: Governments can also directly intervene to boost the supply of middle income housing both in the current municipal districts and the larger agglomeration areas, if the latter is adopted. This could be achieved through a number of incentive programs, such as: (i) Turnkey building on underutilized government land, under which the government provides the front and back end of the development value chain — land up front, and guaranteed offtake commitments by qualified middle income buyers — and in between developers make a satisfactory profit while delivering homes at a lower cost than if they had to pay for the land; (ii) Incentives to build on private land, whereby governments offer private developers with access to land financial and non financial incentives to build middle income housing (as partial or whole projects). Although the current building law offers developers many advantages, the growing need for middle income housing is probably worth a deeper discussion between stakeholders to investigate whether the government could offer further ‘reasonable’ incentives to developers who commit to developing middle income housing in earmarked locations. Incentives could include easing and shortening government approval processes, relaxing planning regulations (such as parking requirements), density bonuses, low cost financing and government concessionary packages that reduce production related costs, including materials and infrastructure. As with the first option, the completed homes could be sold directly to consumers, operated as rental property (usually managed by nonprofit corporations), or purchased by the government through guaranteed bulk offtake commitments.

3. Controlling speculation: Conversely, and to reverse the current trend of speculative investments and prevent it from spreading further in the larger agglomerations, measures are needed to improve affordability in newly integrated areas but also in quarters of the existing municipal city. The success of the market in balancing the supply and demand of housing depends on catering to the demand of a city’s residents. Unfortunately, when the bulk of supply targets absentee high net worth owners, property prices become totally out of sync with local income levels, further widening the gap between housing supply and local needs. Furthermore, having absentee owners negatively impacts the vibrancy and livability of neighborhoods. To this end, housing policymakers in other countries have developed, tested and adopted a handful of tools that control speculation and its negative impacts, while providing incentives to developers, ensuring a reasonable profit and that positive impacts are felt by the communities in which they are building.

Changing mindsets, creating incentives

One such tool is ‘inclusionary zoning’, which requires a shift in the mindset from one where building development is automatically considered desirable, to one where the lucrative profits typically reaped by developers are partially shared with the community. In other words — and while bearing in mind that to be viable, developments have to be profitable — it is time to also think of capturing part of the value increases to benefit local communities. In an inclusionary zoning mandate, all residential development must allocate a portion (say 10-20 percent) of housing for middle income households. Inclusionary zoning is used in many high value and expanding cities, including several US and European ones. Such mandates, if properly enforced, represent opportunities to supplement limited public sector resources, and tap into part of the wealth created in the real estate market for social and economic purposes. Yet to succeed, inclusionary zoning must be properly calibrated so that the value lost from the below-market affordable homes is made up in development profits elsewhere in the same property. This is determined by: (i) the percentage and affordability level of the housing units required; (ii) the extent to which developers have a say in who lives in the middle income units to support healthy integration among residents; and (iii) the extent to which any costs imposed on developers are offset by public incentives as discussed above. Many cities rely on creative financial structures to improve the feasibility of these projects, such as granting affordable housing developers the ability to sell air rights to third party investors and developers (New York City) or using tax credits to leverage private capital and investor equity (most US cities). Moreover, some cities allow developers to substitute the inclusionary zoning requirement with a ‘linkage payment,’ or a stipulated cash amount per square meter, considered a social contribution that landowners must make on high value land approved for all types of new developments.

[pullquote]Such taxation can control real estate speculation and limit increases in real estate prices[/pullquote]

Another important measure, although seemingly unpopular, is a system of property taxation on properties valued above a certain threshold. Such taxation can control real estate speculation and limit increases in real estate prices, therefore increasing the possibility of producing affordable housing. Current taxation systems are insufficient and inadequate: they fail to assess the actual value of property, neglect to distinguish between types of property (e.g. agricultural, development) and leave numerous loopholes that allow developers to evade even minimal taxes.

4. Establish a housing assistance fund: Such a fund could be established through channeling various government resources, some of which were listed above, and includes: (i) existing taxes, such as value added taxes on construction material; (ii) property taxes, long overdue for reform in Lebanon to ensure that the government does not leave money behind by failing to tax the most expensive homes at rates close to their market value; and (iii) new ‘linkage payments,’ considered a social contribution that landowners must make on high value land approved for new development. The housing assistance fund could support important housing programs such as a ‘Rental Vouchers Program’ to offer ongoing payments to rental properties’ owners and hence assist low and middle income households, or ‘Stabilized Housing Programs,’ through which the government plays a counter-cyclical role by purchasing adequate excess supply for the benefit of middle income households. Its role could also be obvious in providing reasonable alternatives to low and middle income communities currently benefiting from the dysfunctional, yet so far irreplaceable, ‘old rent control’ system. In Morocco, for instance, the government imposed a 5 percent tax on the sale of cement in 1999, to fund the Housing Solidarity Fund (HSF) for urban regeneration. Recently, this tax has expanded to include steel and sand. The HSF together with the Real Estate Inclusion Fund — also financed through the cement industry — provide $250 million for urban upgrading schemes. In Lebanon, this measure was introduced modestly when deposits placed to secure work permits for foreign migrant workers were allocated to subsidize housing loans by the Housing Bank. However, the role and resources of such a fund could be widely expanded.

In the absence of adequate government support, private developers have already intervened to ease the housing burden on low and middle income families. It is time, however, for the government to support their efforts by enhancing what they have built, encourage them to build more in specific locations and inspire them to become socially responsible. In order to create an equitable and affordable city, we have to ensure that new developments result in quality, affordable housing that also provides significant public benefit. Of course, the core of socially responsible development is when developers contribute to the surrounding community and support the local economy, through providing affordable housing and/or other neighborhood amenities like parks and open spaces. Such measures have become the norm in numerous cities around the world and may be easily adapted in Lebanon, where the practice of negotiating building rights is common.

Contrary to what might seem logical, developing luxury projects for affluent buyers is not the only way to make profits in the real estate business. Building middle income housing may provide developers the opportunity to do something important that still provides a reasonable return. With proper planning and incentive structures, affordable housing projects can be viable for developers without much compromise on their bottom lines.

All the initiatives mentioned above require an able and committed government, without which very little can be done to genuinely ease the pressure of rising housing costs on middle and low income families. Ultimately it is up to government officials to champion socially responsible development, implement policies that are respectful of existing communities and ensure affordable housing to people of all incomes.

June 18, 2015 0 comments

Business

Build it and they will come

by Nabila Rahhal June 16, 2015

written by Nabila Rahhal

Driving past the rows of vineyards and the occasional industrial factory in the fields of Taanayel, West Bekaa, one of the last things you would expect to see is 200,000 square meters of entertainment and mall structures.

But that’s precisely the location Maurice Torbay, chairman of Cascada Village and a veteran of mall development in South America, has chosen for his company’s first mixed use project in Lebanon, Cascada Village.

Introducing Cascada Village

The project, according to Mariam Akkou, a specialist in public relations, communication and business development at Cascada Village, is designed to be a one stop destination for all residents in the region. Therefore, in addition to a 150,000 square meter mall — which is the project’s anchor — leisure facilities such as an outdoor extreme sports park, an events venue, an amphitheater for musical events, and a dining and promenade area centered around a little lake, are also components of the village. The project will also have a spa, a medical center and a medium sized hotel (200 rooms) in the future.

Today, the weddings and events venue Arcadia is already in operation and will be hosting some 20 weddings from May to September of this year. The rest of the project, save for the hotel, has been fully built, and the mall itself is in what Akkou describes as the “final stages of fine tuning and collaboration with the big tenants.” The mall, along with the entertainment facilities, is set to open by early 2016 at the latest, says Torbay.

[pullquote]Torbay insists that there was no deviation from the size or scope of the planned project with the war in Syria[/pullquote]

Cascada Village has been in the works since the end of 2010, but Torbay admits that they had slowed down their pace with the onset of the war in Syria in order to better assess the risks. Yet he insists there’s been no deviation from the size or scope of the planned project, nor does he see the situation in Syria drastically affecting the West Bekaa area where the project is located.

The people behind the project

Though a project of this magnitude in the Bekaa may seem risky at first glance, Torbay is no stranger to the development of malls in similar conditions. He has made a successful career out mall development projects in South America, where he not only lived, but was also named an honorary consul of Ecuador to Venezuela.

Fifty one years ago, he founded Pinova, a company which specializes in the manufacturing of industrial fridges, before diversifying his business to real estate development and specifically to the development of malls on the outskirts of major city hubs.

With seven such malls throughout South America under his belt — two other ‘Cascadas’ are in Venezuela — Torbay started thinking of creating a regional mall project in Lebanon, his home country. Torbay says his love for Lebanon and comfort in investing inside the country is what motivated his decision.

He then partnered with Roger Abboud — also of Lebanese origin and president of Abboud Trading Corporation, a wholesaler of mainly home electronic goods to Latin America based in Medley, Florida — to create Inter Mall Group. Together, Torbay and Abboud used Inter Mall Group to bring Cascada Village to Lebanon.

[pullquote]Inter Mall invested $200 million in Cascada Village[/pullquote]

Inter Mall invested $200 million in Cascada Village, an amount which includes the purchase of the land and the construction of all the project’s elements (except for the hotel), with the main financing coming from the partners themselves supported by a loan from Bank Audi. They see this investment as a show of faith in their home country, and more specifically in the Bekaa region, where Torbay is from.

The mall

The main pillar of Cascada Village is the mall, which has around 200 retail spaces spread over two floors. Aside from the fashion retail outlets, the mall will also house complimentary outlets such as a spacious, colorful food court and an entertainment center. Hypermarket Carrefour’s second outlet in Lebanon, a 10,000 square meter space, will be among the mall’s anchor tenants, as will an 11 screen multiplex theater to be operated by Empire Cinemas.

According to Gino Haddad, CFO and business development director at Empire Theaters, the cinema in Cascada Village will be state of the art, delivering the latest technology and the same quality experience as their Beirut theaters. “We are not treating this like a second tier project; the movies will be run at the same time as Beirut and the theaters are the same, if not better because they will be newer,” he says. In his opinion, it is the role of Empire to have the cinema experience be within the reach of everyone, no matter where they live.

Inter Mall, says Torbay, is embarking on a marketing campaign to launch the “leasing of the mall’s outlets” on June 10, but to date 62 percent of the retail spaces have already been leased. New operators and some retailers will even be attempting their first venture in Lebanon at Cascada Mall, explains Torbay, giving as an example the children’s entertainment center, which will be operated by the Italian company Terra Magica, as well a few fashion retailers who are also Italian.

Being a regional venue planning to attract shoppers from far away means Cascada Mall needs to have a wide range of prices to cater to all budgets, explains Akkou. “You will just as easily be able to find good quality jeans for $10 as you will be able to find a pair for $300,” says Torbay, explaining that such prices and offers will be a primary aspect in attracting clients from across the region.

Torbay says they will be following a typical leasing formula for malls, whereby they take a percentage of sales from their tenants in addition to a rental fee, the specific conditions of which will be determined on a case by case basis. In this way, according to Torbay, tenants will be more encouraged to lease from them while his company would potentially make more profit than it would have with only a monthly rent formula, as Torbay believes tenants will be selling more than they expect to.

Operating in the Bekaa

While Torbay says he’s confident he’ll be able to fill up vacancies in the mall, he admits they have been having a difficult time convincing some local retailers to rent in the Bekaa. “There is so much ignorance and [so many] misconceptions about the Bekaa, about one’s own country. They think [there are only] potato farmers and cows, which is not the case at all!” says Torbay in frustration, noting that the Bekaa is home to many wealthy and educated expats who have invested millions in the region, not to mention the business owners who developed companies in the area and reside there.

Torbay also explains that while security concerns are cited as a primary reason to avoid investing in the Bekaa, these areas of concern are located closer to the border with Syria near Baalbeck — more than an hour and a half drive from Cascada Village.

Before embarking on any mixed use project, says Torbay, his company conducts a thorough market study to identify the ideal location. “The location of a mall project is a very sensitive factor and while we can make some mistakes, we cannot afford to make a mistake in the choice of location for our project,” says Torbay.

[pullquote]There are over 10 universities and 600,000 residents in the Bekaa — not to mention expats and those who reside in Beirut[/pullquote]

Torbay is therefore convinced that the West Bekaa is an untapped market for mall development, adding that there are over 10 universities and 600,000 residents in the Bekaa — not to mention expats and those who reside in Beirut but come to Bekaa for holidays.

In explaining Empire’s choice to operate in Cascada Mall, Haddad also speaks of the university and school students who reside in the region and do not have entertainment facilities anywhere nearby. “These youth all have access to social media and hear about the latest movies, but they have to wait for a trip to Beirut to be able to enjoy them in the theaters,” says Haddad, adding that there are also young people from the Bekaa who go to university or work in Beirut during the week, who would appreciate entertainment options when they come home on weekends.

The long term target clients of the project, according to both Torbay and Haddad, are the Syrians who will visit Lebanon by land and stop by Cascada Village to shop, eat or enjoy a movie on their way to or from Syria. Cascada Village is thus well situated to take advantage of this eventual influx of consumers when the war in Syria is over.

Community support

Torbay sees his project as improving the quality of life in the Bekaa by being a generator of employment opportunities for those in the area, saying that, upon its full completion, Cascada Village will employ approximately 3,000 people both directly and indirectly. “Instead of having to commute to Beirut on a daily basis, wasting time and money, these people will have jobs near their hometowns,” he says. He explains that in Lebanon the job market is centered in Beirut, which puts high pressure on the city itself and on those commuting to it.

On the peripheries

Besides Cascada Village in the Bekaa, Torbay is planning on building mall projects on the outskirts of major cities in Lebanon. He has purchased the land for his next development in Balamand, not far from Tripoli, which he sees as another untapped market similar to the Bekaa.

[pullquote]The value in such developments is that there is no competition from other malls[/pullquote]

The value in such developments, says Torbay, is that there is no competition from other malls, as is the case in Beirut, since they are essentially entering a new market. Land outside of Beirut and its immediate suburbs is also cheaper, which means they can lease outlets at lower prices. As a result, the tenant in turn can offer lower prices, which means higher sales.

Whether destination malls far off from Beirut will find a client base in Lebanon remains to be seen, but Torbay is very confident that this is the wave of the future and that Cascada Village will, in the long run, be met with great success.

June 16, 2015 2 comments

Books

Bernard Khoury’s first book

by Ieva Saudargaite June 15, 2015

written by Ieva Saudargaite

As I enter the office, I notice a faint smell of exhaust and a fresh motorcycle tire skid mark on the red epoxy floor. Bernard Khoury greets me with a warm — if overwhelmed — smile. He has just flown in from an architects’ conference in Sri Lanka and coincidentally, so have the boxes from SKIRA, his publisher in Italy. He reaches for one of the stacks of freshly bound books piled around him and hands me my copy of ‘Local Heroes.’ Small, but 400 pages thick, it fits snugly into the crook of my hand.

Having contributed some text and photographs to the book, I’m more than familiar with it, but its long anticipated arrival is thrilling regardless. ‘Local Heroes’ is not a monograph, nor a manifesto, nor an architectural catalogue. Instead, the first comprehensive account of Khoury’s work reads like a pictographic novella. Sandwiched between two photo albums, the text unfolds as a sequence of anecdotes interspersed with architectural renderings, drawings and photographs. In fact, the book’s structure and content never ceases to shift right until the end.

The excited chatter gradually dies down as each architect leaves the office with his or her signed copy and in their absence, the sound of the thudding flour mill outside creeps into the aural foreground. We move to sit down around a gray-white marble table, where Khoury pulls out a few blank sheets of paper and begins to draw mid sentence. “This book reflects the kind of situations that I’ve been exposed to in the last 20 years,” he begins to tell me, while his wide eyes momentarily dart down to look at the flowing black ink. “It doesn’t try to be a historical document depicting the political, social, cultural and economic context. The structure of serial anecdotes liberated me from the restraining task of trying to come up with consensual definitions of territory, and instead allowed me to better depict the multiplicity of the environment I have worked and still practice in.”

Khoury explains that the book was an important exercise at a point in his career where there was a need to make sense of different projects, to see his body of work clearly formulated, on paper.

The stories recounted are at times dark and cynical, or humorous, absurd even, told in Khoury’s sarcastic voice and representative of the various characters the architect has encountered since his return to Beirut and the start of his career, after receiving a Masters in Architectural Studies from Harvard University back in 1993. These characters — The Landowner, The Corporate Mogul, The Man Overseas — make appearances throughout the book, and it’s through them that readers are introduced to the architect’s work.

In person, Khoury is a fantastic raconteur, one who paints a colorful picture in a low voice, whether he is talking about the conception of BO18 or his visits to Germany, the Gulf and Nagorno-Karabakh.

“I’ve often been accused of foregoing my political resistance in the years following B018, Centrale and Yabani, when I began to work with private developers,” he says with a bemused smile. “The nature of these projects was relatively unique in that they pertained to the entertainment industry and had a specific expiry date from the onset. Their temporality was the main ingredient that allowed for experimentation and more obvious gestures.”

Along with the different dynamics involved in working with the real estate industry came other and tougher battles. “The private sector has been blindly applying the same residential building typology for over 40 years, one that leads to deep slabs and corridors (read dark spaces), blind cores (read dark staircases) and glazed balconies (read increased isolation from the public realm). The political resistance takes place at this front.” In conjunction with a departure from the aforementioned typology and an application of materials that deviates from the construction industry’s standards, his buildings stand out from the surroundings they are anchored in, often appearing raw and industrial, and possessing a more sophisticated relationship to their territory.

One of his latest ‘combatants’ has risen on the edge of agricultural land in Furn el Chebbak, expected to be completed by the end of 2015. Plot #1282|3853, also known as Factory Lofts, is an aggressive looking edifice whose north and south ends taper into triangular blades. “Only 1.5 percent of the plot’s periphery borders a municipal plot, which means that years down the line, the building could end up surrounded by blind party walls on 98.5 percent of its boundary! Since our project is one of the first in an area that will eventually fall prey to the city’s swift urbanization, we decided to implement an all-round setback, thus creating a building that never turns its back on its neighbor. In contrast to its appearance, which is a result of a direct translation of the building code, it is the most well intentioned gesture we could possibly create.” Khoury is hopeful that potential neighbors will take note and refrain from building on the setback, which would require the erection of 50 meter tall blind walls.

Plot #1282|3853, along with many others, has been photographed and placed in the book in a 100 page series. Entitled ‘Drive-by Shooting’, this album comprises extracts from ongoing surveys of Khoury’s work whether they’re old, just completed or still under construction. Such exercises set him apart from the architectural practices that do not venture out beyond the design-and-build aspect of architecture.

Khoury stays busy on the artistic front as well. Following 2014’s ‘Fundamentalists and Other Arab Modernisms’ installation — a large circular table, library and fresco that traced 100 years of modern architecture in the Arab World— made in collaboration with the Arab Center for Architecture that showed at the Bahrain Pavilion at the Venice Biennale 14th Architectural Exhibition, Khoury exhibited two different pieces in April at Milan, an installation using marble, a material he hasn’t previously worked with, and a lighting design for Viabizzuno.

I look at the sheet of paper he has been drawing on: an elderly man and a woman looking in opposite directions, their elongated bodies emaciated by old age.

“Can I keep it?” I ask.

“Sure” and we exchange a freshly snapped Polaroid for his drawing.

Editor’s note: Although the author was initially paid for her contribution to Khoury’s book, she receives no royalties or other payments from further sales.

Photographs By: Ieva Saudargaite

June 15, 2015 0 comments

Auto Test Drives

BMW’s new X4

by Louis Parks June 13, 2015

written by Louis Parks

With their previous four-by-fours — the X3’s to the X6’s — selling like hot cakes, BMW has decided to develop this range further. The result is this year’s X4, which is for those who love the Bavarian off-roaders due to their ability to get the endorphins rushing on the highway as much as in a muddy field. And if our drive is anything to go by, it seems set to continue the X’s upward curve.

First, it is good looking, in that BMW way, with design cues taken from the now iconic BMW front end, surrounded by shining chrome, to the chiseled contours of the bodywork. Instantly recognizable, it hints at the power contained under the hood — most definitely, a sports 4 x 4.

On the interior, BMWs have never competed with the likes of Mercedes but they do the job well enough. The wooden elements integrate nicely with the textured dash and instrument display. The entertainment system is functional and simple to use, doing exactly what you need it to do. The 360° and parking camera are controlled by a single button, and the radio tells you which station you’re about to select before you hit the button. It’s all very clever and intuitive in BMW’s understated, practical manner.

But let’s get down to brass tacks; the X4 is, with a few minor reservations, a fantastic drive. To give some context, we drove the xDrive35i, the most powerful version of the X4 on offer. With a twin turbo six-cylinder of 306hp, it can reach 100 km/h in an exciting 5.5 seconds and has a top end of 247 km/h — this is a fast car that picks up well and can really shift when you, hypothetically of course, put your foot down. She’s rock steady at speed, though you’ll have to adjust to the breaking distance as it’s a little long. It’s definitely the kind of car you’ll want to get to know before loosening the reigns.

The X4 also has its quirks, but they’re mostly the result of some German engineer being far too clever for his own good rather than serious critique. Firstly, there’s an option to automatically kill the engine when the car’s stopped in traffic, which is more disconcerting than anything else — you can, of course, just turn it off. Another slight issue is the horn. It’s tiny. Clearly, our genius in Bavaria has never driven in Beirut, and the horn area on the steering wheel is so miniscule that it’s hard to give the quick, sharp bursts of hornage you might need on Beiruti streets. Finally, the rear window is on the small side, but that’s compensated for by a generous rear view mirror and an excellent camera system.

Minor negatives aside, the X4 is incredible to drive on the open road. You immediately feel the full 306hp and the engine has a satisfying growl when called into action. Moving along the highway at speed was pure pleasure, the car was solid and responsive as I drove north from Beirut. Returning to the dealership through the streets of Beirut was also straightforward. Since you’re sitting quite high, you’ve got great visibility, despite the rear window, and the X4’s tight turning circle and great power steering means that she’s fleet of foot. The parking camera system also serves as a wonderful proximity alert if you turn it on in tight spots — it beeps softly when a moped comes too close — and the top down view allows you to see exactly what’s going on all around you. For a large vehicle, it’s a breeze to drive through the city.

The hills and mountains around Byblos provided the X4 little challenge (bearing in mind that we were driving the 35i) as the car happily devoured significant inclines. Rocky, pot-holed Lebanese mountain roads, with their shale and rock coverings, proved no issue and at no point did the X4 even struggle. The ease with which it moved through twisting mountain roads was almost alarming. Even when stuck behind the seemingly obligatory mountain lorry, the X4 trundled along quite happily, crawling up steep hills in low gear without a grumble, before instantly picking up speed to pull away from our less agile companion.

A great option for both the city and more challenging roads, the X4 handled Beirut and the mountains with comparable aplomb. It’s exactly what you’d expect from BMW: a good looking interior, intuitive and truly useful electronics, a tremendous engine and off-road capabilities. It’s got a few issues, but they pale in significance when you actually get the chance to unleash her on the open road, or ascend into the mountains.

June 13, 2015 0 comments

Design Fashion

Nour Hage

by John Ovans June 12, 2015

written by John Ovans

Most of my clothes have holes in them,” Nour Hage announces. While that’s not the kind of shoddy neglect you’d expect from a fashion designer, Hage approaches fashion from a road much less trodden in Lebanon. “I love it when you look at an item and it’s worn out,” she says, “and it’s gone through a lot of things and has history to it.”

This kind of sentimentality is typical of Hage, a young designer who at only three collections in, is contributing a distinct aesthetic to the country’s fashion landscape. Curiously, unlike many designers who crave to steer their own course from the word go, Hage never considered starting her own brand early on in her career — simply because everyone kept advising her against it. After graduating in womenswear design from the Paris College of Art, she landed a job in the city with Damir Doma — whom she describes as one of her favorite designers — known for his clean, minimal silhouettes. It was only after she was unable to get her working permit renewed that she had to return home to Beirut.

Once home, and seeking employment, she wasn’t interested in joining any of the established labels. In the end, it was her father who encouraged her to start her own, offering her space in the family apartment to use as her studio, which she says is now getting a bit crowded. Hage has just finished her new collection — entitled ‘Ruĝa,’ meaning ‘red’ in Esperanto — which is on display at Santiago’s, a boutique in downtown Beirut. It is the last in a trilogy, coming after Blāo, high German for ‘blue’, and then ‘Kurkumā’, the name of a yellow spice. She has chosen primary colors for their simplicity and purity, and again, much of her work seems to be based on an emotional and even psychological response. In this case, it originates from the most basic of starting points; how the mind responds to certain colors. When asked whether her designs reflect her own personal style, she struggles to answer, though she does admit that “each item is like a part of my personality.”

It’s interesting to listen to her talk about her creative process, which to an outsider, seems almost random, like inventions that happen by accident. She describes watching a documentary about Tibetan monks on television — “I was mesmerized by their red robes” — and at the same time, she could see the decaying buildings outside of her window in Beirut. “I was also going through a phase when I was only listening to [American alternative rock band] Blonde Redhead.” These are the points of reference for the new collection — disparate, to say the least. “I’ve always been interested in contrasts,” she says. “Something new and clean with some old and used, for instance.” Beirut, though, remains a continual source of inspiration for Hage, which feeds into her affinity for the Japanese worldview wabi sabi, meaning imperfection, or a state of being unfinished. Replete with asymmetry and frayed hemlines, her designs recall a city so unintentionally adept at balancing charm and chaos, while the soft fabrics and use of draping and layering simultaneously brings to mind the Tibetan monks’ robes.

Hage is carving out a name for herself in the Lebanese fashion industry at a time where a number of individuals are doing the same, such as Starch alumni Timi Hayek and Bashar Assaf. “Right now young designers are trying to explore new styles in ready-to-wear, and basically diversifying,” she says. “And I wanted to be part of that.” She acknowledges the difficulty of getting a business off the ground, however, without the same access to artistic grants that there are in Europe or the USA. This year Hage and her fiancé will be moving to London, and so while business plans remain somewhat up in the air, she is excited for the challenge of working between two — dramatically different — cities.

“Lebanon kind of has that comfort to it where people are laid-back in the sense that they don’t feel a rush to do things, as much as in Europe,” she says, something that could never be said of London. While there’s no doubt that talent translates, we hope she gets those holes sewn up before she gets there. Otherwise she’s in for some very chilly winters indeed.

Photographs By: Tanya Traboulsi

June 12, 2015 0 comments

Leaders

The dangers of stimulus

by Executive Editors June 12, 2015

written by Executive Editors

Subsidies are always tricky and generally dangerous. Benefits are impossible to predict with certainty and unintended consequences range from valuation bubbles and boosts of inflation to loss of competitiveness. Governments are well advised to use subsidies sparingly.

Beyond the usual and long standing subsidies that aim at serving the disenfranchised and the needy (such as those on bread, certain social and medical services, and tobacco), subsidies are currently being used in Lebanon for propping up the economy. They are targeted, provided and supervised by the central bank. Known as ‘the stimulus package’, they are focused on the housing sector more than anything else.

[pullquote]Subsidies are always tricky and generally dangerous[/pullquote]

Some did raise questions about the wisdom of the initiative. After the first year of this stimulus when a nominal value of $1.47 billion in 2013 was extended into an $800 million second round for 2014, Executive opined that it was still not possible to see whether and how much exactly the first package had contributed to GDP growth in 2013. Specifically, the package’s 56 percent funding allocation to real estate financing was questionable, we thought, due to low multiplier effects.

Contrary to the doubts, including those voiced by Executive, the subsidies that the central bank extended to the real estate sector via lower interest rates on home loans for the third year running have, by numerous indicators, boosted the flow of property transactions and helped the economy.

Out of real GDP growth in the past two years, perhaps as much as 50 percent was due to the central bank stimulus package. In June 2014, central bank Governor Riad Salameh spoke to that effect about the growth that was achieved in 2013. More recently, the International Institute of Finance said in a paper published in March that 2014 GDP growth was helped by the central bank’s stimulus package boosting bank credit and paper projects, which the economy will continue to depend on in 2015. “Our baseline scenario expects a small pickup in growth to 2.2% in 2015, supported by a third BDL stimulus package and modest recovery in exports of goods and services.”

Notably, the IIF assessed Lebanon’s real GDP growth to have been 1.4 percent in 2013 and 1.7 percent in 2014. For comparison, the International Monetary Fund took a rosier view on both years, speaking last month of a 2014 growth estimate of “around 2 percent.” In its economic database for the World Economic Outlook, the IMF moreover assumed, as did BDL, that 2013 growth at constant prices was 2.5 percent.

Whatever estimate of national growth rates one considers most realistic, there is no arguing that recent years’ expansions of the economy were not enough. A quick jump in Lebanon’s economic pace is also nobody’s expectation and it is only fools or very deceptive property marketers who would today claim that demand for real estate will break out of its current sluggish mode anytime soon. As the IMF said last month, “Lebanon’s traditional growth drivers — tourism, real estate and construction — have all received a significant blow [from an exceptionally challenging environment], and a strong rebound is unlikely soon.”

During research for this year’s special report on real estate, no one in the industry played the fool and told Executive that they expect a near term boom in the sector. But what developers and leaders of the two sector organizations talked of in unison was the importance of the central bank stimulus. The most subdued assessment was that it was a “nice infusion of oxygen” into the market. The bluntest comment was that the sector would be “in deep shit” if not for the stimulus money.

This is concerning. Their conversations with Executive suggest that developers are not just evaluating the impact of the stimulus package — which this year is set at $1 billion according to an undated monetary overview page on the BDL website — on the real estate market. Rather, they are also including the stimulus directly into their expectations, speaking of new projects and ventures that would specifically target buyers who can tap into BDL subsidized housing loans.

This is the upper middle segment of the property market, meaning pricier and more profitable projects than those that benefit from PCH loans targeted at lower to average incomes, but not the over the top luxury projects whose developers angled for the investment cash of high net worth individuals and above. Even if there were zero new luxury projects where the asking price for a square meter of the average flat ranged from 50 to 200 percent of Lebanon’s per capita GDP, the question arises of whether there is genuine high demand for units in the market range of up to $500,000 per residence, or whether developers are not just treating central bank housing loan subsidies as deciding elements when initiating new projects in this category.

Such a distortion of the market cannot be excluded as per the numerically skimpy but visually compelling evidence. Although market participants have for the past three years been talking about negative demand signals, stagnant prices and shrinking profit margins, construction fences are still sprouting around sites in exactly those areas of Beirut where newly built units would have to retail in the quarter to half million dollar range and, by cost considerations, would be incredibly difficult to market.

Possible implications of developers’ self chosen dependency on the central bank’s housing loan stimulus extend from an artificial inflationary push in the Beirut real estate market, which after the extreme property price boom of 2005–2011 is something that the Lebanese economy would do better without, to formation of a not large but potentially very volatile layer of developers whose businesses would be in ever increasing danger of implosion once the artificial infusion of money via subsidized loans comes to a stop.

What exacerbates either concern is the forecast of no autochthonous economic upswing in the Lebanese property market or the economy at large. This means it could be several more years before improved regional circumstances — better banish that hope — or any decisive change in the political processes would provide a rationale for ending the stimulus package.

Thus developers who two years ago paid scant attention to the stimulus package and who are today totally enthused about it, two years from now might find themselves being so dependent on the subsidies that they will falter upon withdrawal of the stimulus. The central bank has clearly expressed its caution of inflation risks that the stimulus tool entails and has tightened some requirements in order to keep those pressures at bay. Yet Murphy never sleeps and repercussions of withdrawal-shocked developer bankruptcies could be grave, tearing down jobs, suppliers, and investor and consumer confidence.

[pullquote]Fiscal stimuli cannot be substituted by central bank initiatives, however smart[/pullquote]

A second vital consideration is that the off kilter real estate development of Lebanon shows no sign of balancing. As Executive commented on the stimulus package in January 2014, and has said in more reports and stories than we ourselves care to count, measures such as a holistic infrastructure development program are desperately needed to improve our productivity and justify real estate development. We are not getting such measures. This is maddening. Policymaking cannot be postponed ad infinitum. Fiscal stimuli cannot be substituted by central bank initiatives, however smart.

Yes, real estate and construction is one of our ‘traditional growth drivers’. In the past two years, a lot of money has been pumped into bank lending for home buyers. This has helped the economy more than we anticipated. What we need today is a convincing legal framework for housing, including provisions for the hitherto neglected parts of the current population, alongside political facilitation of a national infrastructure program, and convincing and sustainable urban and rural development legislation.

But what the Lebanese have seen in the past year alone were only deferrals of decisions, rendering measures such as the law on rental properties ineffective, and as far as property and urban development needs, absolute non delivery of a national framework. From all that we know, we cannot demand macroeconomic wisdom from our property developers. The question is, what reason might we find for having confidence that our elected policymakers will?

June 12, 2015 0 comments

Real estate Real estate 2015: All puffed up Real Estate

PCH: An explainer

by Thomas Schellen June 11, 2015

written by Thomas Schellen

The housing loans that commercial banks offer with the support of the Public Corporation for Housing (PCH), colloquially known as Iskan loans or PCH loans, are engineered according to a smart financing formula that is advantageous for borrowers but nothing short of complicated. When a first time home buyer with Lebanese nationality and residency has been approved for a PCH loan, and has deposited their 10 percent down payment for the home purchase, they can access 90 percent of the approved loan amount at the participating commercial bank that has agreed to issue the loan. This bank will wire the remaining 10 percent of the loan to the PCH, where this amount is held in an interest bearing account to the benefit of the borrower.

Under the tripartite loan agreement between borrower, bank and PCH, the borrower will then be responsible for paying down the principal of the loan to the issuing bank, and must do so during the first half of the agreed total loan period (up to 30 years). In parallel to this, the PCH assumes the responsibility for paying the monthly interest that the bank is owed on the loan amount.

As the borrower thus decreases his bank debt to zero through installments over the first half of the loan period, he incurs a new, smaller debt to the PCH which serviced the loan’s interest rate component on his behalf. This debt plus 3 percent is what the borrower has to settle with the PCH in the second half of the loan period. In terms of the required monthly installments, the borrower will have to pay far less in the second half of the loan period when compared with his obligations in the first half.

The financing formula makes great sense because the interest rate component on a long term loan becomes a heavier cost burden the longer the interest applies. By receiving the PCH’s support in settling the interest on the principal loan within the first half of the financing period, the borrower is provided with a much more affordable total loan cost.

As PCH director general Rony Lahoud says, the borrower’s total payable amount on a borrowed principal of $180,000 shrinks from over $300,000 in a conventional 30 year loan contract to less than $250,000 in a PCH contract, at the same interest rate example of 4.67 percent. Additional financial advantages for borrowers comprise the exemption from fees that amount to about 7 percent of a unit’s value, according to Lahoud, who claims that the total benefits of a PCH loan at the upper end of the available range can sweeten a move into a new home with financial cost savings to the tune of $70,000 or $80,000 when compared with a conventional bank loan.

However, the PCH loan will not meet every need and comes with a set of eligibility requirements. The loan amount ceiling has been raised twice since the PCH formula was introduced in 1999 but the current ceiling of $180,000 per loan still restricts the paid out credit to a maximum of $162,000 under the 90 percent disbursement rule. This rule reduces the repayment installments that borrowers have to make in the second half of the loan period, but the financing cap overall does not give young families room for large jumps.

[pullquote]Financing an apartment in Beirut via a PCH loan would usually be out of the question[/pullquote]

The PCH loan range allows borrowers to finance home refurbishing/restoration, as well as use funds for the completion of at least half finished apartments or the expansion of an existing home. However, when it comes to the typical first time buyer ambition of acquiring a finished, brand new apartment, choices will not be vast even a good distance away from the economic fleshpots of Beirut, given the prices asked for new apartment units even in somewhat affordable areas where a couple might seek to live and commute from. Financing an apartment in Beirut via a PCH loan under the current per square meter property prices in the capital would usually be out of the question, as Lahoud concedes.

The PCH loan is not made easier by carrying borrower qualifications that include minimum age (above 21), employment duration (2 years) and maximum age (65 at conclusion of loan repayments), plus a monthly family income ceiling of 10 times the $450 monthly minimum wage on top of limitations for the size of the financed dwelling (200 square meters).

Not to forget Lebanese nationality and the required proven ability to service the loan payments from a family’s income. One bank’s sample Iskan loan calculator illustrates this important practical restriction by throwing out an $80,000 borrowing limit for a 20 year loan and monthly repayment dues of one third of the applicant’s income when the applicant puts in a monthly family income of $2,000.

As sensical as the PCH loan’s social and economic eligibility requirements are from the perspective of tailoring this home finance option for the presumed primary target group of average-income couples and young working parents, it is difficult to perceive the scheme’s host of conditions and specificities as unbureaucratic. It must also be recognized that the loan criteria bar access to marginal earners who may be the most in need of dignified yet affordable housing in a functioning community.

Putting aside the conceptual restrictions, organizational challenges for the PCH and the various other barriers that young homebuyers face in the proverbially uncertain Lebanese economy, it seems all the more remarkable that the complex scheme has served almost 67,000 households in their home finance needs to date.

June 11, 2015 0 comments

Culinary Art Wine and spirits

Lebanese vintages

by Daisy Mohr June 11, 2015

written by Daisy Mohr

“Honor the land. Honor the vines. Honor the goddess within you.” It is early Saturday morning and Tracy Chamoun is teaching her weekly yoga class at Chateau Belle-Vue. “Soften your hips. Soften your shoulders. Soften your face,” she continues and smiles into the room full of women who drove up from Beirut to be here. In Bhamdoun, surrounded by Belle-Vue’s vineyards, you may only be half an hour away from the capital but it feels like it’s worlds away.

I first came across Chateau Belle-Vue last December. Racing around town to get my Christmas shopping done, I stopped at a wine shop in Saifi village to buy some bottles for visiting foreign colleagues. I figured a good red wine would be a special way for them and their families to have a taste of Lebanon at their Swedish Christmas tables.

The friendly shopkeeper told me they only sell two Lebanese wines because of their outstanding quality. Though I wasn’t familiar with it, I was easily convinced that Chateau Belle-Vue was the one to choose and a few minutes later, I was back in the car with four bottles of Le Chateau — $50 each. One of these attractive bottles was for me and later that week, my friend and I first tasted the terroir of Bhamdoun.

Situated in the former summer estate of the French ambassador to Iraq and Syria, the French government put the property up for sale in the late 1990s. Partly destroyed by the Civil War as it raged through Bhamdoun for many years, presented the French with an appealing bid: to rebuild the land as a winery.

The couple’s attraction to Bhamdoun is rooted in Naji’s childhood. He grew up in a hotel wing of Bhamdoun’s famous Belle-Vue, which was owned by his maternal grandparents. When war came to the village, they all had to flee and the only thing Jill recovered years later, among the rubble of the once thriving hotel, was a single tile; the rest of the property was looted and destroyed. She framed it for Naji as a memory of the place. And 15 years ago, in another homage to Belle-Vue, one of the first things Naji and Jill did was to plant old vines in its front yard. They worked with Vivaldi’s Four Seasons blaring out of the windows of the car; this was the start of their emotional project.

Originally from Minnesota, Jill met her Lebanese husband at college and now seems to love Lebanon and Bhamdoun with a passion many Lebanese can’t match. She takes me on a tour of the vineyard. While they only started with three plots, they now harvest over a hundred.

The vineyard has stunning vistas. Because of the altitude of Bhamdoun, the grapes harvested are small, the size of chickpeas. The skin of the grape thickens in an effort to protect the pulp from the light and this thicker than average skin results in a deeper color and an increase in tannins.

Winemakers know that this kind of terroir is unique. The fruit is also distinct because of the micro-climates of the valley. Grapes have always done well here, their greatest fortune is that there is no fog and no rain in the summer — vines need to suffer to mature properly and that’s what they get here; they aren’t even irrigated. The area also boasts two kinds of soil, with divergent levels of clay and limestone, which makes for a very different grape, and in effect, a different wine. That’s why, though Belle-Vue makes a Bordeaux style blend, it isn’t that obvious.

I don’t remember drinking anything similar in Lebanon before. The intense red color of the wine may already be a hint to the surprising bouquet that awaits you when you take your first sip of Le Chateau. The well rounded, opulent taste, it seems to me, cannot be matched by a milder Bordeaux. Even the limited edition of their white wine is moulded by an amazing range of aromas, from passion fruit to peaches, carrying the sharp freshness of summer.

But there’s more to Belle-Vue than making wine. New olive and fig trees are planted continuously to support a green and fertile valley since Naji and Jill’s mission is to ‘give back’ after so many years of neglect. With many of the employees coming from the village (every grape is handpicked) and the renting of farmland from locals, this is a project deeply embedded in the community in which it is situated.

During my tour, I also realize how Jill has this way of making you feel at home, perhaps due to the passion and connection she has to the land. She explains it all more like a hobby that got a bit out of hand, not a money making project: “Naji works in finance, this won’t put our four kids through school,” she laughs as we look over the Mediterranean from the vineyard.

The core team at Chateau Belle-Vue is female. Esperanza Geara, the vineyard manager, came from Spain with many years of international experience and Diana Salame, the consultant winemaker, is the brain behind the elegant taste. They produce around 20,000 bottles per year, two reds, La Renaissance and Le Chateau, and Petit Geste, their white, as well as some arak. Every effort is made to make this a balanced, organic wine label. “We feel this kind of wine is like romance,” Jill says over lunch in their cozy restaurant, Le Telegraphe, where the Franco–Italian menu is matched to the wines. The cindered creamy camembert cheese, prepared in the fireplace and combined with their red wine, makes me want to drive to Bhamdoun every day.

While the restaurant has been running for two years, the hotel next door only opened late last year. The building had been totally destroyed, with no roof or windows and the plumbing was ripped out, so it required some serious renovation work. Today, this former French ambassador’s summer house is a charming boutique hotel with seven rooms, named after the different grapes they harvest. As you can probably imagine, the rooms, replete with fireplaces, are homey down to the last detail, and Jill makes sure there’s a jar of freshly baked cookies in every room.

This is a boutique winery with a lot of character. Its small size has, undoubtedly, something to do with its high caliber and the variety of awards they’ve already won — their Cabernet Sauvignon and Merlot blend won gold at the London International Wine and Spirit Competition for instance. With their intimate, organic approach and all round hospitality to match the fantastic wine, the small scale translates to great impact.

I know that the next time I open a bottle of Belle-Vue, it will be like I’m at the Chateau again, overlooking a stunning mountain landscape of verdant valleys.

June 11, 2015 0 comments

Wellness

Qi juices

by Roman St Clair June 10, 2015

written by Roman St Clair

Organic produce is hard to come by in Beirut. Even in the humblest of vegetable shops, the items resemble members of the local bodybuilding community, swollen and pumped full of steroids. So the sight of some grubby, stunted, purple carrots in the Souk el Tayeb farmers market stops me in my tracks — and, if the benefits of organic food are beginning to be felt in Beirut, then Qi Juices is one company spreading the news.

It’s early morning on a busy Saturday, and the juices at the company’s understated stall, derived from certified organic farms throughout Lebanon, are all but sold out, as cofounder Hana Alireza pours me a capful of “Morning Greens.” Eyeing the fennel based vegetable juice suspiciously, I note that it shares its color and consistency with stagnant pond water — so my first sip is cautious.

Founded by Leila Fakih Nashabe and Hana Alireza in 2013, Qi’s first offering to the Lebanese public was the “juice cleanse,” Beirut’s nod to the frenzy of kale and bikram yoga worship sweeping gentrified corners of the globe. This cleanse is a three day regimen, during which customers consume six 450g bottles of different, organically prepared, cold pressed juices (beetroot, kale, carrot, cucumber, ginger, spinach, parsley, etc.) per day. The juices are drunk at two hour intervals with water or green tea in between, and that’s it. No food. A daunting prospect, three days without one square meal (not to mention the $195 price tag), yet the juice cleanses took off and ran, and Qi expanded. Their products are now available in select stores throughout the city, and at their recently opened juice bar in G Spa, a high end gym and wellness center on Independence Street, between Sodeco and Sassine.

As Alireza explains, “We started Qi Juices because there was a need to provide a healthy alternative to the pasteurized juices full of additives and preservatives that existed in the market. I wanted to create a company that would support organic agriculture in Lebanon, create a product that is honest about its ingredients and that makes people feel good. And to have fun doing it of course.”

As I can attest, cleansing one’s body can be an intimate and challenging undertaking, and Qi’s strategy is to be highly supportive all the way. Daily emails to the converted carry “funny, light, motivational, and inspirational” messages, plus the encouragement to call anytime “just to talk.” According to Alireza, this — sometimes overly — personal relationship with their consumer base has allowed Qi to grow “organically.” Close is comfortable.

Qi is uniquely placed in Lebanon as the only officially organic juice brand that’s approved by the Mediterranean Institute of Certification. All ingredients are pesticide free and delivered straight from the farm to the ‘Qitchen.’ Choice is seasonal, so Swiss chard, spinach and beetroot disappear with winter, and juices are adjusted accordingly. Herbs such as mint, parsley and coriander grow locally all year round, and are juiced, bottled with a seasonal fruit, and served as “Herbalicious,” Qi’s summer flavor.

The preservative free method of juice pressing gives it a shelf life of just three days. According to Alireza, this is the major problem they face in terms of expansion. The juices must meet demand precisely, or gallons and dollars go down the drain. Thus your fruit and veg fix is delivered, wherever you are, by a scooter with a cooler, like some futuristic designer drug.

Sitting in the new Qi Juices bar in G Spa, I’m downing a “Maca Love to Me” smoothie that was whizzed up in front of me. Styled in the brochure as a “perfect meal replacement or post exercise,” it contains coconut water, banana, walnuts, figs and maca powder, an esoteric life giving herb native to the Peruvian Andes. I am told this drink will, among other things, boost my libido. It’s delicious, though beige and gloopy, with a crunchy, chewy texture from the walnuts and figs. While the drink is surprisingly not filling and there’s no noticeable boost to my libido as I observe a group of middle aged women performing water aerobics, the juice is undeniably invigorating. Hana insists “it’s about getting people to think about what they put into their body.” And while I’m not quite ready to swap my caffeine hit for a mug of parsley juice, I will gladly reject the smooth contours of pumped up veg stalls for the unsightly treasures in this world of organics. We are what we eat, are we not?

June 10, 2015 0 comments

Real estate Real estate 2015: All puffed up Real Estate

A place all their own

by Thomas Schellen June 10, 2015

written by Thomas Schellen

So that every family may own a home. This, according to the chair-director general of Lebanon’s Public Corporation for Housing (PCH), Rony Lahoud, is the overarching idea under which the understaffed government agency pursues its mission of examining an endless stream of loan applications from Lebanese citizens. “It is hard work, but it’s amazing at the same time because when we are giving a loan to the citizen, we are telling him, ‘yeah you are going to have your own apartment where you can build your family,’” he says.

Lahoud’s career stops included work in banking and banking related IT companies outside of Lebanon before he joined PCH as ranking public servant and was confirmed as the agency’s chair and director general (CDG) on May 9, 2014, as part of a wave of high level administrative appointments that constituted one of the last governmental decisions before the end of President Michel Sleiman’s term.

According to Lahoud the PCH approves about 6,000 loan applications per year and has had close to 67,000 loans in its records since it started operations in September 1999. Housing loans with PCH support account for half the real estate market — numerically but not in value. “The value of these loans is about LBP 7.300 trillion [$4.842 billion], and that is cumulative; we are talking here [of] all the years since September 14, 1999, which was when the first loan was given.”

While Executive reporters wait for Lahoud to arrive at his office, some of these loan applications are being delivered; an employee pushes in a classic wire mesh supermarket shopping cart that is not loaded with groceries but stacked high with paper folders, each of them bulging with application documents. Signing these endless files is one of the arduous daily duties of his role, Lahoud confirms during the interview, but according to him the agency is on the brink of enhancing its processes through computerization and automation.

Making work flow with limited means and archaic methods is a common sight today around ministries and administrative units in the Lebanese public sector. Fundamentally to blame for this is always the nation’s chronic lack of fiscal breath that transpires into financial and operational asthma of government departments. Plus, as far as operational cash flows, the periodic occurrence of political disagreements among government players poses a constant risk of disruptions.

Short term funding deficiencies were also what brought the PCH into the headlines last year when commercial banks became wary of outstanding payments under the agency’s responsibility, reported, to the tune of $60 million. “The biggest problem was the cash that the PCH needs each month to transfer to the banks for paying interest of the loans given to the citizens where we are paying about LBP 17 billion [$11.3 million] per month,” Lahoud explains.

The transfers are essential under the complex mechanism by which the PCH and commercial banks collaborate in granting housing loans whose beneficiaries enjoy credit terms that are much more affordable than in standard housing loans. For this mission of sponsoring housing finance for Lebanese citizens in the reasonably priced range of the market, the PCH is entitled to draw on certain property related government revenues, such as a portion of construction and building permit fees.

On the cusp of automation

The money tap was turned back on through discussions with the two involved ministries, finance and social affairs, and with the prime minister and the speaker of the house, Lahoud adds. In securing these funds at the end of last year it was ascertained that the PCH could continue to approve new housing loans in 2015, but that appears to be far from the last of its challenges.

A core structural need is already lined up. The PCH needs to expand and renew its human resources, Lahoud says, because it has a current headcount of about 100 employees, many of whom are approaching mandatory retirement age. To be fully staffed for its operations in the Beirut head office and four satellite offices, and for collaborating with banks — currently 29 collaborations are in place — the agency needs “about 180 employees,” he says.

In moving into the information age, Lahoud says PCH will soon bring technical measures to bear, “like implementing an internal automation system for our work, and everything will be soon computerized starting with the launch of our website in the near future.”

He adds that the PCH needs to revise its organization charts and add new key positions, such as an IT manager. Beyond being a task for management and internal organizational development, however, this challenge also seems to entail external and political components as decrees and approvals are required.

For about half of its existence to date — from 2007 until 2014 — the PCH was also operating without a CDG after its founding CDG Antoine Chamoun retired from the position. The organization thus was not able to expand its reach as much as might have been needed and despite the program’s importance for young families and mid income earners, this clientele’s awareness and understanding of what the PCH was offering was often lacking.

Some informal intermediaries and unlicensed property agents, which are still a major force in the Lebanese real estate market, deceived people about the PCH loans and there is a general deficiency in awareness among potential loan clients, Lahoud concedes. “This is why we are now placing great emphasis on awareness and communicating. We are going to use all kinds of communication tools — our website, emails, our Facebook page and even SMS, [as well as] do a lot of different stuff like presentations on television and radio programs just to alert everybody that we are here, and here to hear you and to help you.”

In practical terms, the awarding of a PCH loan currently consumes on average about 10 weeks, with processes requiring loan applications to be examined by both the issuing banks and the PCH in steps that involve moving the files several times between the participating bank and the agency before the six member PCH Board signs off on a loan. According to Lahoud it is currently three banks that account for almost half of the lending activity with PCH sponsorship, namely Credit Libanais, BLOM and Byblos.

Beyond loans

The task of providing Lebanese citizens with affordable homes is ever more ambitious as no one has a clear understanding of the actual structure and state of the national housing situation, as far as home ownership rates and ratios of owned to rented residences or rent price levels across municipalities are concerned.

Nonetheless, and notwithstanding large political requirements — which usually constitute obstacles — of new legislation, the PCH envisions its future role expanding into the development of individual housing supply in rural areas of Lebanon, in collaboration with municipalities. After securing its finances and developing its human and technical capabilities, this will be the third part of the PCH growth strategy, Lahoud says. “It will be about new projects where we are going to start building some apartments under a low cost frame for the [eligible] people in the village.” This, he adds, will also be done with a view to relieve pressure on Beirut as a population center, by enabling people to reside in rural areas with improved housing and living conditions.

Legal requirements for such measures, however, will entail the passing of new laws such as one facilitating rent-to-own options in the national real estate environment. The PCH sees its role in the provision of homes as serving 50 percent of the total real estate market in the future — which Lahoud estimates as constituting a need for 8,000 to 9,000 new units per year. But as far as getting to the state where socioeconomically winning projects can be implemented in collaboration with municipalities, or under advanced rent and housing legislation, he is not committing to a time estimate. He says, “It is not [going to come] quickly. We need to change some specifications and features in the laws, which we have started to work on. Maybe this will take some time, but at least we started thinking.”

June 10, 2015 0 comments