Executive Magazine

Matt Nash and Jeremy Arbid to Executive

by Executive Editors May 21, 2014

written by Executive Editors

He’s covered everything from oil and gas to questionable flight patterns. And everyone from politicians to his dog. He broke the story on local internet providers tracking their users’ every click. And explained why buildings in Beirut are collapsing.

Today Executive welcomes Matt Nash to our family. Matt will be heading up our Economics & Policy section, both writing and helping direct our coverage of the Lebanese government and economy. This work will build on his seven-plus years of reporting on Lebanon for NOW and other outlets.

Starting next month, Matt will be joined by energy and public affairs analyst Jeremy Arbid. Jeremy — who in his short career has already penned several policy papers for leading research institutions — will apply his incisive mind and considerable knowledge of Lebanese public policy to our coverage.

As Executive’s editors, we’re extremely excited at the prospects these two journalists bring. With Matt and Jeremy joining our talented team, the sky is the limit. Readers, stay tuned.

May 21, 2014 1 comment

The Erbil Rotana Hotel was inaugurated in 2011

Real Estate

Building luxury in Erbil

by Tiziana Cauli May 21, 2014

written by Tiziana Cauli

When in September last year Erbil was hit by a series of terrorist attacks, fears over political instability in the Kurdish capital, among Iraq’s safest regions, might have scared foreign investors away from the city’s booming real estate market. Fortunately this did not happen, and Lebanese investors, accustomed to a little instability in the Middle East, continue to look at the city as a prime location to consider in their investment diversification strategies.

“Unlike many areas of Iraq, the Kurdistan region in the north is safe in terms of investments, business and personal security,” says Jacques Jean Sarraf, chief executive officer and chairman of Lebanon’s Malia Group, which is leading a $52 million real estate development project in Erbil’s city center.

The Arjaan by Rotana is a mixed-use development due for delivery by the beginning of 2016 and will be the second property to be managed by the group in the Kurdish capital through a partnership between Malia and Italian investor DIVA.

Both the Erbil Rotana Hotel, inaugurated in 2011, and the Arjaan project are managed by Middle East hotel group Rotana. Although both Rotana and Malia have businesses in the entire MENA region, the collaboration between them will remain focused on Kurdistan.

“Our partnership currently focuses on luxury hotel projects in Erbil,” explains Sarraf, who also told Executive that Iraqi Kurdistan’s laws play an important role in attracting investors to its capital city. “Erbil has become a business hub in the region thanks to its versatile investment law,” he said, referring to a 2006 law aimed at promoting foreign investment in the region.

Kurdistan’s investment law established equal treatment for local and foreign investors, who are entitled to own the full capital of their projects in the area. Foreign real estate investors can buy and own land just as their domestic counterparts, and they can even obtain it for free or at a reduced price from the government. In addition, foreign investors who start producing goods or providing services in the region are exempted from customs taxes for ten years. These advantages, as Malia’s chairman points out, are likely to continue to attract foreign investors to Kurdish Iraq as they diversify their ownership in the Middle East. “Our roadmap in the coming years is one of strategic growth and diversification where investment in Kurdistan and other countries in the region will feature prominently,” Sarraf says.

Unlike the group’s first property in Erbil, the Arjaan project will be both residential and commercial. According to Sarraf, this will be an advantage for the group, as mixed-use assets can adapt more easily to changes in market demand. “Mixed-use projects tend to be profitable for both investors and end users,” Sarraf says. “From an investor’s perspective, the primary benefit of mixed-use projects is that they capture all three segments of real estate: residential, office and retail. On the other hand, there is always the possibility of a partial restructuring of the project based on demand.”

According to the CEO, the Arjaan by Rotana will benefit from a symbiotic link between Erbil’s residential and office real estate markets. “The demand for residential and commercial spaces feed each other,” he says. “On top of that, the Erbil Arjaan by Rotana is the first branded furnished apartment project in Kurdistan, which further decreases the risk exposure.”

Arjaan is 60 percent owned by Malia Investment Holding and 10 percent controlled by its Italian partner DIVA through the subsidiary company Towerline Touristic. The remaining 30 percent of the project’s capital belongs to the offshore company Roza.

Office spaces in the complex will be available for rent, but not for sale, according to Sarraf.

May 21, 2014 0 comments

The 9th edition of Beirut Boat, took place at Port of Beirut, from May 14 to 18

The Buzz

In photos: Luxury at Beirut Boat 2014

by Greg Demarque & Nabila Rahhal May 20, 2014

written by Greg Demarque & Nabila Rahhal

The usually calm Pier 1 in the Port of Beirut was alive with glittering super yachts, lavish white leather VIP lounges with hot tubs and various stands showcasing the glamorous maritime world. From May 14 to 18, the pier played host to the ninth edition of Beirut Boat 2014, an annual nautical exhibition organized by International Fairs and Promotions in collaboration with German trade fair organizers Messe Düsseldorf.

The event typically gathers boating enthusiasts and potential buyers with global producers of yachts and boats as well as agents of marine sports equipment and accessories. While the 2013 edition of the show was cancelled due to logistical complications, the organizers decided to go through with this year’s program to help maintain the continuity of the event, according to Beirut Boat 2014’s project manager Rayane Imad. They also “got many calls from producers and agents asking for the return of the boat show,” claims Imad.

The 9th edition of Beirut Boat took place at Port of Beirut from May 14 to 18

This smaller ship model is probably more affordable to the wider public than the real boat

This smaller ship model is probably more affordable than its larger cousin

The Lebanese army exhibited some of its boats

This one's not for sale

Various stands showcased the glamorous maritime world

One cannot sail without a proper hat

Drinks were also available for attendees

None for the captain, please

Organizers chose Pier 1 as venue for the boat show

Organizers chose Pier 1 as the venue for the boat show

With the change of location from Marina Joseph Khoury in Dbayeh to the Port of Beirut, closer to the city’s center and hospitality hub, the organizers were hoping to attract a large number of visitors this year. But they projected a maximum of 25,000 attendees, down from the 28,000 visitors at the 2012 edition, according to the festival’s 2012 post-show report.

While the 2014 post-show report is not out yet, attendees Executive spoke to felt that this year’s edition was a smaller scale and less glamorous version of the previous exhibitions, despite it being in Beirut proper. Still, the return of Beirut Boat in any form could be taken as a vote of confidence for Lebanon’s hospitality and tourism industry.

May 20, 2014 0 comments

After nearly a year suspension, Lebanon's national team can now take part to all FIBA organized competitions

The Buzz

Lebanese basketball returns

by Peter Speetjens May 20, 2014

written by Peter Speetjens

Update: Since we published the article online, Lebanon announced its withdrawal from this year’s WABA Championship because it would interfere with the final playoff games which are currently taking place.

Nearly a year since its suspension due to political interference in Lebanon’s most popular game, the Lebanese Basketball Federation (LBF) was reinstated as a member of the International Basketball Federation (FIBA) in early May. As a result, Lebanon’s national team is set to re-enter the arena at the West Asian Basketball Championship in Jordan on May 23.

“We acknowledge with thanks the latest copy of your statutes as approved by the general assembly … [and] we are pleased to inform you that FIBA is now in a position to lift the suspension of the LBF,” FIBA’s Secretary General Patrice Baumann wrote in a fax to LBF President Walid Nasser on May 7. “Your federation is now therefore reinstated with full rights and your teams and officials may take part in all FIBA competitions and activities.”

Changes to the LBF statutes are threefold. First, the election of the federation’s five-member executive committee was altered. Lebanon’s ten professional clubs used to appoint three of its members. Now, each club can only put forward one name, after which the clubs must agree on a final list of seven candidates, from which the LBF Board of Directors will choose three. The board, which is chosen by representatives of both professional and amateur clubs in Lebanon will also appoint the two remaining posts, including the secretary general.

Staying out of court

Secondly, an appeal commission is to be established. FIBA approved the LBF’s proposal to install an independent body made up of five members with professional legal backgrounds. “Its decisions are irrevocable and cannot be appealed in a civil lawsuit,” said Jihad Salameh, secretary general of Mont La Salle sports club. “An appeal can only be filed with FIBA and ultimately at the Court of Arbitration for Sport in Lausanne.”

Until now, Lebanon’s clubs had no other way to appeal an LBF decision than by going to court. That is what happened last year in the tragicomedy between Amchit and Champville, which ultimately led to the LBF’s suspension.

In short, when Amchit failed to show up for a decisive home game against Champville on May 7, 2013, the LBF handed the team a 20–0 loss. While Champville went on to play the league’s semifinals against Sporting, Amchit sued the LBF. The judge in charge decided to temporarily freeze all matches.

FIBA warned that such a procedure undermined the LBF’s authority and demanded that the clubs sign a memorandum of understanding to establish an appeal commission. When a handful of clubs refused to do so, FIBA finally suspended the LBF on July 18, 2013.

Due to the ban, the Lebanon’s men national basketball team was not allowed to participate in the Asian Championship last summer and failed to qualify for the World Championship for a fourth consecutive time. The same happened to the women’s national team in Bangkok in October, while Sporting and Champville were barred from competing in the West Asian Clubs Championship.

Furthermore, due to the politically motivated internal bickering, last season ended without a champion, and this season started way later than scheduled. While Amchit is a club close to Lebanon’s President Michel Sleiman, Champville is sponsored by four businessmen with close ties to presidential hopeful Michel Aoun.

“Thirdly, FIBA insisted that the LBF changes the rules and regulations regarding youth contracts,” said Salameh, even though this did not trigger the initial ban. “Until now, youth players could be under contract until the age of 20. That has been reduced to the age of 18.”

Asked why it took so long to change the statutes, Salameh laughed: “This is Lebanon.”

The fact of the matter is that for the longest possible time, Lebanon’s clubs tried to hold on to as much power as possible. They attempted to create an independent committee to regulate the league, while electing a majority of its members. Following a first warning in January, FIBA wrote in March: “One does not see in these draft statutes a real wish from the federation to depart from the errors committed in the past.”

Only then did Lebanon’s professional clubs and the LBF manage to agree on the above-mentioned statutes, a definitive victory for the LBF. “We have a lot of work ahead of us, but this is a truly joyous moment for millions of fans of Lebanese basketball,” said Nasser on May 7. “Let us for now celebrate our return to where we really belong.”

May 20, 2014 0 comments

Finance

MSCI announcement drives markets

by Thomas Schellen May 19, 2014

written by Thomas Schellen

The region’s securities markets showed mixed performances last week with the strongest gain recorded in Egypt at 4.2 percent for the EGX30 and the biggest drop in Dubai at minus 2.3 percent for the DFM General Index. The Qatar Exchange benchmark advanced 1.3 percent and the MSM30 in Oman dropped 1.3 percent. Between index openings on May 11 and 12 and respective closings on May 15 and 16, the Saudi, Kuwaiti, Lebanese and Moroccan securities markets were flat; the Tunisian and Jordanian markets were up by less than one percent; and the Abu Dhabi and Bahraini markets fell by less than one percent.

MSCI index entrants announced

In terms of attention grabbers, Middle East and North Africa markets were wholly engulfed in the index admissions announced by MSCI late on May 14, near the end of the year’s 20th trading week. In a press statement from Geneva, MSCI specified 19 stocks from the Gulf Cooperation Council markets that will be included in its Emerging Markets Index starting June 1, along with the periodic rebalancing of indices affecting hundreds of stocks in developed, emerging and frontier markets around the world.

MSCI specified that the largest additions to its Emerging Markets Index by full company market capitalization will be Doha-based Qatar National Bank (QNB) and Industries Qatar, and National Bank of Abu Dhabi in the United Arab Emirates. Besides NBAD, UAE entrants to the Emerging Markets Index include two banking and one property stocks from Abu Dhabi plus one bank and two real estate/construction stocks from Dubai, as well as ports operator Dubai World and the company that operates the DFM. The ten entrants from Qatar include, next to QNB and Industries Qatar, four banks, one real estate stock, two telecoms and utility company Qatar Electricity & Water.

In the Gulf, stock investors on May 15 both bought and sold in response to the MSCI announcement. Some investors divested from bets that did not make the cut of companies newly admitted to the Emerging Markets Index, while others took profits by selling stocks that did and whose prices had already moved up in anticipation of the inclusion.

An example for a company that did not make the cut but had prepared for attracting more international money was DFM-listed Deyaar, a developer which had raised its foreign ownership ceiling to 25 percent in April. Its shares fell 2.7 percent on May 15; the drop was, however, a continuation of a two week long slide that drove Deyaar about 13 percent lower from May 4 to 15. Among companies newly added to the MSCI EM, Arabtec had an interesting week marked by a single-day drop of over ten percent before surging almost 30 percent between opening price on May 12 and an intra-day peak on May 14 that also was a new all-time high for the stock. It ended the week with a 5.4 percent drop on Thursday. In a counterexample from the calm side, Abu Dhabi MSCI EM debutant First Gulf Bank saw its share price fluctuate by less than one percent in week 20, with a net change of exactly zero on May 15.

In overall index developments after the MSCI announcement, fluctuation of the native benchmark indices of Abu Dhabi and Qatar was limited to 0.1 percent up for the former and down for the latter on May 15. The DFM Index on the other hand showed a clear impact, dropping 2.6 percent on the day. Notably, Thursday’s trading volumes were the week’s lowest on DFM and ADX but QE volumes were higher than in each of the preceding four sessions.

The full list of GCC companies added to the MSCI Emerging Markets Index:

Company	Sector	Securities Market
Abu Dhabi Commercial Bank	Banking	ADX
Aldar Properties	Real Estate & Development	ADX
Al Rayan Bank	Banking	QE
Arabtec	Construction & Real Estate	DFM
Barwa	Real Estate	QE
Commercial Bank of Qatar	Banking	QE
Doha Bank	Banking	QE
DP World	Ports Operator	DFM
Dubai Financial Market	Stock Market Operator	DFM
Dubai Islamic Bank	Islamic Banking	DFM
Emaar Properties	Real Estate & Development	DFM
First Gulf Bank	Banking	ADX
Industries Qatar	Manufacturing	QE
National Bank of Abu Dhabi	Banking	ADX
Ooredoo	Telecommunications	QE
Qatar Electricity & Water	Utility	QE
Qatar Islamic Bank	Islamic Banking	QE
Qatar National Bank	Banking	QE
Vodafone Qatar	Telecommunications	QE

May 19, 2014 0 comments

Decentralization is not as simple as it looks

Comment

Avoiding the rise of ‘little’ Lebanon

by Georges Pierre Sassine May 19, 2014

written by Georges Pierre Sassine

In early April, President Michel Sleiman put forward a draft law calling for administrative decentralization in Lebanon. The lengthy proposal, prepared by an expert committee led by former Minister of Interior Ziyad Baroud, calls for shifting some administrative responsibilities and fiscal resources from the central government to regional councils and municipalities.

The move towards decentralization aims to give different sectarian and regional groups some autonomy and the ability to determine their local affairs, and can certainly be seen to have some merit given the current context of a central state inclined to political paralysis.

However, this latest call for decentralization comes at a time when risks of disintegration along ethnic lines are increasing across the Middle East, including Syria, Iraq, Libya and Yemen. Several analysts expect the Middle East regional map to be redrawn or radical changes in governance systems including federalism or some version of decentralization.

Lessons from other countries suggest that decentralization cannot be used as a cookie cutter solution across countries and instead much depends on how it is designed and the context it is implemented in.

Three core challenges

In the case of Lebanon, there are three core challenges to its decentralization plans: a fragmented national identity, a weak central authority and inadequate local capabilities to execute. These challenges will have to be addressed by a series of other reforms in order for decentralization to be successful.

The first challenge is Lebanon’s weak and fragmented national identity. The hypothesis is that a strong national identity is the glue that keeps decentralized and federalist systems together. In that case, identity clashes along tribal, cultural, geographic and religious lines create a major barrier to the effective implementation of Lebanon’s decentralization reforms and are likely to increase risks of partition.

A strategy to strengthen Lebanese national identity is essential before any plans to decentralize the governance system. This is a long-term process that includes national reconciliation, education and a secular framework that enables interfaith marriages. It is then that a more cohesive Lebanese identity embracing diversity can emerge.

One critical priority is to empower younger Lebanese generations to overcome historical divisions. Unfortunately, Lebanese history textbooks stop in 1943 in order to avoid inflaming old hostilities. Instead of arguing over “the one true” history of modern Lebanon, decision makers can develop a common history book that teaches students the different perspectives in order to enable their critical thinking and avoid repeating the same mistakes.

The second challenge is Lebanon’s weak central state. The hypothesis is that a strong central authority is needed to coordinate and unite local governments otherwise it will be unable to prevent tensions and conflict from arising.

Lebanon today has its executive decision making diluted across the presidency and council of ministers. There is no clear and empowered executive authority, which makes it hard to govern and know who to hold responsible. This is why the most important reform needed in Lebanon is to concentrate executive power in one body that can effectively govern and be held accountable for its successes and failures. It is then, with a stronger central state, that administrative decentralization can bear its promised benefits in Lebanon.

The third challenge is the lack of experienced personnel and inadequate training of local bureaucrats, which would be detrimental to implementing decentralization reform.

Correctly assessing the capabilities of Lebanese municipalities and having a plan to strengthen their competencies is critical. Lebanon’s decentralization reform has to be accompanied by a detailed strategy to attract a skilled and experienced workforce, and train existing public servants to take on their new responsibilities.

In summary, the Lebanese decentralization draft law should not be passed in the current context unless it is part of a more comprehensive strategy that addresses main risks and takes into account the proper timing, pace and sequencing of reforms.

May 19, 2014 0 comments

The Buzz

The Sicily of the Middle East

by Tiziana Cauli May 16, 2014

written by Tiziana Cauli

Yet another arrest of an Italian politician involves Lebanon. Last week, Italian authorities arrested former minister Claudio Scajola on charges of helping Sicilian MP Amedeo Matacena escape to the Middle East after he was convicted for aiding the mafia. Matacena, also a member of former premier Silvio Berlusconi’s political party, is now free after being arrested in Dubai, although he is banned from leaving the Emirates. According to Italian police investigations, Scajola has since been allegedly trying to help Matacena reach Beirut through a network of political connections in Lebanon.

For the second time in just a few weeks, former Lebanese president Amine Gemayel’s name appears in the police investigation. Italy’s anti-mafia police found a letter to Scajola from a sender they believe to be Amine Gemayel. The letter reassures Scajola, saying that the person he is trying to help — thought to be Matacena — will be able to obtain documents to travel to Lebanon, and implying he will benefit from the same freedoms here as in Dubai. The sender adds that they had to wait until the formation of a new government in Lebanon to make this happen.

The case is reminiscent of Gemayel’s alleged involvement in Marcello Dell’Utri’s story. Berlusconi supposedly claimed that he had sent his ally Dell’Utri to Lebanon to help Gemayel’s bid for the presidency following a request from Russian President Vladimir Putin. The former Lebanese president denied any involvement in the ordeal.

Dell’Utri has been in custody since his arrest a month ago. On May 9, an Italian court issued a final ruling confirming a 7-year prison sentence for mafia association against the 72-year old Sicilian. And earlier this week, Lebanese public prosecutor Nada al-Asmar authorized Dell’Utri’s extradition, a major step towards his repatriation.

The governments of both Italy and Lebanon are now under pressure over two cases with striking similarities — and which allege to involve high-ranking politicians from both sides.

May 16, 2014 0 comments

Posters poking fun at the parliamentarians

The Buzz

In photos: Wage scale protest

by Greg Demarque & Micheline Tobia May 16, 2014

written by Greg Demarque & Micheline Tobia

On Wednesday, May 14, tens of thousands of civil servants and teachers took the streets of downtown Beirut to demand higher wages. It was the biggest demonstration to date regarding the issue. The protesters, who came from areas across Lebanon, first gathered in front of the headquarters of the Association of Banks in Lebanon, and then walked to Riad el-Solh Square — strategically located between Parliament and the Grand Serail.

Hanna Gharib, head of the Union Coordination Committee (UCC), reiterated that the public sector would not back off its demands. One of these is a 121 percent wage hike, approved by the previous Mikati government in 2012 after rounds of similar demonstrations. Gharib vowed to continue the protests and pressure parliamentarians until civil servants’ demands are met.

At the same time, lawmakers debated the bill in Parliament without reaching any agreement by the end of the day. Speaker Nabih Berri adjourned the session to May 27, after the deadline to elect a president.

The organizers prepare their signs for the demonstration

Buses drop off protesters coming from all corners of Lebanon

Hanna Gharib surrounded by protesters during the march towards Riad el-Solh

Protesters walking to Riad el-Solh Square

Protesters expressed their demands on signs and posters they had earlier prepared

Protesters expressed their demands on signs and posters they had prepared earlier

Posters poking fun at the parliamentarians

Sign held by a protester from the engineering department at the Lebanese University: Our demand is to have a fair wage scale, and it is 121%,with a retroactive start date of July 1, 2012

Protestors in front of Mohammad al-Amin Mosque, heading to Riad el-Solh

Protesters in front of Mohammad al-Amin Mosque, heading to Riad el-Solh

Dozens of buses parked near Riad el-Solh waited to pick protestors up after the protest

May 16, 2014 0 comments

Society Tourism 2014

Plans for this summer’s festivals

by Nabila Rahhal May 16, 2014

written by Nabila Rahhal

“We have a cultural role to play; the festival is a form of cultural and touristic resistance which says that the country is still here,” says Hala Chahine, director of Beiteddine Art Festival.

Lately, the country’s music festivals have had many challenges to resist, yet, much like Lebanon itself, they are taking the hits but managing to hang on year after year.

The unpredictable security situation in the country creates its own obstacles for the various festivals. Last summer, Baalbeck International Festival had to relocate to Jdeidet el Metn because of safety concerns in the Bekaa area: “We had the choice to either cancel the festival or to relocate to symbolically keep Baalbeck Festival’s name alive, so we chose to relocate,” says Nayla de Freige, president of the festival’s committee. This year, with the security plan already in implementation throughout the country, de Freige is planning to return the festival to its home.

[/media-credit]Klaus Meine, lead vocalist of the rock band Scorpions at the 2013 Byblos music festival AFPPHOTO/JOSEPH EID

Singing through security woes

Security issues also make it harder to attract performers to Lebanon, and the country’s major international festivals have had to rely on their historic reputation and proven track record to convince artists to sign contracts.

Naji Baz, Byblos Festival’s manager, says he sells the name of Byblos Festival which, after thirteen solid years of performances, has become well known among international artists’ managers, and attracts new talent. “I’d say our former artists are our best ambassadors, and of course we rely on that, but I feel that despite the very good reputation of Byblos abroad, we have to start from scratch every year,” says Baz, adding that it was as hard as ever to sign this year’s lineup since foreign artists don’t distinguish between areas in Lebanon and tend to deem the whole country as unsafe if they hear of an incident.

De Freige says some artists refuse to come to Lebanon while others dream of performing among the historical temples of Baalbeck which, throughout the sixty years of the festival, has hosted such talent as Umm Kulthum, Ella Fitzgerald and Fairuz. “We choose those artists who trust us and know we have a sense of responsibility so if we choose to be there, it is safe. It is usually easier to deal with Europeans because they know more about the reality of the country,” says de Freige.

Al Bustan Festival’s organizer, Nada Massoud, also admits that it is difficult to attract international talent to a country with security issues, but says that once artists get here, they are often pleasantly surprised, “fall in love with the country and some consider settling here.” She adds that the name of their artistic director, Gianluca Marciano, is very helpful in attracting classical music performers.

This has led some festivals to rely on domestic talent with Beiteddine Festival to open with Majida Al Roumi. “We try to give as many chances to young Lebanese talents as we can with at least one mainstream Lebanese program and one or two edgy ones as well,” says Baz.

Budgeting for tough times

Though all organizers Executive spoke to agree that the festival attendees are mainly Lebanese, the lack of a solid touristic season for the past three years has caused a decrease in the number of expats returning home for the summer and in the purchasing power of resident Lebanese. This has left many festivals struggling to maintain their standards and budget — which is largely from ticket sales — while keeping fair ticket prices.

Baz explains that artists’ fees have gone through a global inflation with the decline of CD sales and artists’ reliance on concert tours for their income. “This inflation has made it tougher to practice reasonable selling prices for your tickets especially since you want to remain close to the means of the Lebanese middle class,” says Baz.

[pullquote]Artists’ fees have gone through a global inflation with the decline of CD sales[/pullquote]

Chahine agrees with Baz and adds that since the festival is attended mainly by Lebanese, they offer a wide range of prices to suit most purchasing powers in the country. Beiteddine Festival also offers affordable transportation to Beiteddine and free parking.

The festival organizers Executive spoke to derive between 60 to 80 percent of their budget from ticket sales, with some, such as Beiteddine and Baalbeck, receiving financial government support through the Ministry of Tourism. This support, explains Chahine, is often two years late forcing the organizers to take loans from banks in order to pay their dues on time. According to de Freige, 33 percent of the Baalbeck festival’s budget is spent on taxes which include the value added tax (VAT), and a tax on each international artist contract they sign. This, along with the delay in government support, makes planning in advance and attracting renowned talent hard. De Freige joins Al Bustan’s Massoud in asking that those taxes be reduced. “It’s true we are receiving government support but still we ask for the taxes to be reduced. We want the festival to be financially sustainable,” he says.

Chahine warns of a new law which would increase the VAT tax by 2 percent and the international talent tax by 10 percent in order to fund the Lebanese Artists Fund. “As private nonprofit organizations, we are not supposed to be responsible for this fund,” says Chahine who fears that, should this law pass, ticket prices would need to be increased to a level many people would not be able to afford, adding that they are working to stop this law from passing.

With these obstacles in their path, one might wonder why the festival organizers still give their time year after year. All the organizers Executive spoke to see it as their civic duty to the area they are in and for Lebanon as a whole. They are proud of the close relationships they have with the municipalities of the areas the festivals are held in and the support they receive from the residents who volunteer their time.

Baz sums it up: “We care that the festival takes place in Lebanon though it is very tough. Every market has its difficulties but at least abroad you can predict them and work with them but here there is nothing you can do to save yourself if the situation goes bad. It’s an act of hope.”

May 16, 2014 1 comment

Real Estate

Competing constructions

by Tiziana Cauli May 15, 2014

written by Tiziana Cauli

In mid-June this year, some of Lebanon’s newest real estate projects will be judged by a pool of experts in the sector, including architects, academics, consultants and entrepreneurs. While transparency is not among the main qualities of Lebanon’s property market, judges in the Real Estate Awards Lebanon, launched for the first time by the Real Estate Syndicate of Lebanon (REAL), will have the challenge of fairly evaluating the most outstanding development projects in the country. The contest is open to all Lebanese property projects in different categories, including high and low rise buildings, design and architecture, landscape design, gated communities, eco-friendly and sustainable projects, social responsibility, specialized developments, commercial and mixed-use schemes, office projects and real estate communication campaigns. The winners in every category will receive a trophy and will be able to use the competition logo in their marketing.

Executive spoke with Walid Moussa, secretary of the syndicate’s board of trustees and organizer of the contest, to find out what measures REAL takes to ensure fair judging and avoid conflicts of interest.

The way judges are selected is particularly relevant in a country like Lebanon, whose real estate market is not big in size and business connections link together major and small players. How will you make sure that these dynamics will not affect the judging?

Based on our rules, if any judge has a direct or indirect interest in the project that is being graded, he or she will be removed from the board for that particular case. The jury members also sign a paper where they declare whether they have a direct or indirect interest in any of the projects.

In some cases, though, interests may not be immediately recognizable. What happens if a judge lies or fails to declare them? Would you invalidate the contest?

This will not happen. I am sure. Lebanon is a small country and we would know. We did everything to keep these awards impartial, even at the level of sponsorship. The sponsors of real estate projects taking part in the awards cannot act as sponsors of the event.

Are there any official procedures to check on the judges’ ruling in case participants feel that their projects have not been given a fair score? How can they complain?

No, there is no official procedure but they can complain to us. If anything wrong is found we will make sure that we check and that the results are fair.

Are there any projects managed or marketed by PBM which are taking part in the awards? [Walid Moussa is the Chairman and CEO of PBM Properties]

No, there aren’t.

How did you select your judges? Do they all come from the Lebanese real estate industry?

We did some research and spoke with people in the market. We started by identifying what we would need in every category, knowing that we wanted the best people. So, for example, for projects in the leading landscape design we needed the best landscape designers in the country. We called the most renowned ones and the first ones who accepted were in. Some people we called had to say no because they didn’t have the time so we had to call somebody else. This is how we selected them. We did the same for architects, marketing experts and so on. Also, because we wanted to give [the event] international relevance, we appointed two foreign judges. One of them is Farook Mahmood, chairman of the International Consortium of Real Estate Associations [a partner of the international property association FIABCI, of which REAL is a member]. The other is Claudine Speltz, president of the European Council of Real Estate Professions.

What criteria will the jury consider when rating the projects? Is there a specific list?

Every category of projects has over 30 criteria of judgment, which may vary, but each category has some specific ones. If we are talking about eco-friendly and sustainable projects, for example, sustainability and green features as well as all issues related to sustainable construction will be taken into account. But we can say that the concept — the idea behind a project — is particularly important in all categories.

Can Executive see the scoring sheets to get an idea of how projects will be rated?

No, I can’t show you the sheets. Projects will get scores based on the criteria, but the scoring sheets are confidential.

These are the first Real Estate Awards to be held in Lebanon. Did you base the format of the contest on any particular example outside the country?

I am a jury member in the international real estate awards organized by FIABCI. The way they do it is they pick a judge from each country. My main inspiration came from them, but I have also attended other international real estate contests such as that of [the international property trade fair] MIPIM in Cannes and the international property awards Arabia in Dubai. I was inspired by them as well.

How did you apply international standards to the peculiarities of Lebanon’s real estate market? Did you have to make any changes?

We started working on this project in June last year to make it suitable for Lebanon’s real estate developments. We customized it to fit the country’s market. We did a lot of consulting with brokers and architects, especially to develop the criteria and the different categories. We created a category for heritage projects, for example. Nothing in real estate is specific to any particular country but heritage is very significant in Lebanon’s property market. To me, this is the most relevant category. It is important to us because we want to encourage developers to engage in renovation.

What is the motivation for these awards?

The idea is that of lifting up the standards in Lebanon’s real estate market so that people can work better and we can improve the quality of our properties. This is not a private project — it is organized by a syndicate — so its purpose is not making a profit but encouraging developers to find better concepts and to make the best choices. We want to push developers to reach quality in construction design and projects.

How many projects have registered in the contest?

I prefer not to say. All I can tell is that they are more than 30 but I don’t want to say how many because some people may think that they are not enough. All the categories are full though, even if there was not a limit in the number of submissions.

Did you select the projects before they could enter the competition?

No, there was no pre-selection. All the projects that met the submission criteria could sign up.

How much will the event cost the syndicate?

The total cost is around $200,000. We are now working with the sponsors to see how much we can raise.

Will the awards be held on a yearly basis or were they conceived as a one-off event?

It depends on how everything goes. For sure they will not be held every year but we may have them every two or three years. Before we decide, we need to see how many participants we have and what the feedback is.

May 15, 2014 0 comments