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Business

Keeping the beat

by Tamara Rasamny July 5, 2013
written by Tamara Rasamny

Company: Cardio Diagnostics

Country: Lebanon/United States

Industry: Medical Technology

Co-Founders: Ziad Sankari and Najwa Sahmarani

Established in: 2011

Number of Employees:  11

Revenues: Product yet to be launched, expectation of “several million” dollars in coming years

Capital raised: $500,000 investment from Berytech for an undisclosed amount of equity

 

Ziad Sankari was just 17 years old when he lost his father to a heart condition, but it proved a pivotal moment in his development. “It shaped my studies and focus throughout my education years,” he says.

During his undergraduate years in Lebanon he worked on developing heart products before, with the support of a Fulbright Scholarship, embarking on graduate studies in the United States — researching new technology for heart treatment. The result is Cardio Diagnostics, a supplier of medical devices that monitor a person's heart condition.

Despite the fact that the company has yet launched a product, it has been attracting serious interest. On Wednesday the Lebanese startup incubator Berytech announced that it had bought an undeclared amount of equity for $500,000.  Sankari said he had interest from a number of parties but had chosen Berytech because of the other support they offer. “Berytech brought in venture capital in the true form of the word,” he said.

So far the company has two main products that are in the advanced stages before entering the market, the LifeSense Arrhythmia and the LifeSense Ischemia. The former helps doctors diagnose and treat patients who may have arrhythmia, an irregular heartbeat, while the latter monitors patients with Coronary Artery Disease (CAD) or ischemia in order to detect signs of a heart attack.

The arrhythmia device will come first, due to enter the market early in 2014. Although some arrhythmias are barely noticeable, others can result in sudden arrhythmia death syndrome (SADS), resulting in death if not dealt with in a matter of minutes. Over 4,000 people die per year from the disease in the US alone, according to the SADS Foundation.

The key thing for sufferers is to get treatment immediately if they suffer an attack. As such they need constant monitoring of their heart. Cardio Diagnostic’s product is smaller than a mobile phone, and takes signals from three patches attached to the patient’s chest. If their heart is behaving abnormally, the data is automatically transferred to a monitoring center where further analysis can take place. If the collapse is severe, the patient’s location is recorded and emergency assistance is sent.

Sankari points out that the medical device complies with the “global standards of healthcare” and that it has been approved by the US Food and Drug Administration, a regulatory agency.

There are other services on the market for arrhythmia sufferers, but Sankari says his is both easier and cheaper. “The alternatives today are called an ultra monitor [which] costs around $200 [per week], or [full-time monitoring] in a cardio care unit at $800 per day,” he says. “We’re offering two weeks of monitoring for close to $300.”

Additionally, since arrhythmias can occur irregularly, the device is useful because it conducts long-term monitoring, picking up signs that can help diagnose and treat the condition. 

Although most of the company’s staff is located in Lebanon, its manufacturer is in the US. Sankari describes how the company uses “Lebanon as the hub of talents and logistics,” and then sends their creations and designs to the US for manufacturing.

The company will be starting a small-scale launch later this month, testing out the product in four of Lebanon’s “top hospitals,” Sankari says, declining to name them. Subsequently, they will use that feedback to improve, before a large-scale launch in the US.

As the product is still in the testing phase, the company has yet to have any revenues at all. But Sankari predicts the company’s revenue over the next couple of years will be “several million dollars.”

And he has set his sights higher than merely dealing with arrhythmia and is hoping to deal with Coronary Artery Disease – the most common type of heart attacks – as well. That’s the hope for the current prototype of the LifeSense Ischemia, which will enable people to identify the warning signs of an attack. This product, he says, will be ready for testing next year.

July 5, 2013 0 comments
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Economics & Policy

Road to nowhere

by Philip Issa July 4, 2013
written by Philip Issa

When the plan for Fouad Boutros Road came to the Lebanese public’s attention this spring, activists and public officials clashed, with claims from both sides growing in volume and aggression. The administrative authorities support the Fouad Boutros link, an estimated $75 million project that they say would improve traffic flows through Beirut’s densely populated Ashrafieh district. Opponents of the plan cry foul over the idea, saying the project will not alleviate traffic, but will instead destroy the area’s social fabric, old building stock and hidden patches of serene nature.

Executive took both sides to task, analyzing the likely impact the Boutros road would have if constructed. At the outset, it became clear that there were no real facts to deliberate on, because detailed project plans and impact studies were either hopelessly outdated, kept confidential, incomplete or non-existent.

Without such data, it is not possible to give a reasonable assessment of social impact or cost estimates, as well as the effect on traffic flow, business and air quality. It is worrying is this project was nevertheless put on the people’s doorstep.

A road apart

The project’s leading exponents are the Municipality of Beirut and the Council for Development and Reconstruction (CDR). The municipality owns all streets in the capital and is interested in having more roads to ease Beirut’s growing traffic problem. It denies that the Boutros road would ruin Ashrafieh’s Mar Mikhael neighborhood, saying the only way the project could be described as a failure is if it is not completed to its current specifications.

The CDR, as the governmental steward of the post-1992 master program to recover and expand various infrastructures in Lebanon, wants to do its job, which includes completion of the network of traffic arteries that are mapped out on its various blueprints dating back to a Greater Beirut Transportation Plan devised in the 1990s.

At the forefront of opposition to the Boutros project are two conservationist civil society organizations, the Association for the Protection of Lebanese Heritage (APLH) and Save Beirut Heritage (SBH), and a newly formed group named after the two neighborhoods that will be most directly affected, the Civil Coalition Against the Hikmeh-Turk Link. They have succeeded in creating outrage and protest against what they describe as a highway project that will only make life worse for residents of east Beirut. Vigorously mobilizing media, the detractors have drawn enough attention to their case that MP Nadim Gemayel, one of the deputies representing Ashrafieh, tells Executive, “[Members of Parliament] will not accept [any action] if there is a huge opposition about this and if the residents [of Ashrafieh] are not beneficiaries of it.”

Driven out

Squeezed in the middle of the scenario are those residents, who have been barred from expressing their views in an educated discussion on the Boutros project because they have not been given the fact base for such a discussion.

Even residents along the route are in the dark about their fate. Two families living in the presumed construction path told Executive that they had received no official notices of a pending eviction, and that, if asked to leave, they would expect compensation.

The municipality’s legal reasoning is unambiguous. Along the first 540 meters of the route — between Charles Malek Avenue and Armenia Street — most properties have been expropriated and owners were partially compensated in the 1960s or 1970s. Squatters or renters living today in such properties will not receive any compensation, says Rachid Ashkar, a council member of the Municipality of Beirut and the head of its Committee on Transport and Lighting.

A map of the affected areas in Beirut

 

He tells Executive that owners of expropriated houses have a legal right to stay on on as long as construction of the Boutros project does not commence. The same is not true for renters because it was and still is illegal for owners to lease these properties after expropriation, but Ashkar admits that the municipality looked the other way when owners took on tenants. When the time comes to vacate these premises, however, non-owning residents will get no compensation from the government. “They had deals with the owners. We are not involved,” he says.

There are residents living in expropriated buildings who don’t see things his way. One such family resides in a modest home near the Orthodox (Saint George) Hospital. According to Fuad, the head of the family, which asked to remain anonymous, their tenancy began during the Lebanese Civil War, when they were looking for a place to stay in 1982, one of the darker years of the conflict. They paid about half of the house’s estimated value to the previous occupant ­— who was himself a renter ­— took the keys and moved in.

Not long afterward, they were told that the municipality had expropriated the land years before. “How did they expropriate it? What did they pay the owner? Did the municipality reserve the land? What portion? These are things we don’t know,” says Fuad, sharing the family’s uncertainties with Executive.

In the intervening 30 years, the family says, they have not once been asked to leave and haven’t collected any compensation from the municipality. Fuad’s family is aware that they are not the rightful owners of the home — when a tree smashed their roof last winter, they knew they could not make substantial alteration to the exterior, so they jury-rigged a repair. But if they have to leave their home of 31 years to make way for the bulldozers, they unequivocally expect to be compensated by the municipality.  

“You can’t just throw any person onto the street. Sorry, not in any country can you do this,” says Fuad’s daughter Samar. “Now us, maybe, to avoid a fight, we’ll be quiet for a small amount. But others will not be quiet, because there is no alternative.”

Their feelings about the issue were heightened by the uncertainty that for all these years has kept them from renovating their home. “Suppose the municipality came and told you that it is going to take the house to build a road. Okay. A year passes. Two. Five. Still no road. 30 years?” son Majed asks with incredulity. “After 30 years, they come to say, ‘Yes, I had told you?’”

Kept in the dark

Fuad’s house and those like it have no real heritage value, but conservationists say that the Tobagi house on Armenia Street, which is slated for destruction, is historically significant to the neighborhood.

Residents have received warnings that their buildings are to be destroyed

 

According to Ashkar, though, arguments to keep the house have no legal ground because the building was properly expropriated. The fact that the building’s owners, who have continued living there, restored its façade in the 1990s, is irrelevant and the act was even illegal, he says. “They have had the pleasure of having a nice facade for the past 15 years; that’s good. But, officially speaking, they didn’t have a right to restore the façade, because this is no more their building.”

Adjacent to the Tobagi house are two buildings: one that was to be torn down under the original road plan and one that was supposed to be partially affected. Among the tenants in this second building is Souad Bared, a grandmother in her 80s. She moved in 50 years ago and for the past three decades expected that some day a room in her rented apartment might be lost to the Boutros flyover.

Under the new plan, her whole apartment will have to go. Bared found out recently from media that the project might commence imminently but claims she has not been told anything by officials of any level of government. “They are supposed to give me notice to leave the house and to tell me how much they will compensate me,” she says. “I live with my son. We haven’t discussed any plans or anything. We know nothing.”

 

A dated solution to a modern problem

Not only is the time delay in implementing the project the crux of the social problem surrounding the Fouad Boutros project, but it also explains a whole basket of other issues. It was sketched into the Beirut cityscape plan as an urban highway no later than 1964. In those days, car traffic was seen as a promise of prosperity and highways were hip.
The Beirut municipality began expropriating land for the Boutros highway in 1966, according to the CDR. By 1975, the path between Charles Malek Avenue and Armenia Street was expropriated, but the explosion of the civil war put further expropriations on hold.

Two decades later, it was reconstruction time. The CDR was tasked with rebuilding Beirut’s transportation infrastructure as a core development mission. Planning for the capital region was laid out in the 1995 Greater Beirut Transportation Plan and later augmented by the World Bank Group’s Urban Transport Development Project (UTDP) for Greater Beirut and Mount Lebanon. The planning frameworks proposed a mass transit scheme and a network of primary roads and highways — Fouad Boutros among them.

The plan entailed a traffic model backed by comprehensive survey and traffic data. It made projections to 2015. According to the municipality, it remains the most recent traffic model for Beirut.

TEAM International, the lead consultant of the 1995 transportation concept, says the plan’s underlying traffic model is now outdated. Tammam Nakkash, managing partner of TEAM, explains, “When we did the original study, only 10 percent of the traffic crossed the Green Line. The whole pattern of travel has changed. A new model has to be calibrated. [The old model] is like a squeezed lemon. Don’t try to get more juice out of it.”

Elie Helou, a senior traffic engineer at the CDR, says a 2001 traffic study for the Boutros link was updated in 2011 and confirms that it will ease traffic flows away from overused Charles Malek Avenue and the nearby Akkawi hill. But he does not tell Executive how much traffic the CDR expects Boutros Road to carry nor how much of a relief Charles Malek and other roads would see. Moreover, citizens, reporters and public interest groups do not have access to the study in question, or other technical studies. “It was never customary to disclose any [technical] study,” Helou says.

 

Heritage activists are certain that the new road will add to the existing congestion in Ashrafieh. “You are bringing people coming from [Charles Helou] highway who want to go to Hazmieh, and putting them on this already congested access [Alfred Naccache],” says Giorgio Tarraf, the spokesperson for SBH.

With no access to CDR data and technical studies, APLH recently went to count cars at streets around the critical Spinneys intersection where the new road would link to the existing Alfred Naccache thoroughfare. Raja Njeim, a member of APLH and the general coordinator of the Civil Coalition, insists that basic calculations show that Charles Malek Avenue will need to be widened by two lanes in each direction to accommodate the new traffic patterns enforced by the Boutrous project. Street parking accommodations will also have to be made, Njeim says, pushing the price of the project from $75 million to $200 million and encroaching on the Sagesse school.

But traffic experts dismiss both CDR and APLH projections. Zaher Massaad, a transport engineer at TEAM, says they are meaningless without a new, city-wide model of traffic. “I can update these numbers [of previous local studies on Boutros road], but it doesn’t help. If you don’t have a model, how can you describe how this traffic will move?”

“Don’t trust anything… until somebody gives you a study that can be reviewed by qualified people,” Nakkash adds.

A partial solution

The municipality argues that constructing the road is in the public interest. “You have to have it in order to free other streets all around in order to have dedicated lanes for the buses,” Ashkar says.

Proper public transport for Beirut is indeed something that has been long desired. The idea is actually anchored in the CDR’s 1995 master plan, and the CDR’s Helou concurs that the city and country desperately needs a public transport system. “But that doesn’t mean you stop the work on your road,” he says. However, he concedes that while the CDR has been able to realize about 50 percent of the plan’s road building program, it has yet to implement a trace of an urban public transport system. The plan had called for a network of 13 bus lines — running alongside traffic and not on dedicated lanes — to be implemented before 2005.

For TEAM’s Nakkash, there is no doubt that the highway solutions of the past two decades needed to be “accompanied by parallel investments in public transport.” He adds, “As a transport systems expert, I am absolutely against any investment in more grade separations or tunnels within the city of Beirut. The increasing congestion in Beirut cannot be curtailed except with a substantial investment in public transport.”

Legal entaglements

As things currently stand, the Boutros project requires additional lands, which are currently in the process for expropriation. With legal decrees for their transfer into public property signed in May 2012, the determination of compensations due to landowners are now in the courts. This affects the 250-meter long and 30-meter wide stretch between Armenia Street and Charles Helou highway, minus the area of the existing road that Boutros will supplant. Compensation amounts for the properties expropriated before 1977 could also still increase.
Besides the issue of compensation, the project also needs to conduct an environmental impact study, a legal requirement that came into effect for all developments above a certain size in the middle of last year.  

The CDR’s Helou confirms to Executive that both processes will run their legal course and that no construction action will be taken prematurely. “I don’t expect [the project’s commencement] before the end of the year,” he says.

In the meantime, a lot of discussion is expected on everything related to the project. Opposing stakeholders such as the civil society coalition have already put forth alternative proposals, but these are not well grounded in hard data.

Costs of the undertaking are projected by the municipality at $23 million for the roadworks and two parking structures in the southern portion of the development, $12 million for a proposed parking garage near Armenia Street, and $40 million for compensating expropriated land and building owners.

Construction and engineering experts polled independently by Executive corroborate that the cost projections for the roadworks are in line with their expert opinions. However, the cost of expropriation could easily escalate total project costs to between $90 million and $100 million, Executive estimates, based on input from real estate experts.   

Two components will drive expropriation costs. First, courts have yet to decide the amount owed to property owners north of Armenia Street and south of Charles Helou Highway. Second, the municipality still owes 25 percent of current land values to expropriated owners along the longer route from Armenia Street to Charles Malek Avenue. This is because under Lebanese legal provisions, final settlements are due when development of an expropriated property is implemented. Completing all expropriation could thus cost as much as $65 million, assuming land values of $7,000 per square meter, as real estate advisors observed from new building projects.

Knock-on effects

The Municipality of Beirut is not known for poverty, though, and shouldering of a higher compensation cost may be well within its means. Another point entirely is the cost to businesses and impact on property values in the directly and indirectly affected areas. Developer Zardman has a project in Mar Mikhael that will not be directly affected, but prices in residential towers with direct exposure to the new traffic streams are likely to suffer negative impacts, says Zardman chief executive Makram Zard. “It will help some projects but other projects will be affected negatively. It might help the project’s value go up if the project is not affected directly by facing the bridge [across Armenia street], because there will supposedly be better access.”

Some developers could actually benefit from the widening of the road between Armenia Street and the Charles Helou highway, says architectural consultant Abdul-Halim Jabr. “The [permissible] height of a building is a function of the width of the street onto which it fronts. If a lucky developer … manages to buy more than one parcel in this settlement, then they have more elbow room to go … taller,” he says.

Civil society interests are to divert the use of the project’s state-owned land into something totally novel: a public park for Ashrafieh. According to Najat Saliba, chemistry professor at the American University of Beirut, particulate pollution levels along a congested Beirut thoroughfare range between two and 4.5 times the limits recommended by the World Health Organization. The park alternative would bring Ashrafieh rare things such as playgrounds, benches, grass, shrubbery and trees.

However, cancelling the Fouad Boutros link could just as well have the totally unintended effect of filling the neighborhood with more high rises, warns CDR’s Helou. If the land is not used in accordance with the original expropriation purpose, old owners will have the right to buy back their land at 75 percent of current market prices and offer them to developers at full prices, he says. “In no time, you will have buildings going up there.”

Potential for maneuver

The now mandatory environmental impact study will include a public hearing for residents affected by the project, the Ministry of Environment emphasizes. Helou confirms that the impact report will examine pollution levels and the impact of the project on the neighborhood’s social and urban fabrics, architecture and local flora and fauna. He doesn’t believe that these assessments will dislodge the project but concedes that they might result in improvements.

“We tried to maintain the urban fabric, to maintain the culture of the region, to put trees up where we can — we tried to do all that without an assessment,” Helou says. “So maybe we have had half the story correct. All we have to do is correct the half of the story that is missing.”

Where he admits that the public officials erred was in expecting people would just swallow the project as they did so many times in the past.

Civil society stakeholders aroused public opinion by calling Fouad Boutros a ‘highway’ — which it was in the original design, and what Helou sees as overstating its detrimental impacts on heritage and people in the Ashrafieh neighborhoods.

While the CDR and municipality were caught off-guard by opposition from civil society, all necessary expropriation decrees have been acquired and, save for the environmental impact study, the Fouad Boutros project can be pursued. However, Ashrafieh’s MP Gemayel has a word of advice. “I would like to have… answers from the CDR and the municipality about the traffic study and the environmental assessment — these are main questions where we need answers in our hands in order to have a clear and direct position about this project,” he tells Executive, adding that Parliament has the ability to communicate its views effectively to both the Beirut municipality and the CDR. “I think they will not do anything without our approval.”

Lebanon’s balance of influences aside, the debate over the Fouad Boutros road is far from over. Authorities and activists need to reground themselves in facts, negotiate and propose a solution that will serve the public’s wellbeing. Without an assertion of hard data, people will be stranded on the streets, either in a car or without a home.  

July 4, 2013 1 comment
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Real Estate

Betting on Berlin

by Maya Sioufi July 4, 2013
written by Maya Sioufi

Tourists, hipsters, everybody is welcome. Party like it’s 1945.” That’s the slogan of the underground political group Hipster Antifa Neukölln, founded last summer in Berlin in reaction to increasing resentment toward foreigners, who have been accused of gentrifying the city. Europe’s trendiest capital is attracting tourists and affluent expats, as well as property developers such as renowned private equity group Blackstone.

It has also caught the attention of Beirut-based Real Capital Holding, which started investing in the city-state’s real estate in 2008. By end of May 2013, it was managing 65,000 square meters (sqm) distributed over 21 properties, and it just made its first exit, telling Executive that it achieved a 24 percent annual compounded internal rate of return on the sold property.

The chairman of Real Capital Holding is Karim Salameh, who earned early accolades as manager of Eagle One by Bank Saradar, Lebanon’s first-ever property investment vehicle, akin to a real estate investment trust. His partner in Real Capital Holding is Karim Sinno, who was an active player in the Lebanese property investment market during his 10-year tenure at Middle East Capital Group. Real Capital’s properties are acquired through investment vehicles registered in Germany and capital gains are thus subject to German tax jurisdiction.

While Salameh and Sinno invest their own money in each of the vehicles, they have a handful of investors — a majority of whom are from Lebanon — joining them in their European endeavor, and some properties are acquired for specific clients.
Why Berlin? Having come to the realization in 2007 that Berlin was significantly underpriced relative to other cities in Europe, the partners investigated this arbitrage further and eventually decided to back their conviction with capital. The price per square meter in central Berlin fetches $4,000 today versus $13,300 in Paris and $12,440 in London, according to property database Numbeo. The price is even lower than the average in real estate distressed Madrid, $5,800.

The undervaluation of real estate in Berlin is correlated with the city’s socioeconomic profile and its relatively high rate of unemployment; it is also rooted in the last century’s division of the German capital into the free but insular and economically underpowered West Berlin and the communist-ruled East Berlin and its hinterland.

Private real estate ownership in East Germany was a burden because the state mandated below market rents and landlords had virtually no rights. “The old Communist East suffered a lot from the communist regime with very low wealth creation and bad economic foundations, so the prices of real estate and of goods were very cheap. It is a unique moment in history where [we can] arbitrage the difference of the status of Berlin as the capital of a Western developed country and… as the capital of an almost bankrupt Eastern European country,” says Salameh.

Profiting from history

From an office behind Beirut’s National Museum, Salameh and Sinno have been eyeing commercial and residential properties in several districts of the German capital; to date, Real Capital Holding has invested in eight of Berlin’s twelve districts. While the firm acquired its first property in 2008, that was the only investment it made that year, and none were made in 2009.

The kickoff for their investment spree began in 2010, when eight properties were acquired followed by six in 2011 and five in 2012. They completed the acquisition of a commercial property of over 11,000 sqm in the first quarter of this year. They have not sold any investment yet and intend to hold them for around seven years. With intent to hold the properties for an average of seven years, the partners are targeting an annual internal rate of return of 14 percent.

For many years, Berlin and German real estate markets had little to offer investors seeking the high returns that other European, Middle Eastern, North African and Asian markets could provide. The combination of a stable population, a low rate of construction activity, a financial sector that required double-digit down payments and extensive protection of tenant rights led some German property investment advisors to observe that real estate price movements were as exciting as “watching paint dry”.

But stronger price movements in the German real estate market in recent years have some worried. Multi-billionaire investor George Soros warned last October, “[There is] a serious danger of a housing bubble developing in Berlin.”

Real Capital’s Salameh is not concerned, though, as Berlin still offers property valuations significantly below those found in many other European cities and decades away from the price levels seen in Paris and London.   

Will Real Capital Holding start prospecting other European cities that have seen significant downward pressure on real estate prices? “Not at this time,” he says, as he fears that it might take a long time to adjust to a bottom. While he might look at other German cities to exploit upwardly trending urban real estate prices, he sits pretty in Berlin.

July 4, 2013 0 comments
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The Buzz

Business briefing: 4 July 2013

by Executive Staff July 4, 2013
written by Executive Staff

Economics and Policy

Mohammed Morsi has been dramatically ousted, after a year as president of Egypt.

More from The National

 

Iranian president-elect Hassan Rouhani has called for the government and powerful clergy to end interference in the private lives of the Iranian people, free up internet access and for state media to be more open about Iran's problems.

More from Reuters

 

France has urged Lebanon to sign a tax information exchange treaty to avoid placing the country in the noncooperative countries or “tax-havens states.

More from The Daily Star

 

Companies and Business

The new head of Qatar's sovereign wealth fund, Ahmad al-Sayed, is known and feared as a hard, aggressive negotiator – and his appointment signals the fund's ambitious overseas acquisition plans are likely to continue.

More from Reuters

 

Middle East airline carriers recorded the strongest year-on-year traffic growth in May at 11.7 per cent, far outstripping the global average traffic surge of 5.6 per cent, statistics show.

More from Khaleej Times

 

The Wooden Bakery, one of Lebanon's fastest growing food companies, is planning to continue its international expansion.

More from The Daily Star

 

Al Rajhi Bank, Saudi Arabia's largest listed lender, said it would distribute dividends worth SR2.25bn ($599.9m) for the first six months of 2013.

More from Reuters

 

July 4, 2013 0 comments
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The Buzz

Paradiso reconstructed

by Zak Brophy July 3, 2013
written by Zak Brophy

British artist Tom Young and his wife were taking a stroll through Gemmayze’s back streets when he caught a whiff of the sweet scent of jasmine. As he stopped to smell the flowers, he was struck by an “absolutely beautiful” villa that stood before him. Jaded by the traditional white cube galleries in which he was exhibiting his work, he had been looking for a new space to hang his art, and he knew this building was it.

From that New Year’s day five months ago, the long neglected “Villa Paradiso” was given a breath of new life due to an uncanny confluence of Young’s inspiration and a family’s vision. The classic villa dates back to the turn of the last century, though it was a dilapidated façade forgotten under the shadows of surrounding tower blocks in the heart of Gemmayze until recently. It opened its doors on May 30 as a thriving arts and cultural center that tells of Beirut’s eras past.

A match made in heritage

“Our heritage is [like] our skin; we don’t want to peel it off and replace it with a new skin. It is very important that these elements of our culture are shown to the public and not left to disappear or even be sold away,” said Remi Feghali, a member of the family that owns the building. He is the architect overseeing its restoration and renovation.

When Young contacted the Feghali family, a relationship was forged that, in the words of Remi Feghali, “we… completed one another’s vision.” The Feghalis are active in preservation and own a handful of heritage properties.

They bought Villa Paradiso — a name bestowed by the family — seven years ago for a “six-digit figure” from a successful Armenian family, the Baloumians. The last person to live in the house was the family patriarch, Mardiros, who had escaped the Armenian genocide in 1915, fled slavery and gone on to become a successful contractor, tradesman, philosopher, photographer, actor and writer; he refused to flee to the United States with the rest of his family in 1975 and died in Beirut, aged 88 in 1983.

Video: Turning Lebanon's heritage into art

Initial renovations were done to the roof, which had been damaged by shelling in the war, but beyond that the building was left dormant.

The villa is a weathered reflection of Beirut’s past. It was built over several stages stretching from the late 1800s to the late 1920s. The building carries typical features from this period, such as a beautiful, triple-arched window on the first floor, lofty ceilings and classic tiled floors in the style of Beirut’s late Ottoman era. The mixture of the European and Ottoman influences that pervaded Lebanese life in this period define the architectural style; the aspirations of the thriving merchants that lived here are almost palpable.

As the Feghalis and Young fleshed out their vision for the building’s restoration and the art exhibition, they preserved the character and identity of the building with only modest renovations. Young, who is a trained architect and craftsman as well as an artist, served as the liaison between Remi Feghali, the architect, and the tradesmen who carried out the work.

It was not just the physical structure that inspired the artist’s project but also the artifacts of the Baloumians. Musical scores, photo albums, an Armenian typewriter and vintage furniture told of lives that had long since departed the building. Young took a sunny front room on the first floor of the building as a studio to work among the relics and artifacts from those forgotten days.

“When I moved into that room, with all of the history and memories that it holds, my work went to a completely different level,” he said. Young adorned the walls of the Baloumians’ past home with his interpretations of the faded, sepia-hued memories of their lives in Lebanon, such as summer lounging on Ramlet el Bayda beach and footloose frivolities at Beirut dancehalls.

A future in the past

“It is a combination of nostalgia and somehow looking into the future. A kind of tension between the past and the future, because a lot of the pieces call you to reflect on what could be — at least for me. But I am thinking a lot about that these days: what Lebanon could be, what it was, its potential,” said local resident Edward Stockman-Allen at the opening.

The Feghalis hope that the transformation of Villa Paradiso into a cultural space will serve as an inspiration to other investors to see the value in similar properties and to think creatively about potential uses that not only preserve but also revive heritage. “What we try to convey through Villa Paradiso for those who don’t know what to do with these houses is that they can be used in plenty of ways; museums, galleries, hotels, residences, restaurants, you name it,” said Remi Feghali.

Despite the damage to the roof from the war, Villa Paradiso had by and large been well preserved, with the original windows and door frames and tiled floors still in place. “I have been amazed by the selling off of heritage through the black market. Houses are literally having their organs ripped out to be sold everywhere, so identity is ultimately lost. We want to keep the DNA of this house,” explained Feghali.

The resurrection of Villa Paradiso is not merely about a passion for heritage but also a calculated business investment. The new cultural center will generate revenue by hosting art exhibitions, and the restoration of the property will at least maintain its value, if not significantly increase it. “We are doing this both as an investment and out of our love of heritage. The love of heritage does not stop at looking at a ruin; you have to maintain it so that it doesn’t disappear,” said Feghali. 

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A challenge to connect

by Thomas Schellen July 3, 2013
written by Thomas Schellen

An anchor of the Dubai-based television program Emirates News started her daily run through of the headlines one recent evening by reporting that Sheikh Mohammed bin Rashid al-Maktoum, the ruler of Dubai, was on his way to Paris. That the state-affirming Dubai One TV cites Sheikh Mohammed’s activity at the top of its program is nothing out of the ordinary. But this particular newscast piqued my interest because the trip was linked to Dubai’s bid to host the World Expo 2020 fair.

Dubai is one of four cities competing to host the event, and the contenders last month made their penultimate presentations at the annual convention of the Paris-headquartered Bureau International des Expositions (BIE), an intergovernmental organization of 167 member countries. The final vote of BIE members, including Lebanon, is due in November after another round of symposiums in candidate cities Yekaterinburg, Russia in July; Sao Paulo, Brazil in September; Izmir, Turkey in early October; and Dubai on October 22-24.

One can trust the United Arab Emirates to carry good pecuniary messages, and its high-powered delegation announced a 250 million euro ($328 million) gift package, 150 million euros ($197 million) of aid to support the participation of emerging economies in Expo 2020 and 100 million euros ($131 million) for a multi-year, international brainstorming project on critical global issues, called Expo Live. Another unsurprisingly cash-rich announcement in the UAE presentation was that if awarded the fair, Dubai would fast-track the AED 5 billion ($1.36 billion) infrastructure investment to extend the city’s Metro to the expo site in the area of Al Maktoum Airport.

Dubai has been drumming up its campaign to host Expo 2020 with a steadily increasing beat since first submitting its bid in November 2011. The event has a planned duration of six months, with 25 million expected visitors, 70 percent of them regional and international. According to an Oxford Economics study commissioned for the bid, the event will create some 280,000 jobs, a third of them on a regional level. The opportunities are many, and members of Dubai’s marketing communications industry, most of whom are Lebanese, all had the hots for the business that the Expo would bring when I interviewed them in January.

But the vote for Dubai is not a no-brainer for Lebanon. Izmir is a city with a large trade and exhibition industry, and Turkey can appeal to many commercial interests in the Eastern Mediterranean. A Turkish government minister polished door handles in Amman and Beirut this spring on a tour to promote Izmir. Strong links and shared interests exist also between Beirut and Brazil’s largest city. Note that the mayor of Sao Paulo is Fernando Haddad: he is one of Lebanon’s own. And while Dubai is where the Lebanese commute to work, there is the thorny issue of the UAE’s travel warnings that have punished Lebanon’s economy.

Viewing Lebanon’s Expo 2020 voting decision from the perspective of economic self-interest and emotional appeal, strong entreaties thus beckon from three of the four candidates. To get an edge, Dubai would be well advised to show more understanding of Lebanon’s vital tourism needs and to take the coming weeks and months to elaborate on what Sheikh Mohammed said last month that one of the three core reasons for inviting Expo 2020 to Jebel Ali Trade Center is to show the world that “the Middle East is not a region of conflict, war and tension” and that the expo’s motto of connecting minds also means “to communicate and interact positively within our region.”

Another vantage point is the one of “building the future”, as the second half of Dubai’s expo motto says. London’s Great Exhibition of 1851, often hailed as the first world fair, was a pivotal step in the United States’ ascension as a global manufacturing leader. The year 2020, when China is forecast to surpass the US in headline gross domestic product, could be recorded in history as a similar hallmark in the transition from the American century to a human capital-driven global economy of increasingly interdependent co-creators of wealth beyond nations.

The protests for social justice and dignity that swept the two contender countries Turkey and Brazil so very recently are a reminder that all nations have much to ponder in order to manage the international socioeconomic balance sheet in the 21st century. Dubai, whose corporate environment leads the world in internalizing the human capital success formula of building United Nations within your enterprise, appeals to me as suitable to host a world fair that takes a shot at connecting minds.     
 

Thomas Schellen is Executive’s business editor

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The Buzz

Business briefing: 3 July 2013

by Executive Staff July 3, 2013
written by Executive Staff

Economics and Policy

Egypt's Mohammed Morsi has insisted he remains the country's legitimate president, as mass protests claimed more lives in the capital, Cairo.

More from the BBC

 

The Lebanese economy contracted between 0.5 and 1 percent in the first half of the year, a senior economist at the Institute of International Finance has said.

More from The Daily Star

 

Two lawmakers in Kuwait have defended any military dealings between Israel and the Gulf state, with one claiming that he will “love the Israelis” if they can aid in providing greater security for his country.

More from Arabian Business

 

Companies and Business

Qatar's former prime minister, Sheikh Hamad bin Jassim al-Thani, has been replaced as deputy head of the country's powerful sovereign wealth fund in a restructuring move ordered by the country's new emir, the state news agency reported.

More from Reuters

 

Abu Dhabi International Airport’s new AED11.7bn ($3.2bn) midfield terminal complex will become operational in the third quarter of 2017.

More from Arabian Business

 

The government contracts of Lebanese telecommunication giants Touch and MTC have been extended by three months.

More from The Daily Star

 

Lebanon's renowned Baalbek International Festival, normally held in the town's spectacular Roman ruins, will move to a venue near Beirut amid security fears linked to the Syrian conflict.

More from AFP

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It’s the economy, stupid

by Tamara Rasamny July 3, 2013
written by Tamara Rasamny

After overthrowing the dictator Hosni Mubarak in 2011, the hopeful Egyptian people held their first democratic elections — eventually leading to Muslim Brotherhood-backed Mohammed Morsi becoming president.

But now, one year after taking over, he faces an ongoing uprising against his rule, with the military setting him an ultimatum to reach a deal with the protesters.

Much of the reason for his historic unpopularity has been Morsi's inability to improve the economy. GDP growth has remained at a disappointing two percent and most other indices are going the wrong way — unemployment has risen, as has debt, while foreign reserves have collapsed. Meanwhile the government has been negotiating an International Monetary Fund loan — which could provide the country with much needed boost — for over a year.

Click here or on the graph below for the interactive guide to Morsi's economic record.

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Society

A city run by kids

by Maya Sioufi July 2, 2013
written by Maya Sioufi

With school out for the summer, parents return to the task of planning their childrens’ daily activities. For those that did not schedule a babysitter or summer camp, KidzMondo, a mini city for children that opened its doors last month, could provide respite. Located in Beirut’s Waterfront area, the 10,300 square meter (sqm) indoor children’s amusement center allows youngsters to play at real life professions such as postman, cook or even pest control officer. And in imitation of real-life wages, kids earn points — in Kidlar currency — for each profession which they can spend on toys. “The harder you work, the more points you earn,” says Ali Kazma, chairman of the new mini city. 

Children can try out a range of professions, including being a doctor

 

While new to Lebanon, the concept of a city for children has been around for over a decade. It came to prominence about 14 years ago in Santa Fe, a suburb of Mexico City. The invention of Mexican entrepreneur Xavier Lopez Ancona, KidZania opened in 1999 and started franchising shortly after. Its first franchise in the Middle East, a 7,400 sqm amusement park, was launched in Dubai in January 2010 in partnership with United Arab Emirates’ Emaar Retail, an entertainment and leisure developer, and plans are under way this year to establish KidZania in Kuwait, Egypt, Saudi Arabia and Qatar by 2015. 

For Lebanon’s mini city, Kazma partnered with his old university friend Hind Berri, daughter of Parliament Speaker Nabih Berri, and kicked off the construction of the theme park in May 2011. Initially called KidzMania then KidzVille, KidzMondo was finally settled on because of trademark issues with prior names; it is now registered in 32 countries and the corporate website, copyrighted to Kidz Holding sal, invites franchise seekers. 

Majority owned by Kazma and Berri, the ambitious project cost $25 million. The rent of the 4,300 sqm land — secured for nine years from Lebanon’s behemoth real estate developer Solidere — came at a “low price” says Kazma, while refusing to disclose the exact amount. He is targeting annual sales of 400,000 tickets and hopes to break even by the fourth year of operation.

Entry to the amusement playground is set at LL40,000  ($26) per child and LL20,000 ($13) per adult, and kids under the age of eight must be accompanied by an adult. A family of four is therefore looking at paying LL120,000 ($80) for a day out at KidzMondo. The ticket price gives points — similar to cash — that can be stored in an account at Bank Audi’s KidzMondo branch. As professions are learnt throughout the center, further points can be earned. A hi-tech bracelet given to each child upon entry tracks their location and monitors their activities so parents need not worry about losing them in the large center or wonder whether they are participating in the activities.

 

Go-karting is popular with many of the children

 

For the training of its 300 employees, 220 of whom work directly with the children, KidzMondo partnered with Canada-based Kidproof Safety, a worldwide provider of child safety education as well as Beirut-based MCA People Solutions, a training, consulting and recruiting firm. While the center lacks sunlight and, like Beirut generally, green spaces, it has a wealth of activities. This includes up to 40 earning professions — such as how to be a fireman— and 40 spending professions — Burger King, for instance, lets children make their own burger, but they still have to pay.  

As for sponsorship, the center hosts 55 establishments with exclusive sponsorship per category. For instance, Bank Audi is the only bank, MTV the only television broadcaster and Hypco the only gas station. The prices paid for this exclusivity, which vary depending on the type of contract signed — its duration, level of exposure, etc. — are expected to rack up to 30 percent of the total revenues, with annual fees ranging from $75,000 up to $250,000. With a capacity to host up to 1,500 people at once, the bulk of the revenues will come from ticket sales and other items such as food and beverage.

The mini city opened its doors in the midst of political instability and a distressed economy that has decreased spending power, and it remains to be seen whether it will face difficult times generating hard currency. Kazma doesn’t seem too worried, though: “I believe in the project. I am afraid, but I believe in it.” 

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The Buzz

Business briefing: 2 July 2013

by Executive Staff July 2, 2013
written by Executive Staff

Economics and Policy

Egyptian President Mohammed Morsi has rejected the army's 48-hour ultimatum to resolve the country's deadly crisis, saying it will only sow confusion.

More from the BBC

 

New protests have shut down several Libyan oil fields, cutting output by around a third, industry sources said.

More from Reuters

 

Kurdistan's ruling coalition has postponed key elections and granted a two-year extension to the term of President Massoud Barzani, sparking a mass brawl in Parliament.

More from Iraq Oil Report

 
 
Companies and Business

Google has launched a dedicated Arabic TV hub on YouTube that will broadcast more than 500 shows from the top 20 Arabic entertainment channels.

More from Arabian Business

 

LNG shipper Maran Nakilat Co. Ltd has sealed a loan refinancing deal worth $662.4 million, allowing it to proceed with an expansion of its LNG carrier fleet to six ships from four.

More from Reuters

 

Beirut Stock Exchange activity fell 33 percent in the first six months of the year, mainly due to the political standstill and the volatile situation in Syria.

More from The Daily Star

 
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Since its first edition emerged on the newsstands in 1999, Executive Magazine has been dedicated to providing its readers with the most up-to-date local and regional business news. Executive is a monthly business magazine that offers readers in-depth analyses on the Lebanese world of commerce, covering all the major sectors – from banking, finance, and insurance to technology, tourism, hospitality, media, and retail.

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