Over two decades of experience

The Investment Development Authority of Lebanon (IDAL) was established in 1994 with an economic vision to attract mega investments to the country. It targets foreign and local investors and provides them with services on three main levels: investment promotion, export promotion and startup support. IDAL grants incentives and provides facilitations to eight priority sectors that represent promising opportunities in terms of investment, and have an impact on socio-economic growth. These are agriculture, agro-industry, industry in general, media, technology, IT, telecommunication and tourism. IDAL is currently offering its services to more than 80 investors, and aims to reach double the number during the term of the new board of directors.

Executive talked to Dr. Mazen Soueid, chairman and general manager of IDAL, who shares about the initiatives of the new board, and the different programs and agendas that support large and small businesses, despite the difficult times that Lebanon is facing.

IDAL’s new board

IDAL’s new board of directors was appointed on October 10, 2019, which created a major strategic shift after 14 years of having the same board. “We instituted this board at a time that Lebanon is witnessing unprecedented changes and events, and we are working on rebuilding the institution,” reveals the chairman.

The new board is composed of young members, with expertise in the Lebanese private sector. It is composed of Dr. Mazen Soueid (Chairman and general manager), Alaa Hamieh (Vice President), Simon Souhaid (Vice President), Me. Rana Dabliz, William Charo, Mohamad Al Mohtar, and Me. Rabih Maalouli. The board members are well known in the business, economy, real estate, entrepreneurship and law fields. “I was appointed chairman after long experience in both international and local policy making, and I came to IDAL with big ambitions,” said Soueid. 

Despite all the events that hit Lebanon, Soueid has high hopes in Lebanese investments. “I learned to look at crisis as a great opportunity,” affirms Soueid, “The period of feeling down is behind us. We started to adapt and we are preparing many interesting ideas.” He also points to the necessity of preventing citizens from losing faith in the country and providing them with motivation. “I understand my friends who packed and left, but I do not agree with them,” Soueid said. “The country is not a hotel and I have to fight to make it a better place.”

Encouraging investment

IDAL supports investors on different levels in the pre-investment, financing and licensing stages with various services. It offers a package that comprises fiscal, financial and non-financial incentives. The institution helps in getting investments exemptions from corporate income tax, reduction on land registration fees, the issuance of administrative permits and licenses as well as granting employees work permits. The service also provides information and data on different investment opportunities, in addition to legal and tax advice. IDAL ensures follow-up with investors after starting their operations for an opportunity to grow.

IDAL started building an initiative last December called The Business Matchmaking Platform. Soueid describes its role as “the bread and butter of what the investment promotion authority should do.” He explains further, saying, “I wanted to channel large depositors, big investors and expatriates who can no longer access credits from the banks, into an investment opportunity. We invited many small, large businesses and SMEs at all levels to open their capital for investment in this very challenging time.”

Through this platform, IDAL offers finalizing the due diligence and the high-level presentation for those wishing to invest or those wishing to increase/open their capital. However, the launch of the platform on the national level was postponed due to the Covid-19 crisis that was followed by the Beirut 4 port explosion.

IDAL affirms that many investors reached out to the institution early in the crisis, wishing to manufacture -in Lebanon- the imported products that are disappearing from supermarkets. So, the institution was able to support them in finding lands and zones with tax incentives.

“Investors come to IDAL to validate their investment idea because we have the market know-how, but they are not doing it initially to be incentivized or to get tax credits,” explains Soueid, “They are doing it because they believe that a crisis is an opportunity and these are the people that we enjoy working with.”

Exportation Agenda

As per law No.360 (16-08-2001), IDAL is entrusted in helping Lebanese producers identify new markets. It has three programs that work on promoting the exportation of products and services. It helps investors in branding, developing their business strategy and identifying the markets to which they can export, specifically in the fields of industry and agriculture. In addition to this, the authority funds the participation of investors in international fairs or events, and connects them with foreign distributors through B2B meetings, especially in the gulf countries.

“I went within three months of my appointment as a Chairman to KSA, UAE, Bahrain, Kuwait and Jordan, where I met with the heads of chambers, and discussed the importance of Lebanese products in their markets during this crisis,” confirms Soueid, “We identify in every country the added value and the comparative advantage of Lebanese products depending on the interest.” He added that many activities were postponed due to the hit of Covid-19, yet he aims to relaunch the initiative of connecting the Lebanese exporters directly to distributors in the gulf, once the Covid-19 vaccine is projected to be availalbe in Spring 2021.

IDAL’S Chairman explains that the Lebanese private sector has been introverted for a long time, in the sense that there is high domestic consumption with minimal exportation. In this context, he says, “The company that cannot export cannot survive, because Lebanese purchasing power is significantly poorer than it was a year and a half ago. And thus, domestic companies cannot increase their sales, but the cost is increasing due to the rise in price of raw material.” He also mentions that, “In order to export, investors need to become more productive, more competitive and more efficient.”

Startup support

Supporting startups is very important at IDAL. “Part of my vision for IDAL is to focus on startups, the knowledge economy and the media sector, which will create the advantage of making Lebanon an outsourcing hub; especially that investors will be working from Lebanon and get paid abroad: the money they will be making will be spent here,” affirms Soueid.

“We have established the Business Support Unit (BSU), that is responsible for providing free services for people who have ideas, existing business plans or projects in the sectors we target,” explains Soueid, “We help them run their business and provide them free legal, audit and tax advice. We also assist them in finding angel funds, accelerators or incubators in some cases through our chain of networks that we work with very closely.”

Soueid views IDAL in a different perspective from other institutions. He explains the recognition of institutions, saying, “What is special about IDAL is that although it is a public institution, yet it works little with the public sector. It is an unusual public company that works with the private sector.”

Exclusive announcement, setting the example for public-private partnerships

Chairman and general manager Soueid, revealed exclusively to Executive, the new initiative that IDAL will be launching in 2021. “We are going to launch a Private Sector Development Agenda,” announced Soueid. “It is overreaching and ambitious, and it will be the best example for public private partnership. It will include how a government agency can work with the private sector in a transparent way to help it achieve its objectives,” explains Soueid.

IDAL’s chairman believes that it is the time to make the Lebanese private sector strong and easy to invest in, since it brings growth to the Lebanese economy. “We will work with the existing companies and businesses, to help them reform and reorient their operations towards export,” he mentions, “Once the situation in Lebanon changes, by getting the IMF program, reforming the banks and the political clouds are gone, we will be able to attract many investments because the private sector will be ready.”

IDAL is considered a crossroad between the private and public sectors, and is always open to collaborating with and between both sectors. The new board established a workshop to reform the institution’s decrees – that were not updated for a very long time – and many ministers were invited to IDAL’s premises to discuss future collaborations and projects. “We have to work all together as public institutions and ministries regardless of politics in order to provide the best service to the ultimate consumer which is the Lebanese citizen,” says Soueid.

To step back to the macro level, Soueid views that it is crucial for the new government to be able to attract fresh funds to Lebanon because this will be the only way to sustain Lebanese purchasing power. “Without injecting fresh dollars into the economy, we will see the parallel rate depreciating, the purchasing power eroding and Lebanon will be digging deeper into the crisis,” said Soueid.

Promise for youth and fresh graduates

IDAL offers the opportunity for all university students and fresh graduates to have internships on its premises. It makes sure to provide them with professional training and to link them with the network of investors that the institution works with. “IDAL is open to youth and fresh graduates at all levels, and is ready to provide guidance for startups ideas,” the chairman explains, “We will help them on the macrolevel to work for a better Lebanon and advocate the right policies.”

Projections for the new year

Soueid concluded by sharing his thoughts on the new year projects that will start coming to light in the first three months of 2021, saying, “If we can achieve excellent outcomes that shine in collaboration with the private sector, then I will say that I came to IDAL for a reason. In the most difficult time, it was fate and not misfortune.”

“As a chairman and as a board, we are working to make IDAL in 2021, an exemplary public institution through our private sector agenda, to establish a hub of excellence that will remain after the tsunami recedes,” Soueid emphasizes.

As Winston Churchill worked to form the United Nations after WWII, he said, “Never let a good crisis go to waste”. This has been Antoine Assi’s motto and business model, Managing Partner of ESTIA Real Estate Group.

Assi predicted the crisis in Lebanon three years before it happened. At the time, a similar hurricane of crises was afflicting Greece. Assi decided to capitalize on the Greek crisis, and expanded his real estate business, where he eventually benefited from the sharp drop in real estate prices. Assi sold over 2,000 apartments, developed over 20 hotels, and manages over 500 million euros in property.

In this interview, Executive sits down with Assi, to get a better sense of his experiences and successes as a dominating figure amongst the Lebanese diaspora.

Can you tell us about ESTIA as a company and what kinds of services it offers?

ESTIA is a real estate development company that develops residential and touristic projects. We focus on residential development specifically in Athens and Portugal. We offer residential apartments ranging from 50 sqm lofts in the center of Athens up to 400 sqm apartments in the south and other luxurious areas along the Greek riviera. The budget of the properties we offer ranges from 180,000 euros to 3 million euros per apartment, we also offer villa development ranging from 2 to 5 million euros.

Estia manages everything in-house, from architects, lawyers, property managers to rental management. We provide a full 360-degree service for our clients and investors.

Estia Capital, a division of Estia group manages 3rd party investors and gives them the opportunity to invest in any of our ongoing residential developments or hotels.

We were reluctant to venture into commercial real estate development. We believe that when you have a crisis like COVID-19 the commercial tenants are the first ones to leave. Thus, we prefer, as a group, to have exposure on residential or touristic projects than to have exposure on commercial tenants.

ESTIA started in Athens in residential rentals during the crisis. It started buying apartments, renovating, and renting them as short term (Airbnb etc..), medium- and long-term rentals, because the yield was at that time very high, around 16 -17%.

The team grew from a two-person operation to a 200-employee operation in less than 4 years.

 Where are ESTIA properties located? How do these locations attract investors?

Most of our properties are in Athens which is a strategic location that generates high rent. Wherever we decide to develop a residential building, the number one requirement is to be in a strategic location, so that the client or investor who is buying the property can generate a decent profit of 7 to 10% annually.

We also have properties in Portugal. It is always interesting for us to choose locations that give us long-term opportunities. We don’t just want to sell our apartments; we want to retain the   management of the property to generate the maximum income to our clients.

Our rental division in Athens is managing over 2,000 apartments. These locations are prime locations that get high yields and will always have a demand for rent.

The clients can decide to rent the apartment for short-term use, and use it themselves in the summers, for example; or, they can rent it for a longer contract when they don’t need it.

The apartment serves as a three-dimension investment: firstly, for their own use, secondly for getting a Golden Visa and becoming permanent residents of Europe, and thirdly, making yearly rents and [passive] income.                

What experience does ESTIA have in Airbnb hotels?

I will tell you a small story. When I came to Athens, I was staying in the Hilton hotel. I saw that during the worst year in the history of Greece – when there were riots, political and security problems – the Hilton was running on full staff and offering food every day. So, I said to myself, “I want to establish a hotel that doesn’t offer food nor has a staff problem”.

My dream was to launch one hotel that runs on one employee. This way when there is a crisis, investors will be safe from pouring money back into the project because of the high cost of the hotel. Thus, I started something close to an Airbnb hotel, where the whole building is running like a hotel but with one employee. And this is done through our application and center management.

We provide our clients with a delivery menu and all our Airbnb hotels are strategically located. The clients love to go down and have breakfast in the different nearby restaurants. The unit at our hotels ranges from 25 to 200 sqm. Our 3-bedroom unit is around 80 sqm that can cater to eight people for just 150 euros a night, where the 16 sqm couple room at Hilton stands for 280 euros/night.

This advantage raised our ratings to 9.5 in comparison to 8.3 rating for Hilton hotel. So now the families prefer our concept.

Our Airbnb concept is very competitive, and its real estate value is high because it is a custom-made project. Our interiors are well designed, and we make sure that every unit is a signature apartment.

In terms of luxury, they are even higher than the ones in the market with more amenities such as furnished kitchen, high end gym, laundry area, bags storage etc. while being three times cheaper than a typical hotel. In October 2020, the worst time of the year, we had 85% occupancy, while most hotels had 20%. Our experience in Airbnb hotels started in 2016 and now we have over 20 under development. 

Do you have any advice for people seeking to invest in real estate?

In the past thirty years, we have seen that real estate has been the safest investment and the most secure. I would advise anyone to invest in any real estate property that generates income. The real estate investment can turn into a burden if it does not generate income.

What people do not know is that there is a holding cost. For example, if you are buying land, your holding cost for it is the interest of your money that you are not receiving. When you are buying an apartment that is not rentable you have municipality taxes and common charges and utility to pay that will be a burden on you. So, when you buy a real estate property you need to see the location, the quality, and how rentable it is, because at the end of the day, you need to account for one month of every year of rental going towards the payment of these costs, which are the municipality taxes, utility, and common expenses.

So, if you buy in places that cannot be rented, the real estate will turn into a burden. Besides, I always advise people to buy early from the developer when he is launching his project because they can get a 10% to 20% discount.

What types of investment opportunities does ESTIA offer for potential or seasoned real estate investors?

We offer opportunities in the typical residential business, where people can either invest with us to buy the lands and develop them, or they can buy apartments from us and we can rent them so they can make a good profit. And they can also invest in our upcoming hotels where they can make a very good return by owning shares.   

What types of architecture and interior design does ESTIA provide to its diverse clients?

First, it is important to highlight that we have a team of thirty engineers, interior designers, and a furnishing department. We give the clients the option to do everything with us in terms of interior design. We have a department that offers interior design since most of our clients live abroad.

As part of our services, we handle the full furnishing of their apartments, we deliver the apartment ready to move in.

For the architecture, we are working with a panel of top architects in Athens to provide multiple architectural projects for every taste. We are delivering different styles from modern architecture to the renovation of heritage buildings.    

What kind of residency does “owning a property” in Greece provide the owner?  How can ESTIA help in this regard?

ESTIA has provided until now over 1,000 residencies in Greece alone. Every country has different laws regarding residency, but what is common between all these residencies is that they give you access to all Europe.

When you become a resident of Greece you become a resident of Europe. It is a permanent residency (PR). So as long as you buy an apartment for 250,000 euros, and maintain it, your residency remains for life. Every five years you would have to renew the PR and simply show that you still own the apartment.

What people don’t know, and what they are discovering now, is that when they become residents of Greece, they don’t have to pay taxes. In comparison to the Schengen Visa, the PR is more stable since all the Schengen Visas were cancelled or recalled when the crisis started in Greece, but the PRs were still active. When you have a PR, it is easier to submit a work permit application to the ministry of interior.

What is important to highlight in this regard is that most people think that a Schengen acts like a PR, which is not true. They must understand that when they have the Schengen for 5 or 10 years, they cannot stay in Europe more than 50% of their visa period, which means 182 days per year.                      

Any last words of advice for the Lebanese looking for a way out of the crises?

I believe that the economy in Lebanon collapsed and what the Lebanese are witnessing is the tip of the iceberg.

The state in Greece is protecting the Lebanese expatriates. In the COVID-19 crisis, the Greek banks called us suggesting to extend the payment of our loans and to reduce the interests. However, I heard that some Lebanese banks increased the interests from 8 to 27% during the crisis.

Soon, the Lebanese will be banned from entering several countries. So, every Lebanese should have a Permanent Residency and an income generating property in Greece or Portugal to safe keep their families in terms of crisis.