Construction at the $100 million

Movenpick resort in Raouche steams

ahead. The 72 chalets and 1,000 cabins

have already gone up 7% in price since hitting

the market on August 1, and while

Kingdom Holding won’t reveal the figures,

the diagrams in the on-site sales

office suggest sales are going well.

Sales manager Samer Abu Ayash admits

that the project has faced a credibility gap.

“Everyone knows the checkered past under

the old owners,” he says. “This makes it

more important that we get things right and

on time.” Movenpick has similar resorts at

the Dead Sea and Sharm el-Sheikh.

Branding is important. Alwaleed Bin Talal

is himself a brand name. “When he says the

project will be finished in summer 2002,” says

Abu Ayash, “people believe him.”

The project has a 4,000m2 health club, a

30,000m2 hotel, a l ,500m2 shopping mall,

swimming pools, restaurants, chalets, cabins,

a marina and 700 parking spaces. The

shops, says Abu Ayash, will attract local

residents as well as those using the resort.

The biggest unit until now is 80m’,

although the design allows up to 200m2

“Visitors to the hotel will be able to do

everything within the resort,” says Abu

Ayash. “This is unique in Lebanon. They

can rent a boat, put the kids in their own

pool, have a mud bath and go to a restaurant.

Some people who go to Sharm el-Sheikh

never leave the resort for two weeks.”

The main interest in chalets has come, says

Abu Ayash, from Lebanese expatriates,

while interest in cabins stems mainly from

Beirutis. The largest chalet, around 208m’, is

close to $ l million (with prices between

$4,250 and $5,250 perm’) and the 6m2 cabins

are $25,000 to $30,000. Not cheap. But

there is no rival project on the horizon.

Score one for SMGH

The Saudi-run Societe Mediterraneenne

des Grands Hotels (SMGH) has finally

received permission to demolish the old

Hilton, amalgamate the plot with an adjacent

one and keep a built-up area (BUA) of over

31,000m’ on the combined site. That clears

the way for a new 20-storey Hilton.

The company bought Mi net el Hosn plot

111 – complete with the 27,000m’ ruined

hotel – in 1980. When the Solidere master

plan came into effect, the appraised value

of the site was around $ 11 million, but the

owners decided to keep it rather than take

Solidere shares. SMGH then paid $4 million

for the adjacent plot with 4,300m’ of

BUA. Under current regulations, new

build on I LI would have been restricted to

around 10,000m’, but the council of ministers

has granted an exception and

allowed the combined site to retain the

existing BUA of 31,300m2

It adds up to a shrewd move by the owners.

If they had bought at current Solidere

prices, they would have paid around $31 million

for both plots. Construction will take

around three years. The company is confident

that Lebanon can accommodate more

five-star hotels in addition to the Phoenicia.

Building a

bad reputation

Architect Charles Hadife had a shock in

June when he opened a newspaper

and saw a picture of his home in Beit

Chehab house. “A traditional Lebanese villa

developed by the Hayek Group,” he read. Not

true. Hadifeh did the renovation himself.

The newspaper explained that the Hayek

Group is using the Internet to market themselves

to Lebanese expatriates, offering services

from brokerage to engineering, finance

and legal advice.

Hadife was livid. “I sent someone to

Hayek group asking if I could buy the house

– they said they’d sold it.” EXECUTIVE contacted

the Hayek Group and asked where to

find the house and whether Hayek renovated

it. “I think it’s in Beit Mery or Broummana,”

said the receptionist, “and no, that’s not one

we did.” Strange, then, to choose a house that

has been featured in international architecture

magazines and belongs to one of Lebanon’s

best-known architects.

Southern bargains

The market is even more sluggish in the

South than in Beirut. A 1995, 320m’

duplex with four bedrooms, three bathrooms

and five balconies on the edge ofTyre can be

yours for just $80,000 – and yet it’s been on

the market for several months. The brokers are

Cedarweb (www.cedarweb.com).

Real estate in the south declined with the

Israeli attacks of 1996. The stagnation, says

Tyre developer Ibrahim Mourtada, has been

not so much in prices – which have fallen up

to 20% since 1996 – as in the delay or

amount of a fust payment. Smaller units of

around 120m’ are about $250 per m2, with

new duplexes fetching $320-$350 per m2

This suggests the Cedarweb duplex is a bargain

– provided you have the necessary: It’s

a cash sale with no credit facilities.

EXECUTIVE has teamed up with international real estate consultants Healey & Baker to provide information

about market activity in Beirut and its suburbs. The real estate listings change monthly and

are updated quarterly. The following profiles will be revisited in February.

The BCD residential market is currently skewed by Solidere’s pricing strategy at Saifi,

which is to sell at $1 ,750 per m’ (base) and rent from a base of $85 per m’ – a strategy

followed by the company in order to attract residents downtown when clients are unwilling

to buy at these prices. The rate outside Saifi is around $1,500 perm’ for sale and something

over $100 perm’ for rental. It will be interesting to see how this develops over time,

especially as approximately 65% of BCD is zoned for residential.

After all the delays, and the ups and downs, the market in BCD now seems to be

finding its level. Refurbished offices are fetching between $150 and $175 perm’ in

annual rental, and new build, like the Atrium, is going for up to $250 per m’. Demand

is now focused on new build (especially from international companies), with less for the

renovated buildings.

Solidere’s target price for retail is $5,000 per m’ for sale and $500 per m’ for rental.

The highest price achieved so far for retail downtown appears to be $9,000 per m’

in the Atrium, where proximity to the souks and Banks Street has proved a crucial factor.

The cheapest ground floor retail is available for less than the Solidere target. This

is very much a market that will change quickly, especially when the souks project

comes on stream.

Ever popular for homes, Hamra is a genuine community with local amenities and a

busting, cosmopolitan atmosphere. The cheaper residential is the older buildings,

and there are some bargains here for those seeking character rather than up-to-the

minute luxury. Parking problems, traffic and honking horns will always limit the potential

for growth.

Hamra is mixed as a business area, just as it is in retail. There are no obvious benchmarks

for pricing offices. While there is attraction for some businesses to be in such a busy area,

others – especially international companies – will be deterred by the traffic congestion, the

very low number of up-to-date office blocks and the general lack of purpose-built parking.

I n the best locations, retail prices in Hamra remain high. At the same time, there are a

number of badly designed malls that have fallen into disrepair. The opening of the

Crowne Plaza should give Hamra a big lift, adding to the boost already given by names

like Starbucks, lntimissimi and The Body Shop. Hamra will endure the opening of the

souks downtown if it can continue to offer impulse, easy-access shopping. Don’t

expect large stores in the area.

Mar Elias became a popular retail destination during the war, and subsequently has

suffered because of Verdun’s proximity. The development of retail downtown will

lead to a further deterioration. Housing in Mar Elias – including new build – is of mixed

quality and not helped by the large amount of property let at old rents, which act as a

huge disincentive for owners to carry out repairs, much less improvements. Most rental

is at the medium level.

0vercrowded, congested, dirty and

literally falling apart, Hamra street

bears little resemblance to the

fabled upscale shopping and nightlife hub it

was less than three decades ago. Lined with

chic boutiques and elegant sidewalk cafes, the Champs-Elysees of the Middle East – as it was

once called – was the grande dame of Beirut

prior to 1975. But the war rubbed off most of

the area’s luster. “The Christian residents,

fearing for their lives, fled the area,” says

Walid Noshie, president of the Hamra Trade

Association. ‘The Kuwaiti and Saudi owners

of buildings and businesses abandoned their

property, leaving janitors in charge of everything.”

Hamra was left to deteriorate. Stores

are run down, cafes cater to a seedy clientele

and the formerly lavish movie theaters now

screen soft porn flicks to a crowd of Syrian and

Egyptian laborers.

Younger, trendier shopping and business

centers have taken over the role Hamra once filled.

Verdun is Beirut’s Fifth Avenue, with

high-class boutiques and upscale shopping

centers, while Ashrafieh is the undisputed

center of the capital’s nightlife – Hamra is virtually

dead after sundown. North of Beirut,

Kaslik provides yet another elegant shopping

venue and a good selection of restaurants and

11.ightclubs. What’s more, since most Hartlra

property owners are not even in Lebanon –

while many residents are still paying ridiculously

low old rents – there has been little

incentive to rehabilitate or redevelop the

area. At the same time, the government has

made no attempt to reinvigorate Hamra and

its image. The street now offers a sad picture

of urban decay.

Despite all its faults, Hamra can still lay

claim to some of the capital’s most prized

real-estate. The average sale price for residential

space in the area is between $500 and

$1,000 per m2, while retail prices range

from $2,000 to $6,000 per m2

• This compares to Ashrafieh, where residential runs from

$600 to $ 1,500 per m1 and retail averages

between $2,500 and $5000 per m2

. In Verdun residential apartments cost between

$850 and $1,300 per m2, while retail goes for

$7,500 to $10,000 per m2

.

In the last few years Hamra has become an

attractive spot for investors. Starbucks, The

Body Shop, Grand Stores (GS), Calzedonia

and lntimissimi have all set up shop along the

busy street. The Crowne Plaza hotel, opening

in June 2001, is the biggest real estate project

in the area. The hotel will contain 200

rooms, two movie theaters, a huge shopping

arcade, six conference rooms, three banquet

halls and a food court with seven restaurants.

General manager Georges Aoun firmly

believes that Hamra is on its way to

regaining its past glory. “Hamra is in a prime

location,” he says, “and the area is changing.

It will go back to what it was before the war.

That’s why we’re building the hotel.”

Hamra may no longer symbolize the opulence

of Beirut, but the street is still one of

Lebanon’s biggest hubs of activity, surrounded

as it is by universities, hospitals,

banks and hotels. It is near downtown,

Verdun, Ashrafieh, the sea and the airport. Its

proximity to the American University of

Beirut, Lebanese American University and

Haigazian University has helped to buoy

rental prices. As has the Lebanese tradition

of holding onto property – even in a recession

– kept real estate prices artificially high.

Selling today wouldn’t catch the price that

most owners are holding out for. ” Prices in

Hamra have technically declined,” says

Noshie. “But since some landlords and

homeowners don’t need the money right

away, they prefer to hold on to their property

until there is an upswing in the economy.”

But Hamra’s biggest asset is undoubtedly its

charm. “Hamra is the only street in Beirut

where you have Muslims and Christians, rich

and poor,” says Noshie. “It’s the only city

street where you have decorations for both

Ramadan and Christmas.” In Hamra, he

explains, all of Lebanon’s sects intermingle,

regardless of personal income. “Eventually,

downtown will look like Europe, but Hamra

will always look like Lebanon.” The area’s

nostalgia is also a major draw. “People who

used to come to Beirut before the war still want

to stay in Hamra,” says Karim Ibrahim, managing

partner of the property management

firm Operators. “It’s the memory of Hamra

that accounts for its appeal.”

Syrian painter Khaled Takreti comes to

Beirut every other week for a two-day getaway

from Damascus. He always stays in

Hamra. “Some streets are more fashionable

or upscale than Hamra,” he says. “But that’s

not what I’m looking for. Everything I need

can be found in Hamra. There are sophisticated

and common people, shops are varied

and have reasonable prices. And there are

good movie theaters and lively cafes.”

During his Beirut sojourns, Takreti stays at

the Al Sultan House, near the St. Michel

store, where the rate per night is a mere $30.

Hamra now welcomes a certain kind of

visitor – mostly Arab tourists who drive to

Lebanon and want affordable shops and

cheap hotels. “Hamra is Like Mar Elias and

Furn El Chebak. It’s a lower-middle class

shopping area, where customers can argue

about the cost of an item and pay 20% less

than the listed price,” says Ibrahim, adding that

new investments in Hamra cater to mass

market shoppers and not to the upscale travelers

who came in the ’60s and ’70s.

Thanks to the heavy foot traffic in Hamra,

store owners rely on high volume sales rather

than big profit margins. According to Noshie,

the GS branch in Hamra has higher turnover

than in any other location. “In Verdun, you

have one customer who comes in and spends

$ 1,000. In Hamra, 500 customers come in and

spend $100 each. That’s five times more

money than in Verdun,” he says.

Even though Hamra has retained a certain

allure and real estate prices remain stubbornly

high, poor infrastructure, lack of parking,

congestion and the ugliness of many buildings

will probably prevent a major renaissance. But

in a decade or two, when Solidere fills up and

becomes too expensive for the average resident

and retailer, the overflow will hit

Hamra, and the historical street will be rediscovered

by a new generation of Beirutis