Illegal buildings on public property
Security forces in Lebanon are cracking down on the illegal construction of residential buildings on public land. Particular areas of concern are Hezbollah-controlled regions in the southern suburbs of Beirut and south Lebanon. According to As Safir, the Ouzai district was constructed entirely on public property while nearly 1,000 residential units were built on thousands of acres of public property in southern Lebanon. On April 18, six policemen in the southern suburbs of Beirut were injured while attempting to evict the occupants of illegal houses. A similar incident on April 21 in Tyre left two civilians dead and two others wounded by police gunfire. According to the Associated Press, caretaker Prime Minister Saad Hariri indicated that Hezbollah has turned a blind eye to the construction. Hezbollah defended itself against the accusation, urging officials to severely punish such violations.
Syrian tycoon Makhlouf in the spotlight
Last week, London-based World Finance magazine announced that it was reconsidering an award it had presented in March to Syrian businessman Rami Makhlouf, calling it “appropriate to factor in the wider political agenda” after Syrian protestors have been widely vocal about his perceived corrupt business dealings in the country. Makhlouf, the 41-year-old maternal cousin of Syrian president Bashar al-Assad, was commended for “visionary leadership and contribution to the Syrian economy” through his holding company Cham Holdings (Syria’s largest private company), which includes businesses ranging from aviation to telecommunications, energy and banking. Makhlouf’s businesses control more than 60 percent of the Syrian economy. His main property group, BENA holdings, is developing mixed-use, resort and hotel properties on a total of more than three million square meters of land from Aleppo to Damascus. In an email to the Financial Times, later published in an April 20 article, Magda Sakr, chief executive officer of Makhlouf’s telecommunications firm Syriatel, said that “Makhlouf is a businessman and is therefore seeking — as any serious businessman — to get investment opportunities… The fact that he is ‘well connected’ does not make him a criminal who has to justify each contract he gets.” The email went on to ask, “Is somebody going to claim that Mr. Makhlouf’s success was due to him using Syrian intelligence officials to intimidate the Syrian public to use the services of [his] companies?” Makhlouf has been widely criticized by the international media and was sanctioned by the United States Treasury in 2008, banning him from operating with any American person or business.
One big hotel purchase
Monaco resident and Lebanese businessman Toufic Aboukhater has coughed up $643 million to Morgan Stanley Real Estate Funds (MSREF) for seven InterContinental hotels in France, Vienna, Amsterdam, Madrid, Rome, Frankfurt and Budapest, according to a report by the Reuters press agency. Arguably the most prized asset in the portfolio is the Carlton Hotel overlooking the Mediterranean coast in Cannes. MSREF had bought the hotels in 2006 for $925 million using a debt-heavy strategy, with Barclays Capital organizing an assortment of lenders to complete the deal. The reclusive buyer once owned London’s Dorchester Hotel and Monte Carlo’s Grand Hotel, in addition to others throughout Europe.
Eco-design is flourishing
The Build it Green conference held at the end of March highlighted the vitality of eco-friendly living in Lebanon. Host to more than 300 real estate professionals from Lebanon and the Middle East, the conference addressed several aspects of green building. Featured at the conference was a new project by the event sponsor Greenstone. ‘La Broceliande’ in Yarze, outside Beirut, is to be Lebanon’s first residential BREEAM (an environmental assessment method and rating system) green-certified building, scheduled for completion by mid-2012. Fouad Hanna, an architect with Dagher Hanna and Partners, who worked on the La Broceliande project, emphasized the increased demand for green construction in Lebanon. “The interest that we find today is phenomenal compared to even just a few years ago,” he said. “Though consumers focus on quality and location when making purchasing decisions in Lebanon’s real estate industry, quality living and energy cost saving through environmentally-friendly architecture are gaining popularity.”
Jordan retains value
Despite the political unrest in the region, Jordan’s property market has not experienced dampened prices, according to a first quarter report from property consultancy Asteco Property Management, with some residential sales transactions exhibiting higher prices. The report noted that during the first quarter of 2011 the activity of sales and leasing of small and medium sized apartments has kept the same pace as in 2010, partly due to scarcity of land in high-demand areas and low housing budgets. “The Jordanian government moved swiftly in adopting policy changes… [and] as a result of these changes, which included limitations on price increases and the waiving of transfer fees, Jordan’s property market has shown little sign of slowing,” said Elaine Jones, chief executive officer of Asteco Property Management. However, average apartment sale prices in Amman’s 4th Circle street have decreased by 1 percent to $1,340 per square meter compared to an average price of $1,481 per square meter in Abdoun, the most expensive residential area in Amman.
Egyptian land mogul detained
Former Egyptian housing minister Mohammed Ibrahim Suleiman was arrested by Egyptian Authorities on April 6 for allegedly awarding government land to real estate developers in the country for less than fair market prices, according to the Assocated Press. Suleiman, who is the second former housing minister to be arrested since the fall of the government, is believed to have approved biased deals while in office from 1993 to 2006, generating the possibility that land transactions made under previous governments may be annulled, much to the dismay of some regional real estate investors. Authorities also arrested Egyptian businessman Magdi Rasikh, accusing him of purchasing public land through a deal brokered with Suleiman, which indirectly lost the public purse some $100 million. Property companies have already been battling a series of legal challenges after a court ruling last year that an earlier land deal made with the country’s biggest developer, TMG Talaat Moustafa Group, was illegal.
Coughing up for the coppers
Construction company Saudi Oger – owned by the family of the Lebanese Caretaker Prime Minister Saad Hariri – plans to finance the construction of police training facilities in Saudi Arabia with a $2 billion syndicated loan. Saudi Oger last participated in the loan market in August 2010, borrowing $250 million via Credit Agricole, which will mature in December 2014. Bank sources claim that Saudi Oger has nearly reached the limits of its credit lines and has been trying to diversify its financing beyond domestic banks. According to Maktoob, Deutsche Bank has been attempting to put together a syndication of small banks to provide the loans. Similarly, lenders have each been asked to contribute $200 million.
