Construction glides steadily
Construction work is resuming its upward arch after a slow start in January, shooting up 26.6 percent in February to 1.16 million square meters, registering a total of 2.07 million square meters of construction area authorized by building permits in the first two months of 2011. The most recent February figures, from the Order of Engineers in Beirut and Tripoli, show an 11.5 percent increase in the construction area authorized by permits relative to February of 2010, but the total amount of permits jumped almost 20 percent in comparison to the same period last year. The zone receiving the most construction activity remains Mount Lebanon, for which 682 permits were authorized in February, followed by the South and Bekaa regions. Construction area covered by permits up until February signifies 17 percent growth in comparison to the area covered by permits at this time in 2010. Some however see permits issued as a flawed indicator of the overall health of the real estate and construction sectors as this does not account for cancelled or stalled projects.
Syria hopes to build in billions
Syria will tender $8.4 billion in projects in the second quarter of 2011, a government official announced in the early March. Yasser al-Sibai, general manager of Syria’s Real Estate Development and Investment Commission, Syria’s property industry regulator, told Bloomberg that the commission was in the process of finalizing the tender books for a dozen separate projects totaling 12 million square meters. “We invite more investors to establish companies in Syria and participate in the tendering process, which will be announced in some two months,” said al-Sibai to Bloomberg. “Newly established companies are advised to merge in order to meet our development plans.” The commission has been in existence since 2008, but did not license the country’s first privately owned real estate developer until 2010. Syria has now licensed 24 private developers. Sibai said Syria requires 570,000 new housing units by 2015. But investor response to the to-be-tendered developments (which are set to provide 118,000 units) has been slow, with 35 percent of the investors being non-locals, mostly from the Gulf and a few from Turkey and Iran. An international arbitrator, Kamal Malas, suggested to Bloomberg that Syria’s operating conditions are lacking some of the basic needs for stable operations. “More stability in laws, a clearer vision on behalf of the government, better trained labor force and deeper coordination between authorities are among the issues,” said Malas. It is also unclear how the current unrest sweeping Syria will impact further investments.
MENA construction trillions
A total of $4.3 trillion will be spent on construction in the Middle East and North Africa by 2020, according to a new PricewaterhouseCoopers (PwC) forecast. This estimation represents 80 percent growth over the next decade. In their new report, “Global Construction 2020,” released in March, PwC forecasts global construction spending will grow to reach $12 trillion, experiencing 67 percent growth in the second decade of the 21st century. Jonathan Hook, engineering and construction global leader at PwC, said in a press release announcing the report: “The scale of projected [global] growth in construction output of 67 percent over the next decade from $7.2 trillion to $12 trillion represents a growth of 5.2 percent per annum, outpacing global gross domestic product growth.” According to Hook, the construction industry represents 11 percent of overall global GDP. The report says that Saudi Arabia and Qatar are the MENA growth hot-spots, given KSA’s young population and Qatar’s aggressive government spending in connection with the 2022 World Cup. “Particular emphasis will be placed on social and affordable housing to meet the needs of the growing indigenous populations,” wrote Mohammad Damash, PwC’s real estate, construction and engineering leader for the region in the report. PwC also noted Egypt as a place to look for steady growth. With large public debts, Egypt has passed a law allowing private investment in traditionally publicly funded infrastructure, but recent events may delay this development. Qatar and Algeria will finance most construction from oil and gas exports, the report noted. Squatting chez Qadhafi
A small group of protestors has moved into Saif al-Islam Qadhafi’s home in Hampstead, which is a village within the London borough of Camden renowned for having the largest population of millionaire inhabitants within its boundaries than any other area of Britain. The group, “Topple the Tyrants,” put banners on top of the house with the words “Revolution” and “out of Libya, out of London.” They claimed to the press to be acting “in solidarity with the people of Libya, the people of Cairo, the people of Saudi Arabia.” When asked how many members “Topple the Tyrants” has, group spokesman Montgomery Jones said to reporters: “We’re not doing numbers.” The group has no Libyan members but claims to have “Middle Eastern” membership. A printed announcement proclaiming the group’s squatter’s rights is taped to the $16 million brick house. Though the house is technically owned by a Cayman Islands-registered holding company, the protestors claimed to have received an anonymous tip revealing its location and owner. In the group’s official statement of its intentions, a member who first climbed out of a second story window and down a tree, said: “We do not trust the British government to properly seize the Libyan government’s corrupt and stolen assets so we have decided to take matters into our own hands. The British government only recently stopped actively helping to train the Libyan regime in crowd control techniques… as well as training the regime in repression, British corporations are also guilty of providing the same weapons that are now being used by Qadhafi against the Libyan people.
Beirut offices climb rankings, again
Yet again, Beirut’s office space has moved up in rank in Cushman and Wakefield’s annual survey of office property prices. Beirut was ranked the 28th most expensive in the world and third in the region in the 2011 survey, up from 31st place globally and fourth regionally in 2010. The survey takes into account office space in 68 locations, ranking them based on rent, taxes and expected service charges. Just ahead of Beirut on the list were Warsaw, Dublin and Athens, while Beirut proved more expensive than Tel Aviv, Brussels and Vancouver. The report mentioned that rents in Beirut Central District (BCD) were stable in 2010, as opposed to a decline in other regional markets and the skyrocketing increase in BCD prices in the previous few years. In fact, the region was a global minority as only 16 of the 42 countries covered by the survey saw declining office rents while three saw stable rents.
Out of Libya, on to Iraq
Ay Yıldızlar Construction of Turkey is dropping all of its projects in Libya in favor of aggressive expansion into Iraq. The Turkish company stands to lose $15 million due from the Libyan authorities, according to Construction Week, and has now agreed to partner with Iraqi Cihan Group to build 62,000 residences in the northern Iraqi city of Erbil. The company stopped work on 13 separate projects in several Libyan cities, including Benghazi and Tripoli. The so-called “mega-project” in Erbil will begin with 15,000 residences with total costs of $250 million, said Muhammet Tuysuz, coordinator of administrative management and technical affairs for Ay Yıldızlar. “The negotiations took nearly two years for this mega-project, which will include smart-apartments and one-floor luxury properties,” said Tuysuz, as reported by Construction Week. This initial project will be followed by a second phase resulting in 42,000 residences, also in Erbil. Cihan Group is an Iraqi holding company whose areas of operation include textiles, plastic, paper, trade, automobiles and investment banking. “The total cost will be paid by our Iraqi partner Cihan Group and Ay Yıldızlar Construction will deal with the construction of the project,” said Tuysuz. Iraqi Housing and Municipalities Minister Muhammad Sahib al-Daraji said that Iraq will require two million new residences in the coming four years.
