Hold on Latakia
Mass protests and domestic unrest in Syria have caused investment company Qatari Diar, the real estate arm of the Qatari Investment Authority sovereign wealth fund, to temporarily cease its projects in the country, including the $350 million Ibn Hani Bay Resort project in the city of Latakia, according to a May 8 press release. Construction on the resort began in January 2010 and covers more than 244,000 square meters along the Syrian seaport. Qatari Diar’s Chief Executive Officer Mohammed bin Ali al-Hedfa, told Doha’s Al Arab daily newspaper on May 5 that the company remains committed to its projects and plans to resume production on the resort and its commercial and residential real estate project in Damascus once the situation stabilizes. Meanwhile, United Arab Emirates retail builder Majid al-Futtaim told Executive in a May 19 email that the first phase of its fully-owned, $1 billion investment in Khams Shamat, its largest project in the region, is still due in 2014 after breaking ground late last year, and that, “The master plan is being approved by the ministry of tourism and all staff and consultants have been chosen.” The hospitality section of the project will include the Kempinski Hotel, Crowne Plaza and Novotel Hotel.
Seafront and BCD in demand
Property advisory firm RAMCO’s May 1 report announced that 22 new residential buildings are being constructed on the Beirut seafront, extending from Ain Mreisseh to Ramlet El Baida, with a total sale expectation of $850 million. The individual apartments average 525 square meters (sqm) in size, with the smallest at 310 sqm. Prices on the first floor start at $7,000 per sqm and increase to $10,000 per sqm on upper floors, with 65 percent of projects already sold. In the Beirut Central District (BCD), five sizeable projects are being built at a value of $1.7 billion and are slated to start delivery in 2014. The report noted that the gap in prices between the BCD and other in-demand locations in Beirut has decreased due to strenuous competition between the suppliers of residential units.
Illegal construction crackdown continues
On May 5, Military prosecutor, Judge Saqr Saqr, charged 12 individuals with obstructing the police after they responded “violently” to a police campaign to curb illegal construction on public property in the southern Beirut suburb of Ouzai. According to Agence France-Presse, 130 illegal constructions had been demolished in Beirut’s southern suburbs and further south of the city by May 10. Particular focus has been put on the area that borders on Rafiq Hariri International Airport. Caretaker Interior Minister Ziad Baroud told An Nahar that illegal construction by the airport constitutes an “encroachment on aviation safety”. Hezbollah and Amal officials have publicly supported efforts to curb illegal construction, despite the fact that the majority of targeted areas are within their political strongholds. Caretaker Speaker of Parliament and Amal official Nabih Berri told As Safir newspaper on May 3, “As long as I am alive, building violations won’t be legalized anywhere. The issue can’t be solved through a settlement or compromise.”
Saraya still building in Jordan
In a retaliatory press release on May 4, Dimah Khalili, senior manager of corporate public relations and investor relations of Saraya Jordan (a subsidiary of Saraya Holdings), refuted an article published by Al Bawaba the day before which claimed that Saraya Jordan had dismissed all its staff and would discontinue operations, including its 634,000 square meter tourist and mixed-use project, Saraya Aqaba. She confirmed that the parent company, Saraya Holding, would complete its projects in Jordan and Oman, after ceasing other developments in Sochi, Russia and Ras al Khaimah in the United Arab Emirates in the last two years. Khalili said: “The company has undertaken additional measures aimed at ensuring its continuity under prevailing conditions, including the re-organization of the company’s operations and the reduction of its operating expenses.” However, the initial completion date of the first quarter of 2011 has passed and a new date is yet to be announced. Saraya Jordan signed an agreement a year ago with the Social Security Corporation, Arab Bank and the Aqaba Development Corporation to build the touristic project. Lebanese caretaker Prime Minister Saad Hariri is chairman of Saraya Jordan and his family’s firm, Saudi Oger, is the developer-contractor.
Humbling indicators
Confirming the salon-chatter around town that real estate has taken a u-turn since its skyward rise in the last two years, the number of transactions in the first quarter showed a 21 percent fall compared to the same period last year, to 17,373 sales. Sales to foreigners, the backbone of the luxury residential component, have fallen more than 30 percent in the first quarter, which many attribute to civil unrest in the region and the lack of a government in Lebanon. The figures released by the General Directorate of Real Estate Registry and Cadaster, and published in a Bank Audi report, show that the value of sales fell only 14.5 percent. The price-stickiness is largely due to the fact that developers keep prices high even if demand withers, in order to cover the high cost of land, especially as the number of available plots diminishes. On the supply side, contractors seem to be ordering less cement, as deliveries fell 6.7 percent in the first quarter of the year compared to the same period last year, reducing tonnage to 1,035,000, according to figures from Banque du Liban, Lebanon’s central bank.
Toward the sky
Lebanon-based construction giant MAN Enterprises officially signed the main construction contract, worth over $100 million, to build what will become Lebanon’s highest residential tower, Sama Beirut, developed by Antonios Projects. Chairman of MAN Enterprises, Michel Abi Nader told Executive that there were 10 other firms involved in the tender, most of which were Lebanese along with four from the United Arab Emirates. He predicts construction will take 33 months. At the May 17 press conference announcing the contract, founder of Prime Consult Massaad Fares said that the 50-story, $200 million mixed-use tower has already sold a fourth of its units, though there were no sales in the last three months. For financing, Prime Consult has partnered with BBAC to provide loans, but so far none of the buyers have utilized a home loan on the offered apartments, which range in price from $5,600 to $9,000 per square meter. CCC ordered to pay up, again
In the latest installment in the largest and longest contempt of court procedure in the Commercial Court at Brick Court Chambers in London, a final judgment was handed down on May 5, whereby $75 million was ordered to be paid to Jordanian businessman Munib Masri by Athens-based construction giant Consolidated Contractors Company (CCC). Masri had accused CCC and its majority-owner, Palestinian billionaire Said Khoury, of failing to deliver his portion of an oil concession in Yemen that the two parties were involved in. Litigation has also been ongoing in Lebanon, where CCC is incorporated. CCC has attracted controversy since a British high court labeled it a “complete disgrace” for failing to pay court-ordered fines in 2010. Marwan Salloum, vice president of CCC and a close associate of Saif al-Qadhafi, son of the embattled Libyan leader, was also scrutinized in a May 15 article in the Daily Telegraph for controversial business dealings on behalf of CCC. In related news, Masri revealed on May 16 that his grandson, Munib Masri Jr, a 22-year old student at the American University of Beirut, had been shot and injured during the Nakba (catastrophe) day clashes between Israeli forces and Palestinian protestors at the border in Maroun Al Ras the day before. Six unarmed demonstrators were confirmed killed by Israeli forces and more than 100 others were wounded.
