Lodging industry grappling for visitors
For the first time since 2007, Lebanese hotels and furnished apartments experienced a slump in occupants and revenue for 2011, according to the Ministry of Tourism and Byblos Bank research. Visitors spent $104.5 million on hotel and furnished apartments last year, a 17.3 percent fall compared to 2010 figures. Figures representing both the number of people who stayed in such lodgings and the total nights spent show a similar contraction of 15.8 percent and 17.3 percent, respectively. Besides Lebanese nationals, who made up 20 percent of the customers at such lodgings, Visitors from Saudi Arabia and Iraq made up 11 percent and 8.6 percent of clients, respectively, while Jordan, Syria and Kuwait made smaller visitor contributions. While clients from Iraq increased by 12.5 percent year-on-year, the number of hotel guests from Saudi Arabia and Kuwait shrunk by 25 percent each.
Hold on Hotels
One of the largest hotel management groups in the world, Millenium Hotels, has spoken up about curtailing its development plans in the Arab world, notably in response to instability in Syria, Egypt, Tunisia and Libya. “Things have changed dramatically. [In] Syria we were talking to people; [In] Egypt we were talking in Cairo; [In] Tunis we had an [memorandum of understanding] signed, which was affected as well,” Ali Hamad Lakhraim, the president and chief executive of Millennium & Copthorne Hotels (MCH) for the Middle East and Africa, told The National in a February 12 article. The group said that visitor numbers had dropped and that their investors in those countries were in a ‘wait-and-see’ mood until a clearer political picture evolved. Hotel occupancy in Cairo last year fell to an average of 36 percent, a roughly 45 percent drop year on year, according to Ernst & Young. Before the revolution started in Libya, MCH, which manages 120 properties worldwide, had five projects under negotiations in the oil-rich state. After a recent visit to Libya, Lakhraim said he hoped to sign on two of the deals this year as the political situation clears. Even though, according to Lakhraim, “Iraq…is not the easiest market,” MCH plans to build new hotels in the country’s northern cities of Sulaymaniyah and Erbil, and refurbish Sheraton-brand hotels in Basra and Baghdad. Moving to safer waters, MCH plans to capitalize on last year’s 13.2 percent hike in United Arab Emirates hotel occupancy by opening two hotels in Abu Dhabi later this year, in addition to Dubai’s Millennium Plaza hotel which opened in January. MCH is majority owned by CDL Hotels International, based in Singapore.
BLOM housing financing blooms in KSA
In line with growing demand for housing in Riyadh, the investment arm of Lebanon’s BLOM Bank has arranged for a $77.3 million loan to help finance the development of 400 homes in Riyadh, according to a February 11 press release. On February 8, BLOMINVEST Saudi Arabia arranged the project’s financing from the National Commercial Bank on behalf of IBAR development. The total cost of the project is $152.7 million. In addition to its financing role, BLOMINVEST Saudi Arabia also signed a 3-year contract with the main developer, Maskan Arabia, as a development partner. Abdulaziz Alsaghyir, chairman of IBAR Development, said at the signing ceremony that, “The [Saudi Arabian] real estate market has an annual demand for around 200,000 housing units and an expectation of 8 to10 percent growth in real estate investment in the coming period.”
Beirut’s towering property prices
In a study comparing the 2011 prices of 120-150 square-meter apartments across 94 cities, Beirut came in second place in the Arab world, and 50th place overall, with an average price of $3,223 per square meter. As a study on property investment, the Global Property guide looked at high-end apartments in selected areas of the world’s cities that are available for resale. The study collected prices of apartments in Ashrafieh, Verdun, Ramlet El Baida and the downtown district, among others. Noting that gross rental yields have dropped to 4.7 percent and that prices have increased in the Central Beirut district, those concurrent trends would likely be unsustainable. The study placed Beirut at the top of the Middle East and North Africa region for their price-to-rent ratio, or the number of years required for rent paid to equal the property’s sales price. Compared to an average ratio of 16 in the region, it takes an average of 22 years of rent to cover the purchase price in Beirut.
Bekaa to bustle
Lebanon’s Bekaa area will be home to the newly announced Cascada Village, a commercial, retail and entertainment complex to be built upon a 200,000 square meters (sqm) area which includes a 9,000sqm man-made lake, shopping center, offices, amphitheater and restaurants. The project developer is Inter Mall Group, based in Lebanon with operations in North and South America, while the design consultant is Chadi Massaad Group, based in Lebanon with offices all over the MENA region as well as Brazil and California, according to its website. The 150,000sqm shopping center will include a supermarket and 100,000sqm of office and retail space. While the amphitheater will include seats for 4,000 people, a nearby hotel and wedding hall will accommodate for both local and regional parties. As the project is positioned almost halfway between Beirut and Damascus, its website adds that it will attract visitors from Syria and Jordan, and thus will accommodate for over 4,000 cars. Inter Mall Group has 30 years of experience in developing shopping centers, with its largest mall in Venezuela having 300 stores and 175 offices, according to the letter from the chairman, Maurice Torbey, on the project website. Calls made to the Kaslik office of the developer said that this is the group’s first commercial project in the Middle East, and that the group is currently deciding on anchor tenants in the mall.
Qatar’s new snatch
Qatar Holding has completed a real estate acquisition in London’s Canary Wharf district, expanding the UK property holdings of its parent Qatar Investment Authority, the country’s sovereign wealth fund. The holding said in a Feb 17 statement that it bought and leased-back the London headquarters of Credit Suisse at One Cabot Square. The bank will lease the building from Qatar Holding under a long-term agreement that runs until 2034. The statement did not declare a transaction value but The Telegraph reported on January 28 that the Qatar Holding offer was understood to be around $519 million. The Qatar Investment Authority (QIA) already owns 6 percent of Credit Suisse, making it the second largest shareholder, while the wealth fund’s subsidiary owns a 27.7 percent share in Songbird, the major owner of Canary Wharf Group.
Big Mall goes bigger
The largest mall in the world, Dubai Mall, will be expanded by 92,903 square meters (1/12th of its current size), as announced by its developer, Emaar, in mid-February. In 2011, 54 million visitors packed into the mall, and the expansion will include both retail space and hotel rooms. On February 11, Emaar Retail reported that growth in leisure revenue had increased 13 percent in 2011, year-on-year. In other retail news, the United Arab Emirates’ Majid Al Futtaim Properties (MAF), the largest builder and operator of retail malls in the Middle East, announced its fully-leased Beirut City Mall under construction in Hazmieh, will be complete by February 2013 instead of summer 2012, as originally cited. The remarks were made by Alain Bejjani, the group’s head of business development, at a January 27 press conference in Dbayeh concerning Waterfront City, Lebanon’s largest mixed-use community development, a joint venture between MAF and Joseph Khoury Holding. MAF is currently looking for an operator to manage Waterfront City’s 5-star hotel with serviced apartments.
