The long delayed and much anticipated southern section of the Beirut Souks is finally open. On October 2, the public was given its first opportunity to wander through and visit the few shops that have opened, with others to follow suit before the souk’s grand opening at the end of the year.
Rami Ariss, the land, sales and real estate leasing division manager at Solidere, the developer behind the project, said that the reason the Beirut Souks had a soft opening is to respect the arrangements with tenants and the beginning of the fall season.
“When you open an area like this, you have to respect the fashion and the season… so we respected the requests of the tenants to be ready at that time,” explained Ariss. “So if they are not ready, that’s their problem.”
However, some stores are delayed because of the long approval process they had to go through in order to finish setting up.
“[The management] of the souks doesn’t give quick approvals. From our side, we were ready for quite a while but I think they have a long process, so it takes some time,” said a tenant who was supposed to open in September but has been delayed until the beginning of next year.
Still, the Souks did miss the summer shopping season and all the shoppers that come with it.
“We wish [we had] opened a long time ago, but with everything we have faced, it is good we reached this stage this month,” said Ariss.
The southern part of the souk includes 200 retail stores — 49 of which are in the Gold Souk — and 17 restaurants, with Solver, the Met and Megnet scheduled to open by the end of 2009. Solidere kept the streets’ historical names in order to “safeguard the souk’s historical street grid” said the company, with names such as Souk El Tawileh, Souk El Jamil, Souk Arwam, as well as the Intabli and the Ajami squares.
The project’s northern part will be handed over progressively over the next two years, said Mounir Douaidy, general manager and chief financial officer at Solidere. It is divided into two phases, the first featuring a 14 screen cinema entertainment complex, while the second will include a major department store.
The project is to cost $300 million and is financed by Solidere’s own resources, said Douaidy. According to Asharq Al-Awsat regional newspaper, the value was originally $120 million, but the project’s delay more than doubled its cost.
A 10-year lag
Originally, the idea of reviving what was once the most popular shopping destination in the capital started in the 1990s, and Solidere applied for the construction licenses in the second half of the decade. Beirut Souks were set to open in 2000, but were postponed due to “licensing delays arising from political issues,” said a source informed about the project. During that time, the only part under construction was the underground parking, until Solidere finally received the license in 2004 and works began. The Souk’s construction was again delayed by the 2006 war and subsequent political instability.
Trouble in the Gold Souk
The project is finally open, but there are signs of conflict brewing in the Gold Souk between Solidere and the Syndicate of Expert Goldsmiths and Jewelers in Lebanon (SEGJL). According to Naim Rizk, the president of the syndicate, Solidere offered to sell stores and offices at the Gold Souk in 1998 priced between $7,000 and $8,000 per square meters.
“They gave us 10 days to decide, and around 250 applicants applied,” said Rizk.
One-hundred-and-twenty of those applicants were accepted and paid 5 percent of the price, agreeing to pay 20 percent more after six months (when they would also sign the purchase contract), 20 percent on delivery and the rest over five years.
After six months, Solidere refused to receive the next payment, according to Rizk, saying that there was a delay in the license and the applicants should wait. Since then, the syndicate has had numerous meetings with the company, added Rizk, which stalled and asked them to wait. Three months ago, he said Solidere changed its mind and wanted to buy back the stores, offering $2,000 per square meter for shops and $1,000 for offices.
“That was a hit on the head,” said Rizk. He explained that the jewelers refused to sell, and wanted their shops to be delivered. Then the syndicate met with President Michel Sleiman and speaker of Parliament, Nabih Berri, who both said that they would work on the issue. Since then, negotiations have restarted, but Rizk says most of the applicants still refuse to sell. “Even if they give me $100,000 per square meter, I don’t want to sell,” he said.
Solidere claimed that in 1998, the company did not offer the plots for sale, but that the syndicate sent in applications with checks amounting to 5 percent of the total price as a goodwill gesture — hence there is a the disagreement over the interpretation of the 5 percent paid. Since there were no contracts signed, the syndicate does not yet own the shops and Solidere still has the right of ownership. This year, the board of directors at the company met and decided not to sell anymore, and offered each of the applicants a compensation amount, which some 20 of them accepted. Solidere is currently renting the shops to tenants, since they are still owned by the company, and the Gold Souk is expected to open soon.
Beirut Souks by the numbers
Shopping for all classes?
What differentiates the Beirut Souks from the rest of downtown is that they cater to both the high and middle-income segments of the market. “We did it to attract as many people as we could,” said Ariss.
To achieve this, Solidere formed a new company called Beirut Real Estate Management Services (BREMS), in partnership with the Abu Dhabi-based Aswaq Management Services (AMS). Ariss explained that the know-how of AMS and BREMS established the right mix for the Souk.
“The most important thing in a mall is to have a good product mix and tenant mix,” said Elie Harb, president of Coldwell Banker who is currently marketing several retail projects in Lebanon. He added that once the food court and the cinemas are open, the number of customers will increase, as visitors do not frequent malls only to shop but also to enjoy the entire experience of food, shopping and entertainment.
Luxury brand attraction
Beirut Souks will be an attraction to both Lebanese and foreign shoppers, and thus international brands have seen it as a good locale to open their high-end boutiques and showcase newly-launched products. Eric Vergnes, Middle East general manager of Tag Heuer, said the company invested some $250,000 in its Beirut Souks boutique, which is set to open in a few months. “It has been a long time [that] we wanted to open a boutique in Beirut,” he said.
The average leasing price for shops is between $900 and $1,500 per square meter per year, depending on the location, size and the time when it is leased. Ariss also explained that according to contracts, the rents will increase around 5 percent in three years.
Ets. H. Atamian, retailers of several high-end brands, are opening four boutiques in Beirut Souks (including Tag Heuer). Barkev Atamian, the business manager at the company, said that $250,000 is the minimum brands are putting into their shops. “They are investing a lot because the Souks are going to have high standards,” he said. Barkev added that each boutique will have new editions and new products that will be introduced to the market.
Souks lack link to the past
When they opened to the public, many expected to see the historical souks revived — buildings separated by narrow streets, people gathered around flower shops and butchers, and both fancy and cheap textiles stores catering to both the affluent and the less well-off.
There has been much disappointment and heavy criticism, however, from local media, the general public and even political figures. Member of Parliment Walid Jumblat said at a press conference that the Beirut Souks is not linked in any way to Lebanese history and the people’s memory of the past.
Former Minister of Finance Georges Corm also told Al Akhbar newspaper that “it is a shame to call it a Souk. It became a huge Mall,” adding that it follows the example of some Gulf countries which destroyed their countrys’ heritage and replaced them with giant shopping malls.
On the other hand, there were others who appreciated Solidere’s efforts. Caretaker Prime Minister Fouad Siniora praised the project and congratulated the company on its historical accomplishment, according to Ad-Diyar newspaper, while also expressing his happiness with the flow of Lebanese shoppers and tourists into the Souks.
Karim Makarem, director at Ramco Real Estate Advisors, said even though the new souks are not related to Beirut’s historical image, they will redefine the Beirut Central District.
“It has been dead for many years, and you can already see a large amount of people at the souks,” he said. Makarem added, however, that Soldiere should have waited until the end of the year to open to the public because construction work is ongoing and many stores have yet to open.
