In general, the real estate market has not witnessed any changes in prices. It seems on the contrary that many people are now thinking to increase their prices. People believe that prices might shoot up. This is something we are sensing, as we are hearing of more and more commitments of Lebanese living abroad who are willing to come back if the situation improves. This will increase demand for everything. From inquiries we have been receiving after February 14, we noticed that prices are still being maintained by demand. It doesn’t seem that anybody sees this as an opportunity to bargain down prices, which is a very healthy situation.

The retail sector has suffered the most from the upheaval. Whether it is leisure or selling clothes, it is a luxury and people are sticking to their cash in times of hardship. This affects especially the downtown. In a climate of unhappiness people will wait with making new investments into retail space, as will the ones who are buying apartments. It’s normal but I don’t think that this short-term effect will influence the market. All depends on how long the crisis lasts. 40 days can be absorbed. If this crisis lasts one, two, three months, it can easily be absorbed by existing retail tenants. Especially in Lebanon, businesses have to be ready for surprises and a wise business man takes precautions for a temporary difficulty.

In residential real estate and in general, projects that have started are continuing and will not be stopped. Most projects that started in the last years have been pre-sold to 50%, 60%, and 70% prior to completion. These projects will continue, they made their sales, they made their profits. Also in commercial, the rules of the game require pre-lease before starting construction. From practical experience we know that it takes sometimes six months from inquiry until realization of a project.

I don’t think that enough time has passed to see any trend on the real estate market accelerate but we are receiving more inquiries than we had before the current developments. We have gone up from three to four inquiries per week to five or six and sometimes seven, and these are serious inquiries. It is still too early, however, to say what will last, what will continue. If there is demand it will be everywhere and if there is a reduction, it will be everywhere.

One year ago, the biggest buzz in Beirut was over the 100 million square mile Sannine Zenith resort project aiming to transform the barren backside of Mount Sannine into a wonderful world of recreation above the clouds. The project’s sheer dimension, ecological implications and foreign flair of investments stirred up ruckus in public opinion, but even more, it portrayed a golden tourism future for the country. Executive asked Habib Ziadeh, the administrative and financial consultant to Sannine Zenith if the current crisis changed the project’s outlook and where things stand today. 

Habib Ziadeh

Because of the political issues of the day, we are still in a time where nobody is free to talk business. The impact on Sannine Zenith is not yet tangible and we haven’t had enough time to see the consequences on the project. So while views are very subjective now and it is too early to say if the future will be either gloomy or rosy, nobody is panicking. The fundamentals remain in place and are still right. The mountain is still there, the weather is still there, and these are the pillars of the project.

As far as the development of the project, we are in Phase One. We had presented the public with a preliminary master plan [a year ago]. Now we are completing the final master plan, which will take about another month to finalize. This will be followed by another month of working on feasibility and placement issues. In May, we should have some figures.

Lebanon has high flying ambitions for attracting international tenants to base their regional presence in Beirut. Executive asked real estate consultant and broker Michael Dunn, chairman of Michael Dunn & Co, how the market for office space looks today and what scenario could make the country most interesting for foreign companies to locate here.

Michael Dunn

For the moment, there is zero demand. The only area where demand would be strong is for high security compounds with space. In the Beirut area, an isolated building surrounded by a high wall would immediately find a tenant from the diplomatic or corporate side.

In matters of international presence, a lot of companies have been leaving or stopped producing in Lebanon because of the high cost of electricity and similar factors. At the moment, we are losing companies. To attract international firms, I think we need for the whole country to become almost like a free zone. The opportunities are there and Lebanon could boom in a similar way like Hong Kong did in the 1970s. The question is whether the country could implode again. Certain groups want more power. If we can move away from that, all will be happy. We are not there yet, but I am extremely optimistic for the future. 

To assess the level of trust and activity in the real estate sector at the present juncture, Executive inquired about the perspective of a bank on the sector. Elie Azar, marketing manager at Lebanese Canadian Bank, told how the bank is dealing with the issue of housing loans and its own corporate real estate plans.

Elie Azar

We are granting housing loans at a slow pace to evaluate the situation of our customers. A person who wants to invest by buying a house should be relaxed in their decision. envisioning plays a big role in such a decision and at present, this is not the case. For the time being people are focusing on day-to-day problems and no one is pursuing long-term loans such as housing loans. All our own projects are now frozen. We bought nine branches from Al Madina Bank and United Credit Bank, of which we opened three. On the others, we are now waiting for the situation to improve but we are sure and ready to restart all our efforts at the proper time. The bank reflects the genuine impact on the market. All people were shocked by what happened and I think we need the time to restart again. In the US, after 9/11 it took them more than a year to restart. 

I think Lebanon will overcome this current and sad situation of political instability. It will come with free elections and a coherent government. Lebanese, Arab and foreign investors will again be interested in investing in Lebanon. It is true that major projects for residential high rises are concentrated in an area, the hotel district, that is suffering under the current situation too much these days but I am confident that all Lebanese are aware that we must all together be united as our late prime minister, Rafik Hariri, wanted. He was the architect of Lebanon and especially his beloved Beirut. This is why I think that we need time to forgive and forget those who directly or indirectly affected the stability and prosperity of the economic situation in Lebanon by killing the symbol of stability and development.

The Lebanese are now preoccupied with wanting to know the truth about the tragedy. They want stability of the Lebanese Pound and it is very important to have a solution to the current situation by forming a trustworthy government that will lead Lebanon out of this cloudy situation. I think things will soon change, by agreeing on confidence in Lebanon. Syria doesn’t have an alternative to banking in Lebanon and we don’t have any problems with Syrian people. The Syrian customer knows that he is most welcome in Lebanon, we don’t have any problem.