RESTORATION UNDERWAY IN LEBANON
Like a phoenix rising from the ashes, the once Phoenician kingdom of Lebanon is rebuilding itself once more. With its capital voted one of 12 cities of the future by Savills, Cityscape takes a closer look at what the Levant country has to offer investors.
Nestled in the eastern corner of the Mediterranean, boasting sandy beaches framed by snow-capped mountains, Lebanon has always had a lot to offer in terms of natural resources. Couple this with stunning art-deco architecture and it is easy to see why the country’s capital, Beirut, was once referred to as the ‘Paris of the Middle East.’
Yet, a chequered political past and a potentially unstable future, thanks in part to neighbouring Syria, makes Lebanon far from a safe bet when it comes to real estate. However, for those willing to roll the dice the rewards could be great – both financial and in terms of cultural and natural attractions.
Civil war raged in Lebanon from 1975 to 1990 and many of the country’s landmark buildings were razed to the ground. Further destruction followed the 2006 Israel / Lebanon conflict, which also saw large-scale devastation to the country’s infrastructure.
However, Lebanon is a resilient nation, and its reconstruction is well underway as the Lebanese pull together to recreate their country and re-establish Beirut’s position as the Paris of the Middle East.
A young population, which is entrepreneurial in spirit, aims to bring back the trading function of the city in the Middle East.
The country boasts a burgeoning culture and arts scene, and a re-emerging tourism market thanks to its Mediterranean setting.
It has a relatively open and liberal mindset, and is somewhat western in its outlook. Add to that a growing GDP and population, and the country is being seen as a clear alternative to Dubai and Abu Dhabi for regional investors.
New development is sparking interest in Lebanon’s real estate market once more.
Joint stock company Solidere (Society Libanaise pour le Developpment et la Reconstruction de Beyrouth) has been heavily involved in construction works in the capital, with its latest master plan – Beirut City Centre (BCC) – set to revitalize 191 hectares of prime real estate.
The aim of BCC is to provide an urban design framework for new construction alongside the restoration of preserved and historic buildings, leading to integration of old and new, tradition and innovation.
The development includes business, institutional, residential, cultural and recreational facilities with the aspiration of creating a 24-hour active downtown.
According to Solidere: “The master plan is conceived not as a single, homogeneous central district but as a cluster of city quarters or sectors. It capitalises on the inherent values of the site. Reflecting the site topography and natural features, street patterns, past neighbourhood structure, and concentrations of preserved fabrics, it maximises views of the sea and surrounding landscapes including bays, hills and mountains.”
It aims at preservation of townscape features and subdivides Beirut city centre into 10 planning sectors – eight in the traditional city centre and two in the Waterfront District, each with its own detailed plan and regulations, as well as its own unique character.
Maximising on the Mediterranean
Also under the remit of Solidere is the Waterfront District. The 73 hectares of reclaimed land, enclosed by a terraced sea defence system, will offer a built up area of 1.7 million sqm to form a multiuse district with distinctive architecture.
The development density will be higher than in the traditional city centre, with nearly 60% of the reclaimed land set aside for public spaces. These consist of a waterside city park, sea corniche, quayside and sea promenades, squares and gardens, plus walking, jogging and cycling trails.
Further coastal development is taking shape on the seafront between Zalka and Dbayah, according to Bank Audi’s Lebanon Real Estate Report, published in September 2014, which cites 50,000 sqm of office space under construction.
Retail development in the pipeline or just come to market include the Spot C Mall in Choueifat with 47,000 sqm of gross leasable area (GLA), Airport Mall in Aramoun with 60,000 sqm GLA, and Spot Mall in Nabatiyah with 14,700 sqm GLA.
Meanwhile, UAE developer Emaar is working on a 655,000 sqm community in the mountains above Beirut called Beit Misk. With some homes already handed over, the development offers residential, retail and public spaces in a sustainable neighbourhood just 18 km from the capital.
It is little wonder then that Savills listed Beirut as one of 12 New Frontier cities in its Candy GPS report for 2014.
“It is, obviously, a potentially high-risk ‘buy’ and not for the faint hearted, given the geo-political risks of the region, especially neighbouring Syria. But there are features of the city that are compelling. The risks of another civil war, property destruction and security risks are still present so it is a high risk strategic play in a high-risk region, but would diversify returns away from the fully-priced cities of Dubai and Abu Dhabi and might make particular sense for investors already within the region, especially those able to take advantage of a holiday home or weekend retreat property in Beirut,” said Yolande Barnes, Director, Head of Department, Savills World Research and Co-Author of the Candy GPS report.
According to Barnes, since the start of restoration works in the capital in 1990, demand has arisen for a cosmopolitan, cultured, historic city in the Middle East that isn’t Dubai.
The majority of real estate investors are locals and individuals from the Middle East, with Barnes pointing to areas in central accessible and historic areas of the city like Sursock or Saifi village offering the best residential values, while the city centre offers the best opportunities for commercial property.
“There is strong retail, leisure and hotel demand as well as limited residential supply potentially driving real estate values,” she explained. However, Barnes is quick to put in a caveat: “I think the U.S. Embassy still cautions its citizens against visiting Beirut and there is ever-present risk of both the domestic political situation degenerating into civil war again, as well as the conflict in neighbouring Syria and elsewhere in the region, having an impact. The city therefore has to be seen as extremely high risk – as well as high potential.”