Despite the political instability, Beirut is witnessing a construction boom which is changing the face of the Mediterranean city. Tarek El Zein looks at what is driving the development.
Something is dramatically changing in Beirut. Forget the political backbiting or the rioting that's business as usual. Forget the tit-for-tat between Hizballah and the Israeli Defense Force (IDF) or the enduring UN investigation into the death of Rafik Hariri; they have been on going forever. What is new is the presence of all these towering cranes, that constant loud sound of construction, the never-ending fencing of just purchased empty lots. It's the changing skyline with the mushrooming of Marina Tower, Beirut Tower, Platinum Tower and the Four Seasons Hotel Tower. It's the continuous announcements of large scale projects such as the $600 million Beirut Gate or the $1.3 billion Phoenician Village. Beirut is quickly being transformed from a calm Mediterranean city with French colonial architecture into a giant building site.
But how have all these real estate investments - which are in large majority emerging from the Gulf region found their way to politically-troubled Lebanon? Why would companies such as Abu Dhabi Investment House or Kuwaiti-based Al Sayer Group take such massive risks by venturing in such a potentially volatile market? Maybe many of these investors sense the time is ripe to invest in Beirut, before land prices increase further. They could be following John D. Rockefeller's thinking that "the way to make money is to buy when blood is running in the streets." Or maybe many of these investors are seeking fresh opportunities outside their home countries to minimize risk by spreading assets. Whatever the reason, one thing is for sure: Beirut is a magnet for petrodollars, which in turn is allowing it to develop at unprecedented speed.
As an indicator to this land-grab hysteria, Solidere, the company in charge of developing downtown Beirut, has said that it sold land worth a total of $1.1 billion in the first quarter of 2006 alone five times more than in all of 2005. The Order of Engineers the authority which issues building permits in Lebanon also stated that new building permits in Lebanon rose by 81.6%, or 3.7 million square meters, in the same period. Naturally, with growing demand and shrinking supply comes a hefty increase in prices. According to a recent study conducted by Lebanese real estate consultancy firm, Ramco, Beirut has taken a direct hit with land prices increasing by 40% to 50% in the first quarter of 2006. Additionally, the study discovered that prices for buildable areas in Achrafieh rose on average from $350 per square meter in 2004 to $500 in 2005, while in the Clemenceau area prices jumped from $400 to $600, and in Jnah from $400 to $700. In downtown Beirut, prices for buildable areas rose from $1,100 to $1,500 per square meter - by far the most expensive prices in Lebanon. And it's unlikely that the boom will lose any steam anytime soon as a large market exists between rich Lebanese expatriates and Arab nationals looking for a vacation home in Lebanon. Unfortunately, most of the apartments currently being developed are too expensive for the average Lebanese citizen. As an example, apartments in downtown Beirut sell at $3,400 to $4,500 per square meter, while along the downtown seafront prices reach $5,000 to $6,000 per square meter. And with most apartments on the seafront ranging between 600 to 1,000 square meters, that would mean an apartment could cost as much as $6 million. No wonder that 60% of these seafront apartments have been bought by GCC nationals.
However, new supply is currently being injected in the market for those who want to live a downtown life, with all the perks included, but cannot afford to forgo of such heavy sums. All along the vicinity of downtown Beirut, new apartment buildings are being erected, be it in Clemenceau, Gemmayzeh, Tabaris or the Corniche showcasing an expansion of the boom from downtown Beirut to other areas. These buildings, although tagged as luxurious, are more affordable to the higher middle-class than those in downtown Beirut.
The single most important effect of this real estate boom will be its impact on Lebanon's tourism sector.
Contrary to the rest of Beirut's concrete jungle, downtown Beirut has a set urban master plan one that calls for the integration of designs by local, regional and international architects. Developers are headhunting for the most prominent names in the world so as to associate them with their lustrous projects. And the names are quickly piling up. Iraqi-born Zaha Hadid has contributed her unique designs to the headquarters of Al-Mawared Bank in downtown Beirut and the Issam Fares Institute at American University of Beirut (AUB).
Internationally renowned Jean Nouvel designed The Landmark, a towering structure unlike any other expected to cost some $150 million when built smack in the middle of Riad Solh Square. Philippe Starck the man behind some of the most beautiful hotels in the world will be designing what he has called his last and most beautiful hotel project in Wadi Abu Jamil, also in downtown Beirut. Rafael Moneo, Ricardo Boffill, Nabil Gholam, Valode and Pistre, Karim Kassar, Nabil Tabbarah, Kevin Dash, Steven Holl, Michael Graves, Arata Isosaki, Kohn Pederson Fox Associates and Lo Mauro & Reggiani Associati are just few of the names that will make up the new Beirut. Even gardens in downtown Beirut have star names behind them, namely Vladimir Djurovic, Olivier Vidal, Machado and Silvetti Associates and Gustafson-Porter. Such a vision by Solidere will truly make the capital a center for architectural creativity.
And the giant construction site is not even close to being finished. Solidere has just recently shifted to second gear by commencing works on Phase Two, expected to last till 2024. Phase Two will initially finalize the construction of the $100 million Souks of Beirut, the redevelopment of the Saifi and Wadi Abou Jamil urban villages and establishing prime new areas in the Serail corridor, hotel district and Ghalghoul sector.
However, the most important part of Phase Two is its focus on developing the Martyrs' Square axis and the new waterfront district, to officially internationalize the downtown project as a whole. Already, two major projects have been announced in Martyrs' Square - one on the south end (Al Sayer Group's $1 billion plus Phoenician Village) and the other on the north end (Abu Dhabi Investment House's $600 million Beirut Gate) while a third is expected to be revealed in the center area of the square soon. These first three projects have closely followed designs that have been sketched through an international urban design competition regulated by the International Union of Architects and won by a Greek team in 2005. (Previous designs that have been selected through this international competition include international landmarks such as Sydney's Opera House and Paris's Georges Pompidou Center). All together, these three projects will cost some $2.5 billion - an impressive sum for an area as small as Martyrs' Square.
In more detail, the Phoenician Village will become a 206,000 square meter development comprising of residential, commercial, entertainment and business centers, while Beirut Gate will have a total built-up area of 178,000 square meters including seven deluxe residential and business centers.
Further towards the sea, Solidere is still working towards completing works on the Normandy landfill, which will allow it to start infrastructure works on Beirut's new and promising waterfront district. The plan is a development of the 2001 planning study by a consortium of U.S. firms including Skidmore Ownings & Merrill for urban design, Sasaki for landscaping and Parsons Brinckerhoff for transport planning. Tagged to become Lebanon's financial and business center, the new waterfront district will also include roads designed to host a Monaco-style Formula One Grand Prix circuit a design which received Federation International de l'Automobile's preliminary technical approval. The waterfront district will give Solidere a fresh stock of land area to sell to investors a total of 73 hectares or some 60% of the traditional downtown area. It is important to note that the design for the new waterfront was the only non-American project to win a Charter Award of the Congress for the New Urbanism.
Solidere's master plan calls for the construction of 1.58 million square meters of office floor space, 1.95 million square meters of residential floor space, 0.563 million square meters commercial, 0.386 million government/cultural and 0.200 million square meters of hotel floor space.
Nevertheless, the real estate boom has not been restricted totally to Beirut. According to the Order of Engineers, Mount Lebanon recorded the strongest growth in terms of building permits acquired standing at a 117% increase while the weakest growth rate was registered in North Lebanon at 35.9%. The order revealed that 71% of land purchases were in Mount Lebanon mainly in Baabda, Aley and Metn regions and 94% of these purchases were undertaken by Gulf investors. UAE investors purchased the most land, followed by Kuwaiti, Saudi and Qatari investors.
However, this entire boom as positive and promising as it sounds does have some weak links. Any visitor driving through the ring road which divides downtown from the rest of the city is in for a shock. On one side rests downtown Beirut with its freshly refurbished buildings and exclusive restaurants and shops. On the other rests post-war Beirut with its dilapidated buildings and chaotic developments an effect which has been tagged the concrete jungle. Such extravagant contrast cannot be healthy as many Beirut is are not only feeling abandoned, but also that the new Beirut is not being built for them. While the boom is certainly good for Lebanon's economy, the government cannot ignore the widening gap between rich and poor through the long overdue economic programs and reforms. It is important that the state tries to bridge this gap by constructing decent infrastructure throughout the whole city, if not the entire country. Instead, the political bickering is continuing and showing no sign of stopping.
© Jordan Business 2006
