Shunned by West, Saudis invest in posh Beirut real estate

“We made a big bang,” Movenpick general manager Frank Reichenbach said of the hotel’s opening this summer. “Many (chalets) were bought without seeing the finished product.”

“(But) you can feel the economy is not really kicking… There’s quite a bit of unemployment,” he added.

Just up the street from dirt-poor neighbourhoods in Beirut’s Shi’ite Muslim southern suburbs, glittering new residential towers and luxury hotels are rising on the city’s seafront.

Saudi Prince Alwaleed bin Talal, one of the world’s richest men, who built the Movenpick for $140 million, is also building a 250-room Four Seasons hotel in Beirut.

The luxury Crowne Plaza Hotel opened in the capital this autumn, and the head of Lebanon’s Hotel Association said more five-star hotels were in the works. Over the summer Lebanon blew up a never-opened Hilton hotel in downtown Beirut used as a sniper’s nest in the 1975-1990 civil war to make way for a new five-star hotel.

EVERY SAUDI A PRINCE: Lebanon, once dubbed the Paris of the Middle-East for its relative social and political openness, has struggled to attract tourists since the civil war left its infrastructure and reputation in shambles. But analysts say the September 11 attacks on US cities and the anti-Arab and anti-Muslim sentiment the attacks fostered in the West have been a boon to Beirut as more Gulf Arabs choose to spend their time — and their money — in Lebanon. “Muslims, they have feelings they are not welcome in Europe and the States,” said Pierre Achkar, head of the Lebanese Hotel Association. “Every Saudi here is a prince.”

Analysts say Gulf investors have brought in several hundred million dollars this year to Lebanon in the form of real estate investment and tourism. They said Gulf Arabs were some of the biggest buyers of luxury properties, but that wealthy Lebanese expatriates and other Arabs were also behind the boom. “They feel it is a safe haven,” said independent economist Ahmad Jachi. “They say, ’We don’t want to go to the States. We are humiliated. We don’t get visas’.”

Analysts said they expect demand for luxury real estate to continue as property in downtown Beirut, rebuilt by property heavyweight Solidere after the war, gets more scarce. Solidere, whose top shareholder is Lebanese Prime Minister Rafik al-Hariri, returned to profit last year on the back of a more than 20-fold jump in sales revenue. It has a virtual monopoly on property in upmarket central Beirut.

“The demand is there but the supply will shrink. Most (projects) will finish in 2003-2004 and there will be no supply left,” said Karim Chamseddin, senior corporate analyst for Capital Trust Real Estate Holdings. “We expect an appreciation of value (in luxury residences) in two to three years of 20-25 percent,” he added. One planned luxury apartment building catering to rich Gulf Arabs said 65 percent of its apartments, including a top-floor penthouse, have been sold since sales opened in May. Builders will not break ground on the project until next year and sales on the flats, which go for more than $1 million apiece, have been stopped temporarily. Sales will resume next year at higher prices.

Despite a boom in luxury markets, analysts said the rest of Beirut’s real estate market was still largely stagnant, with many buildings sitting empty, though overall vacancy rates for Beirut property had declined. “I really believe the stagnation is still prevailing in the real estate environment except in downtown Solidere areas,” said Raja Makarem, head of the leading property consultant Ramco. “I would n’t say it’s doing well. The sector as a whole is less ill than two to three years ago,” he added. But analysts say the economic downturn that has hurt Lebanon’s pocketbook has helped investors who want to build luxury projects by bringing down construction prices.