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French Version

Phoenicia Village : Beirut's largest development yet

Project includes shops, offices and flats

The development of Phoenicia Village, the biggest investment in Beirut's history, is expected to begin in June, Salah al-Mayyal, managing director of Levant Holdings - the shareholding company funding the project - said in an interview with The Daily Star.

Flanked by the Mediterranean Sea and Martyrs Square, the four-building, 22,000 square meter (207,000 of which is built-up area) complex will encompass two plots of land in the Beirut Central District. About 60 percent of units will be residential apartments, 20 percent will accommodate offices, 15 percent will be retail outlets, and about 8 percent will be hotels.

Mayyall says that Phoenicia Village will put Lebanon on the map as an attractive climate for foreign investment.

"Gulf investors always express interest in Beirut, but they are reluctant. We strongly believe that real-estate prices in Beirut are still under-valued, and the political developments since former Premier Rafik Hariri's assassination will lead to real-valuations in the future."

The Cabinet ministers green-lighted the land acquisition on April 13 - in only six days - and according to Mayyal the government, especially Prime Minister Fouad Siniora, has been very supportive. The same cannot be said of the Investment Development Authority of Lebanon however, which he calls "a disaster organization" that "needs to keep up with what's going on."

Levant Holdings, a Kuwaiti company, will finance the project once it raises $410 million in start-up capital. Since Levant issued an initial public offering four weeks ago, 60 percent of shares have been purchased and the expected delivery date is 42 weeks from June - when the fund is expected to close. The remainder of financing will come from prospective occupants, and there is a possibility of another public offering after construction has started.

Since it is a Kuwaiti company, 51 percent of shares must be held by Kuwaiti nationals or corporations, though the target is for Lebanese citizens to own 25 percent of shares.

Since Levant Holdings has regional ambitions, the decision to spearhead its first project in Lebanon - a country for which sustained economic and political stability is less than certain - seems risky.

"That's the million-dollar question," says Mayyal, though for him it is worth closer to a billion. He argues that the Syrian withdrawal and the "internationalization" of Lebanon's problems ensure that investment will be protected. The national dialogue and the upcoming Beirut I donor conference - which will hopefully inject $6.1 billion into the local economy and reduce the public debt-further - bolster confidence for foreign investors.

Lebanon's booming real-estate sector is testament to this confidence. According to Bank Audi research, the value of property sales has grown from under $46 million in 1998 to over $64 million in 2005. Mayyal's experience bears this out; he says the valuation of the land purchased by Levant Holdings nine months ago has already risen 30 percent.

"If our company is making unrealized gains without even starting the building process, you get an idea of what an investment opportunity Lebanon is. This property has been around forever and we developed it a little bit and are already getting crazy offers."

He noted that since Beirut's real-estate market is also highly dollarized, it remains relatively impervious to domestic currency fluctuations.

He added that investing in countries whose "economies are imbalanced on the whole" is inherently risky, but imperative in today's market. Mayyal argued that the excess liquidity in the Gulf region should be mobilized to correct these imbalances and develop national service sectors.

"I think it is a disaster investing only in capital markets," he said, "and it is the responsibility of the private sector to create investment opportunities that lead to long-term growth."

Beirut 22-05-2006
Lysandra Ohrstrom
The Daily Star

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