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French Version

Construction boom goes bust - for now

Developers take wait-and-see approach toward future investment

The countless cranes on Beirut's skyline may have stopped moving since Israel began its bombardment of Lebanon 10 days ago, but Gulf investors who have funneled billions of petro-dollars into high-end real-estate projects are not abandoning Lebanon just yet.

Regional developers are taking a wait-and-see approach before deciding how to move forward. Some are more apprehensive than others about the security of their investments.

The estimated 11 major construction projects in the pipeline for Beirut Central District (BCD) are on hold.

Mounir Douaidee, the General Manager of Solidere, said that it was still too early to determine the long-term implications of the violence for Lebanon's investment climate, but admitted property transactions were "paralyzed."

"Maybe next week or the week after we'll have a better idea but at this point it's premature to give an opinion on whether the value of real-estate will go one way or another," Douaidee said over the phone from Solidere's downtown headquarters.

He dismissed rumors that Solidere had transferred part of its staff to Saudi Arabia due to security concerns and said he was not aware of any investors panicking or pulling out of projects.

But a Beirut-based real-estate developer with projects throughout the Levant region told The Daily Star that while his investors are "worried silly," he had no plans to abandon any existing projects - all of which are currently "frozen."

"We are sitting and waiting and watching," said Michael Dunne. "My desire is to come back, take a seat at my desk and press on with our projects, and do what's best for our investors and Lebanon."

It is yet to be seen whether Israel's military campaign will undermine the country's recently restored credibility with foreign investors, especially GCC nationals. Gulf investment caused the value of property transactions in Beirut to rise by 88 percent since 2001. Foreign direct investment accounted for 10 percent of GDP in 2005.

The International credit rating agency, Fitch Ratings, revised Lebanon's rating from Positive to Stable after less than a week of violence and said the extent of the economic damage will depend on the time-frame and severity of Israel's attacks.

But Gulf real-estate developers seem less inclined to write Lebanon off.

Dubai-based DAMAC properties announced that it would continue the development of the $150 million "La Residence by Ivana Trump" and that it even intends to go ahead with an expansion plan. Kuwait-based Levant Holdings said it would resume the construction of the $1.1 billion Phoenicia Village as soon as a resolution is in sight. Emirati Investment Firm Shuaa Capital insisted it had no intention of pulling out.

"Lebanon has always been a favorite destination for inter-Arab investment and has never been politically stable," said Salah Al-Mayyal, the CEO of Levant Holdings. "If they stop today the country will get back to normal in 4-6 months times." Whatever the long-term outcome, very few people in Lebanon are worrying about real-estate development or transactions.

The unrelenting sounds of construction that had become a part of daily life in Beirut have been replaced by disconcerting silence for the lucky few, and fly-over and bombs for everyone else.

"Nobody is thinking about construction right now, they are thinking about the people who are dying or their own safety," said the head of Lebanon's Contractor's Syndicate, Fouad Jamil Khazen.

"There are no laborers because all the Syrians have left, the town is empty at night, and there are no trucks bringing sand, cement or gravel. The country is paralyzed," he said.

Beirut 22-07-2006
Lysandra Ohrstrom
The Daily Star

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