Beirut rises from the ruins
The property executive takes in the whole of central downtown Beirut in one sweep of his arm: "All this was destroyed. Not a stone was left standing. Now look."
He indicates a beautifully restored residential and leisure district, with Parisian-style colonnaded streets that would not have looked out of place in the rue de Rivoli, and the Beirut Souks, a stylish retail area that bustles with shoppers and latte drinkers.
A short drive away there are smart high-rise offices and bank buildings, a corniche district that contains a remarkable feat of engineering, and a yacht marina surrounded by fashionable residential towers reminiscent of Dubai.
It was indeed hard to believe this had until 1990 been the main battlefield in the civil war that tore Lebanon apart for 15 bloody years, or that parts of the city had been later pummelled by Israeli aerial bombardment, destroying much of the country's physical infrastructure.
The "Paris of the Middle East", as Beirut was known before the violence and destruction eclipsed its role as the financial and business centre of the region, is on the rise again. The executive is from the Lebanese company Solidere, which has been the main agent of the city's commercial and financial regeneration.
The Societe libanaise pour le development et la reconstruction, to give it its full name, was set up in 1994 by Rafik Hariri, the prime minister who was later assassinated.
Since then, despite financial crises and intermittent outbreaks of violence, it has largely delivered on the aim of making Beirut once again a major regional financial centre.
On the whole, it has done so with a careful eye on Beirut's 5,000-year history and its cultural heritage. For once, the interests of financial shareholders and conservationists have been largely squared.
The main dynamo for the regeneration of central Beirut has been the property market. In Lebanon, property appears to obey none of the normal rules. Between 2006 and mid-2009, property prices in the capital rose by between 25 and 30 per cent a year, mainly fuelled by Lebanese expatriates looking to buy into the country's recovery. "The slower pace since then reflects the drop in activity that affected these expats, especially those living in Gulf countries affected by the financial crisis," says Soha Yammine, an analyst at the property research company Ramco.
The property cycle in Beirut in the past 15 years has tended to go through a series of steep rises followed by a plateau, but avoiding the sharp drops of other regional markets. Each boom therefore takes off from a higher base.
The effect in the central downtown area is significant. Prices start at about US$6,000 (Dh22,038) a square metre, with more desirable property rising to $10,000, which is comparable to prices in any of the world's great capital cities. Although there is still great demand from Beirutis displaced by the war, few ordinary Lebanese can afford such prices and many of the stylish residential apartments appear to be unoccupied. Ms Yammine explains many are owned by expats who visit the city only for part of the year.
If property prices are not necessarily linked to the world financial situation, the share price of Solidere itself certainly has reflected global trends. From a peak of nearly $40 a share, it has since nearly halved.
Because of its close relationship with the Lebanese government, Solidere shares also reflect uncertainties over political and security issues, which form the permanent backdrop to business and finance in the country. "Contrary to most international and regional markets, local banks are flooded with cash that is being channelled partially into housing loans, which will keep the market, especially the low to middle market, performing satisfactorily in the foreseeable future," says Ms Yammine.
"We at Ramco believe the market will overall undergo a period of stabilisation, because developers have the necessary financial clout to withstand a slowdown in sales without decreasing their prices. Developers are mostly self-financed and do not have the same financial pressures to repay loans as other developers in global and regional markets."
If there is a period of stabilisation, it will help Solidere consolidate on what it has already achieved. The area around Place de l'Etoile and Martyrs' Square is virtually completed, as is the Souks retailing district, which will form the core of the financial and commercial district in close proximity to some of the most important archaeological sites of the Mediterranean.
But perhaps the most impressive part of Solidere's work is the new sea promenade and its defences, which illustrate the Beirut talent for deriving inspiration from necessity.
During the civil war, the inhabitants of the western part of the city found themselves cut off from waste disposal facilities in the east, and were forced to dump their rubbish in the sea. The result was an island of garbage off the city's coast, an environmental disaster, with millions of square metres of land apparently polluted and useless.
All this has been filled, reclaimed and levelled, adding perhaps 30 per cent to the central district, intended for residential and commercial use.
Surrounding it is a 1.3km sea barrier, designed to keep out the occasional "Mediterranean tsunamis" that have hit the city in the past, and linking two marina developments.
Beirut's efforts to restore its role as one of the financial centres of the Middle East will ultimately depend on long-term stability in the political and security fields. But Solidere is playing its part in the regeneration to the full.
Published: November 1, 2010 04:00 AM