Majid Al Futtaim is banking on Lebanese buyers for its mixed-use project in Lebanon as foreign investor appetite cools amid regional instability.
The Dubai retailer and developer is jointly developing the Waterfront City Business Park in Beirut with the Lebanese contractor Société Joseph G Khoury et Fils Holding.
When complete, the project will have 2,000 residential units, two hotels, 60,000 square metres of office space and 12,000 sq metres of retail. It will also have Majid Al Futtaim’s trademark City Center shopping mall.
The residential prices at the upscale project, which launched in 2013, would range between US$3,200 and $6,900 per sq metre. Offices would range between $3,600 and $4,200 per square metre.
At Cityscape Global property exhibition in Dubai on Tuesday, the developer released 200 mid-market residences in the project at prices ranging from $250,000 to $550,000 for one to three-bedroom units.
About 80 per cent of the home buyers at the Waterfront City in Dbayeh are Lebanese, according to John Ward, the project head for communities in charge of the Waterfront City at Majid Al Futtaim. He declined to give a completion date for the project.
The local real estate appetite is currently in a recovery phase that is a continuity of the bearish trend that started in 2011, with the exception of 2014 when the sector showed some progress owing to hopes of a potential political breakthrough in Lebanon after the election of a new cabinet, according to Mirna Chami, the senior economist at Beirut-based Blominvest Bank.
“The war in Syria and the series of security developments that took place in Lebanon heavily affected foreign demand, especially from [Arabian Gulf] countries that constitute the biggest bulk of clients for the luxurious real estate market,” she said.
The share of foreign demand of total real estate transactions narrowed in the first half in Lebanon, at 1.48 per cent, from 2.01 per cent during the same period last year. For all of 2015, the share of foreign demand of total real estate transactions was 1.96 per cent, up from 1.48 per cent in 2014 and 1.57 per cent in 2013.
“The increase in 2015 can be partly explained by nationals from Syria and Iraq escaping their war-ridden countries and purchasing apartments in Lebanon after having rented apartments for several years,” said Ms Chami.
“Regional instabilities and a strong dollar will mainly impact foreigners’ demand, including that of Lebanese expats, for real estate properties.”
Majid Al Futtaim expects to start construction of office spaces at the US$1.8 billion Waterfront City Business Park next month, with expected delivery in 2018. Around 55 per cent of the first four office buildings have been sold. Retail spaces are yet to come to the market.
“[The real estate sector] would find it hard to recover this year as people are still building and there is more supply,” Mr Ward said. “Right now there is more of a sense of fear of what’s going to happen next, and people are going to hold, and only when there is positive events happening in the region that people will be encouraged to move [to invest in real estate].”
Majid Al Futtaim had also developed the $300 million Beirut City Centre, which opened in April 2013.
Follow The National's Business section on Twitter