TBY talks to Georges Chehwane, Chairman of Plus Holding, on potential in the construction sector, the effect of foreign and diaspora demand, and the Plus Towers project.
TBY How does having a background in media assist in the company’s property business?
GEORGES CHEHWANE As you may know, the media is the main marketing tool to promote any product or project, so owning the right media tools, the right strategy, and know-how will definitely enable anyone to sell—even desert property. Plus Properties has become a strong name in that field, renowned for its successful sales strategy. That is why a lot of developers have approached us to carry out marketing and sales for their projects.
What potential do you see in the Lebanese construction sector?
It is the right time for construction in Lebanon. As for property, the potential is in new demand for small apartments in various regions. Much of this demand is from Lebanese expatriates, buying property to be used as a “pied-à-terre”—and there are upward of 12 million Lebanese in the diaspora. Demand is also high in the suburbs, but from a different group. This is the new generation who want to buy their dream homes but cannot afford the prices in the center. On the other hand, the country is only a short flight away from the Gulf region—Saudi Arabia, Kuwait, Oman, and the UAE—making Lebanon a good target for investors or people who want to buy a home, second home, or holiday home.
Having had experience in Dubai also, what major differences exist between the two markets?
I would buy land worth $500 million in Dubai, even though I only had $25 million in my pocket. I bought the land knowing I would be able to make quick sales in a matter of months. This is not the case in Lebanon. In some instances, people buy an extra apartment for their children as an investment. However, usually, they have the money. The banking system in Lebanon is solid. It isn’t possible to buy land or begin a project unless you have all the capital you need. There are no assurances given on land. This does, however, mean that leveraging isn’t great—the system is a bit conservative.
What is your assessment of the real estate sector?
Looking at the 1975-2011 period, it is interesting to note that prices have always been on the up. Sometimes pauses occur, but prices have never dropped. This is due to the limited number of plots available. In Solidere’s master plan, there are only a few plots remaining, whereas the rest were quickly sold. In Ashrafieh and Verdun there is no more land—we are limited by geography. Thus, demand is always higher than supply. Generally, when there is a downturn, people refrain from buying. When an upturn is anticipated, they begin buying again.
How significantly does foreign investment and the Lebanese diaspora affect your business?
Out of the 300 apartments we have sold over the last three years, the majority of buyers have been expatriates. Up to 60% were of Lebanese descent, 15% residents, and some foreigners from the Gulf and Africa. We attempt to reach this market by attending world exhibitions outside of Lebanon. Wherever there is a market, we try to make an impression. In this endeavor, we have recently been to Nigeria, Canada, and the UK. We also seek to participate in Saudi Arabia, the UAE, and other GCC countries. We also pursue clients through the media and even social networking tools. We believe in the impact of media exposure.
What are your expectations for Plus Towers?
It is a very nice project. It was designed in Miami by the studio Arquitectonica. It is in the heart of Beirut—a very prime location. It contains a mall and a gym, and is an eco-friendly building. Currently, Lebanon is not very sustainable in its construction, as building green means you must pay more. This has to be justified in terms of sales. Today, people in Lebanon don’t want to pay extra for that. However, sales are going well, and in pre-sales terms, up to date, we have sold 40% of the space already.
What is your outlook for the sector and for Plus Holding?
We will continue to see growth until 2015. We hope to establish our name across the Middle East. Our plan is then to expand by calling investors in by 2015. We are proud of what we have achieved in terms of recognition. Because of real estate demand and the population profile, we have decided to stay relatively small in size. We will continue to incorporate green technology on a supply and demand basis, and continue making projects we can be proud of.
© The Business Year