Lebanon Real Estate: Plus Properties

Interview with George Chehwane, Chairman of Plus Properties

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Price increases in Lebanon for property reached multiple digits for the past four years.  How would you describe the current climate in Lebanon’s real estate sector and also in the UAE?

In 2008 when the global economic crisis started everyone was affected all over the world but Lebanon was lucky to not be hurt by this due to its strong banking and finance institutions.  The banking sector in Lebanon has attracted a lot of Lebanese and Gulf investors due to this stability.  The Lebanon real estate sector was not affected and there is a real demand in Lebanon.  UAE is also productive for the real estate business and we were involved there before we were even involved in Lebanon.  When the crisis started Dubai was hurt much more than other countries in the real estate market due to speculation instead of investment.  Now the situation is normalizing and people are accepting their losses.  We are happy with our situation.

How has the crisis affected Plus Properties in the UAE?

In 2008 Plus Properties was active in 14 real estate projects in the UAE.  We faced this crisis in a very smart way and management has been very important. In 2009-2010 our achievements were very good.

"We have consolidated our projects, stopped some

of projects, and refunded those stopped projects. "

We focused on 3/14 projects while shifting some clients around from Dubai to Lebanon.  By diversifying our real estate portfolio we have been able to weather this situation in a successful manner.  We have no legal or financial problems in the UAE despite our losses.

As an industry professional, how do you see the outlook for 2010-2011 in Lebanon and the UAE?

In Lebanon there is a lot of cash in the banks and expats have transfered their money to Lebanese banks due to the strength and confidence in the banking sector.  The proximity of Lebanon to the Gulf has lead other people to have homes in Lebanon as well and this is very promising for the market.  Will Beirut face a situation similar to Dubai or the UAE?  No way because there is no speculation in the market, only demand. 85% of demand in the real estate market in Lebanon is real and you cannot buy land without paying full price up front.  In Dubai and Abu Dhabi I believe we have two or three years left before we get out of the crisis.  The large number of projects in 2008 was exaggerated and everyone took a gamble expecting high returns on their investments in real estate.  Here we should consider supply and demand and the government should reconsider their policies towards visas and expats in the area. 

"We have invested a lot in the UAE because we

believe in the area being a nice place to live with

a solid economic structure."

The banks in the UAE are not being very positive with the expats either, they should help the expats in the same manner that they are able to help the locals. The government of Abu Dhabi and Dubai should meet with foreign investors because they are a part of the economy too.  However, the market offers attractive offers and a lot of people are still buying today in Dubai from the Gulf, India, and even Europe and this will help the market bounce back.

What are some other projects you are working on and how unique are they?

In our group we have four levels of activity in real estate.  We are successful because how we we sell and promote our own projects.  Because we have a strong sales team and a large number of offices in the region we have exclusive projects for sales and marketing. The 200 million tower is owned by me and Venus Towers is being sold on an exclusive basis.  Plus Properties is one of the strongest names in the region for real estate.  Today we are launching a new project outside of Beirut for a medium priced Lebanon because there is a high demand for low and medium real estate units.  We are focusing on launching projects like this around Beirut in particular.  In Dubai and Abu Dhabi Plus Properties is working on two waterfront properties but unfortunately we are not moving very quickly on this although we have many investors and buyers.  In Reem Island we are working on a project called Sky Garden and we believe this will be successful.

How do you integrate your communications and marketing strategy into your approach?

"The most important things are having the right

product, the right location, and the right pricing."

We have been successful with this in Dubai and Lebanon and we have beautiful designs made by renowned artists.  Once all of this is taken care of we access the appropriate media channels and we launch very strong campaigns.    We use 4-5 pages a week in the main news papers and we book all of the news papers, for example.  We also participate in all exhibitions and take advantage of outdoor communications as well.  Even when we don’t have a project we maintain a media presence.

What is the most efficient way to market a product in the local market?

In our offices we have a large number of databases that we gather information for at exhibitions and at the airport.  We send regular e-mails to these people and keep them informed with our campaigns.  We are very aggressive and this helps us reach the right buyer/investor at the right time.  Timing is also important and our communications department is very adept at managing all of this.

You mentioned the owners have funded a certain amount for the Venus Project and the rest was financed.  How risky is this structure and how confident are you in completing the project?

The cost of the project is divided in two areas- land costs and construction costs.  Usually the owners have to finance the full amount for the land and the construction is taken care of by owners, sales, and banks.  Every developer has to be able to finance the entire project.  However, if you can be flexible this can help in reducing the personal investments from the owners and this is what we did for the Venus project.

How unique are you in media?

Media is and always have be the main source of our business.  I myself am a media man and today Group Plus is one of the largest media companies in the Middle East and we are very active in Lebanon, UAE, KSA, Bahrain, and Syria.  We use outdoor, radio, publication, and our own printing facilities to serve our business and other companies.

In terms of the investor, who are you looking for?

Everyone can be an investor.  We are open to all types of people or companies who are looking for the right investment.  We have a lot of interest from people looking for the right investment and partner.

Where do your large investors come from?

For the UAE we have a lot of European funds as well as some from Saudi Arabia and for Lebanon there are a lot of people from the GCC.  All of the main developers in the UAE are diversifying in Egypt, UAE, and Lebanon. 

What is your vision for Plus Holding, Lebanon, and the UAE?

The most important think is that we are still alive and active after the crisis of 2008.  This is our main concern because we witnessed a lot of companies fall off the market and cease to exist.  Diversification between Dubai, Abu Dhabi and Lebanon helped us survive in addition to diversifying our business by being in media and real estate. 

"Our strategy for the next five years will be to continue

to further consolidate the markets where are are active."

By the end of 2010 we will be looking for new and emerging markets to enter and use our expertise in.  While I am not a financial expert, I can say that it is very important to be conservative in our business so as not to expose ourselves if we lack the strong financial support.