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InterviewsJune 04, 2010
Quality Investment Group: Quality Construction Company in Lebanon
Roger Karam, CEO of Quality Investment Group
- Published: June 04, 2010
Interview with Roger Karam, CEO of Quality Investment Group
How would you describe the current real estate and construction sector in Lebanon?
What we have seen in the last two years is a catch up on the stagnation we have had for the previous 10 years. Lebanon has historically been the most expensive country in the region due to the scarcity of land and density of population. Today, afterfew years of stability there is an appetite for Lebanon because of its attractiveness and we are catching up on prices we are seeing elsewhere.
Are property prices still undervalued in Lebanon?
We had in excess of 150 to 200% increase in prices in an extremely short period of time. We have pretty much caught up with cities such as Amman. What we’re seeing now is a correction in the other major cities. I think we’re close to a fair value.
In order to avoid any real estate crisis the government should provide actual statistical figures related to this field from the real estate directorate and related ministries. What is your assessment of this statement?
Unfortunately the data collected does not allow us to accurately interpret it. A lot of work needs to be done with this regard. If we had some real data on what the upcoming offers are, what’s being built or what the real demand is, it would definitely help us auto-regulate the market and be more advised in our approach. It is clear that we need more information and much more transparency on what’s going on in the market. There has been no significant move since the end of the war to improve data collection or even access to available data.
How lucrative is Lebanon’s real estate market for speculative investment?
We haven’t seen the level of speculation that existed in the gulf. It is mostly an end user market. Supply in the country is being met by real demand. There are no mega projects. You have a very limited number of high rises in other word high density buildings. Presales are at reasonable levels (30 to 40%), which show good level of confidence on the part of the developers. . The financial structure of projects in Lebanon is much stricter in nature than what we have known in the gulf. The banks are quite conservative in nature, with regard to leverage. They are also selective with regard to who they finance. Overall I would say that speculation is not what drives the market
Can you give us a little background about the company and what your competitive advantage over other players in the market is?
Quality Investment Group was created as an investment vehicle to drive and support opportunities from its subsidiaries, among which is Qualco (Quality Construction Company) Our strategy was to bring investors that have expertise in their fields, and to leverage the synergies that existed or could be created among our shareholders. It opened some really interesting opportunities and lead to several co-investments. We have been conservative and pragmatic in the approach that we have taken We did not rush into flourishing sectors unless we felt the thrive was realistic and sustainable. We have been extremely reliant on our management. It has always been our focus. It is people that are the essence of an enterprise and that generate sustainability. We are a multi shareholder company. The procedures in place meet proficient corporate governance requirements; committees make decisions, and there is serious auditing on all levels. We very much rely on our partners and work with people who respect us and have similar business philosophies. So far we have been successful in our decisions; Qualco (Quality Construction Company), our contracting subsidiary, has in a very short period of time become a major player in the construction industry; while Quality Development Company, our real estate subsidiary, has in less than a year generate a pipeline of eight buildings; finally Qualtra (Quality Trading Company) is set to start operation in Q3 2010 in Iraq with the distribution of a number of very renown brands When we started in 2002 with Qualco, we were 4 employees. Today the group accounts for close to 850 employees
How confident are you about your growth continuing and are you ready for it?
You cannot sustain such growth indefinitely; we have to be realistic. I’m not sure we even want to sustain such growth because it is quite hectic on people and it might lead to misapprehension. Soon we will have to stabilize and have a more reasonable growth. We also have a constraint in Lebanon; it is the size of our market. Today, in order to maintain this growth we have to expand and probably move outside Lebanon; this cannot be done at the same pace it was done in our home country. We are seeking opportunities in the Levant including Iraq; we believe this country has immense potentials. We also need to diversify our strategies and are looking for opportunities in Europe and in the gulf region.
How do you envision the group in 2012 and beyond?
We are opening offices in new countries. I look forward to see our business plans put to execution and be ready to expand further. We intend to become a significant player in the investment, construction and real estate industry. To do so, we will have to evaluate prospects to sustain our objectives and this could lead us to become public in the future.
The company is known as contractors that build communities. Can you elaborate on this and give us a final message?
Our focus has been to build communities and that is probably why we have a large number of projects full of dedication. We have built some of the largest universities in Lebanon. We believe that we have a social responsibility towards the community; that we need to answer the requirements of an evolving society. We have a role to play in improving the environment of the country and to put forward a philosophy of good ethics. Every single project that we have worked on has brought benefits to its surroundings. The universities that we have been building are definitely something that was needed and that is providing a lot of social improvement within the population. We team up with our partners, our management, our employees and our shareholders in a manner that puts forward the potential that our group can provide to the community.
How would you describe the current real estate and construction sector in Lebanon?
What we have seen in the last two years is a catch up on the stagnation we have had for the previous 10 years. Lebanon has historically been the most expensive country in the region due to the scarcity of land and density of population. Today, afterfew years of stability there is an appetite for Lebanon because of its attractiveness and we are catching up on prices we are seeing elsewhere.
Are property prices still undervalued in Lebanon?
We had in excess of 150 to 200% increase in prices in an extremely short period of time. We have pretty much caught up with cities such as Amman. What we’re seeing now is a correction in the other major cities. I think we’re close to a fair value.
In order to avoid any real estate crisis the government should provide actual statistical figures related to this field from the real estate directorate and related ministries. What is your assessment of this statement?
Unfortunately the data collected does not allow us to accurately interpret it. A lot of work needs to be done with this regard. If we had some real data on what the upcoming offers are, what’s being built or what the real demand is, it would definitely help us auto-regulate the market and be more advised in our approach. It is clear that we need more information and much more transparency on what’s going on in the market. There has been no significant move since the end of the war to improve data collection or even access to available data.
How lucrative is Lebanon’s real estate market for speculative investment?
We haven’t seen the level of speculation that existed in the gulf. It is mostly an end user market. Supply in the country is being met by real demand. There are no mega projects. You have a very limited number of high rises in other word high density buildings. Presales are at reasonable levels (30 to 40%), which show good level of confidence on the part of the developers. . The financial structure of projects in Lebanon is much stricter in nature than what we have known in the gulf. The banks are quite conservative in nature, with regard to leverage. They are also selective with regard to who they finance. Overall I would say that speculation is not what drives the market
Can you give us a little background about the company and what your competitive advantage over other players in the market is?
Quality Investment Group was created as an investment vehicle to drive and support opportunities from its subsidiaries, among which is Qualco (Quality Construction Company) Our strategy was to bring investors that have expertise in their fields, and to leverage the synergies that existed or could be created among our shareholders. It opened some really interesting opportunities and lead to several co-investments. We have been conservative and pragmatic in the approach that we have taken We did not rush into flourishing sectors unless we felt the thrive was realistic and sustainable. We have been extremely reliant on our management. It has always been our focus. It is people that are the essence of an enterprise and that generate sustainability. We are a multi shareholder company. The procedures in place meet proficient corporate governance requirements; committees make decisions, and there is serious auditing on all levels. We very much rely on our partners and work with people who respect us and have similar business philosophies. So far we have been successful in our decisions; Qualco (Quality Construction Company), our contracting subsidiary, has in a very short period of time become a major player in the construction industry; while Quality Development Company, our real estate subsidiary, has in less than a year generate a pipeline of eight buildings; finally Qualtra (Quality Trading Company) is set to start operation in Q3 2010 in Iraq with the distribution of a number of very renown brands When we started in 2002 with Qualco, we were 4 employees. Today the group accounts for close to 850 employees
How confident are you about your growth continuing and are you ready for it?
You cannot sustain such growth indefinitely; we have to be realistic. I’m not sure we even want to sustain such growth because it is quite hectic on people and it might lead to misapprehension. Soon we will have to stabilize and have a more reasonable growth. We also have a constraint in Lebanon; it is the size of our market. Today, in order to maintain this growth we have to expand and probably move outside Lebanon; this cannot be done at the same pace it was done in our home country. We are seeking opportunities in the Levant including Iraq; we believe this country has immense potentials. We also need to diversify our strategies and are looking for opportunities in Europe and in the gulf region.
How do you envision the group in 2012 and beyond?
We are opening offices in new countries. I look forward to see our business plans put to execution and be ready to expand further. We intend to become a significant player in the investment, construction and real estate industry. To do so, we will have to evaluate prospects to sustain our objectives and this could lead us to become public in the future.
The company is known as contractors that build communities. Can you elaborate on this and give us a final message?
Our focus has been to build communities and that is probably why we have a large number of projects full of dedication. We have built some of the largest universities in Lebanon. We believe that we have a social responsibility towards the community; that we need to answer the requirements of an evolving society. We have a role to play in improving the environment of the country and to put forward a philosophy of good ethics. Every single project that we have worked on has brought benefits to its surroundings. The universities that we have been building are definitely something that was needed and that is providing a lot of social improvement within the population. We team up with our partners, our management, our employees and our shareholders in a manner that puts forward the potential that our group can provide to the community.