Lebanon: UAE firms facing Dh10 billion investment risk

DUBAI — As the conflict in Lebanon intensifies, UAE companies are facing growing investment risk worth more than Dh10 billion in various projects.

By Babu Das Augustine (Assistant Editor)

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Published: Tue 25 Jul 2006, 11:03 AM

Last updated: Sat 4 Apr 2015, 1:08 PM

With about 80 per cent of UAE investment (Dh8.5 billion) in the real estate sector, UAE-based companies and investors have exposure to sectors such as hospitality, tourism and financial services. In addition, there are a large number of private investors who own real estate and financial assets in Lebanon.

With no immediate ceasefire in sight, the future of a number of mega projects by UAE firms looks uncertain. The leading UAE investments in Beirut's real estate sector include Dh2.3 billion investment by Abu Dhabi Investment House, Dh1.83 billion by the Dubai-based Al Habtoor Group and about Dh1 billion exposure of Dubai Islamic Bank in three Beirut real estate projects through Deyar, its real estate subsidiary. While property major Emaar has an estimated commitment of more than Dh1 billion, Damac and Al Futtaim Group's projected investments in Lebanon are estimated at Dh550 million and Dh1.8 billion, respectively.

“During the first few days of the war, many UAE-based investors were hopeful that the skirmishes would not escalate into a protracted conflict. With the chances of prolonged hostilities, many UAE-based companies will be forced to rethink their Lebanon strategy,” said an investment analyst.

Although most investors are hopeful about the post-war opportunities in Beirut, many are jittery about the immediate future.

“No doubt, the war waged against Lebanon has a negative impact on the economy and construction sector, but Beirut Gate (ADIH's project) is still at a very early stage of development. No construction has been done on the plots of the project and hence there is no physical damage. The project is active though we are monitoring the situation very closely and have put in process a continuous review of our marketing activities in line with the developing situation in Lebanon,” Rashid Janahi, CEO of Abu Dhabi Investment House told Khaleej Times.

The ADIH's Beirut Gate project is the downtown's largest development project. Beirut Gate comprises seven plots on 229,871 square feet and a built-up area of almost 1.9m square feet overlooking the landmark Martyrs' Square at the heart of downtown Beirut. The project will be a mixed-use commercial and residential area. The company is hopeful that the situation would soon ease and they could resume the project.

“Beirut has a history of resilience and has risen from destruction several times in its history. Despite all the hardships, crises and difficulties that Lebanon has gone through over the past few decades, it always proved remarkably capable of recovering and starting anew with such amazing high morale and unbreakable persistence. This makes us optimistic about the future of Lebanon and our project Beirut Gate,” said Janahi.

Al Habtoor Group's investments include the Habtoor Metropolitan, Metropolitan Palace, Habtoor Grand, Metropolitan Park and Habtoor Village.

“At the moment people are dying in Lebanon daily and it is not the right time to worry too much about future business. People's security comes first. Therefore we have sent most of our staff in Lebanon on leave, because they need to care for their families in this difficult time. As soon as the crisis is over and the situation returns to normal, we will bring them back to work,” said Mohammed Al Habtoor, CEO of Al Habtoor Group in a statement.

Al Habtoor has temporarily closed the Habtoor Grand Convention Centre & Spa and put its other hotel, the Metropolitan Palace, on a reduced operation run by a skeleton staff. The Habtoorland theme park has also been closed for the time being since there are, of course, no families and children visiting right now.

“Our businesses are located in an area unaffected by the current attacks. As far as the longer term future is concerned we cannot yet gauge the impact nor do we want to try right now. Since the whole infrastructure of Beirut is being destroyed, it could take years to rebuild fully and. it will take even longer for the region to recover socially and economically,” Habtoor said.

Dubai-based Damac is optimistic and plans to go ahead with its multi million projects.

“Damac’s launch in downtown Beirut stems from our belief in the prominence of this area as a leading destination for business and tourism from citizens the world over along with its 5,000 years of history and considerably rich culture. Everytime after a crisis Lebanon has bounced back. We retain faith in the property market there to offer good returns in the future. We have a long-term plan for Lebanon and will introduce a number of highly exciting projects in the near future” Peter Riddoch, CEO at Damac Properties. The recent economic boom in Beirut has attracted significant GCC investment worth over $8 billion during the past three years.

Residential towers, shopping malls, hotels, leisure complexes, and many other projects have all brought new investment to Lebanon. Solidere, the Lebanese Company for the Development and Reconstruction of Beirut Central District, attracted a large share of the Gulf investments.

The Council for Development and Reconstruction (CDR) has a $3.6 billion multi-year programme currently underway and have significant investments from the GCC region.

In addition to the UAE based companies leading Gulf Groups such as Al Shaya Group and Kharafi Group from Kuwait and Kingdom Group from Saudi Arabia have huge investments in Lebanon.

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