“The ceasefire announcement is certainly a positive step in the direction of cessation of violence, though we would have to wait and see if this would translate into the start of a long-term peace exercise. As for Abu Dhabi Investment House (ADIH), we have expressed our optimism about the Lebanese economy before and we continue to monitor the situation closely,” ADIH CEO Rashid Janahi said in a statement to Khaleej Times yesterday.
UAE companies have investments in excess of Dh10 billion committed in various projects in Lebanon With about 85 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.
The leading UAE investments in Beirut's real estate sector include the 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. Other leading companies with investments in Lebanon include names such as Emaar, Damac and Al Futtaim Group. Damac and Al Futtaim Group's projected investments in Lebanon are estimated at Dh550 million and Dh1.8 billion, respectively.
The month-long hostilities and the huge damage to the country's infrastructure has caused a certain amount of uncertainty about the future of many of these projects. 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 at the heart of downtown Beirut.
The company is hopeful that the situation would soon ease and they could resume the project.
Businessmen are counting on the Lebanon's resilience. “During the past the country has proved remarkably capable of recovering and starting anew after each crisis,” said the CEO of a business group that has substantial business in Lebanon.
“We are more concerned about Lebanon and its people than our immediate business prospects. If our endeavours can help in alleviating the sufferings of Lebanese people, we will be glad to resume our activities there anytime soon,” he said.
An immediate problem that most companies will face in resuming their projects in Lebanon will be the acute shortage of manpower. While the war has scattered the local workforce, foreign workers have fled the country during the early days of conflict. The war has left Lebanon in a dilemma.
On one hand, there are thousands of people in the tourism and contracting sectors who lost their jobs during the summer season and on the other hand, over 200,000 Lebanese, some of whom are holding double nationality, have left the country either temporarily or for good.
In response to the war, Khalaf Al Habtoor, Chairman and Founder of Al Habtoor Group, has announced that the company would give its Lebanon staff the chance to move to Dubai.
“We offer as many jobs within our groups of companies to our employees in Lebanon, as we can, regardless their position,” he said.
Al Habtoor Group's investments include the Habtoor Metropolitan, Metropolitan Palace, Habtoor Grand, Metropolitan Park and Habtoor Village. Al Habtoor has temporarily closed the Habtoor Grand Convention Centre & Spa and put its other hotel, the Metropolitan Palace, on a reduced operation. The Habtoorland theme park has also been closed.
The war has hit Lebanon's key economic sectors such as tourism and agricultural exports hard. The conflict has almost wiped out Lebanon's tourism industry. Tourism accounts for about 15 per cent of the Lebanese economy, and had risen 50 per cent in the first half of 2006. The government had hoped the country would draw in 1.6 million visitors this year, bringing in about $2.5 billion in foreign exchange to the economy.
Sources in the construction industry said UAE-based companies have a big opportunity to join the massive reconstruction efforts. The total damage the country's physical infrastructure is estimated in excess of $3.5 billion while the reconstruction budget could exceed more than $5 billion.
Despite such opportunities, in the context of the highly volatile political situation, many companies are not in a hurry to re-start their Lebanon projects.
“We have a very fragile situation in Lebanon with Israel reiterating its intentions to pursue the war against Hezbollah. Until the time we have some sort of long term peace agreement the investments in Lebanon could be at huge risk,” said a senior executive with a UAE-based property firm.
Dubai-based Damac group is very much optimistic and plans to go ahead with its multi million projects in Lebanon. The recent economic boom in Beirut has attracted significant GCC investment worth over $8 billion during the past three years. 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. With the war inflicting huge damage to the economy analysts expect the reconstruction could take longer than anticipated.
Lebanon, already saddled with a public debt of about $40 billion, or 180 per cent of GDP, will have to rely solely on foreign donations to rebuild. While Saudi Arabia deposited $1 billion in soft loan it provided $500 million towards reconstruction of the country. Kuwait along with other Gulf states together have contributed another $500 million.
48,780 people have also been wounded in the war, a spokesman said
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