Three issues that were pending with the
State have been resolved this quarter. They concern the sea defense
structure and the Souks of Beirut, both SOLIDERE projects, as well
as the Hilton hotel. While this is sending a positive signal,
investors are still awaiting the resolution of other important
issues which remain outstanding with the State, thus hindering the
reconstruction and development of Beirut city center.
government put its seal of approval on the sea defense structure
built by SOLIDERE, as part of its 1994 agreement with the State,
represented by the Council for Development and Reconstruction (CDR).
The defense structure falls within marine works, also comprising the
construction of the Beirut Marina with a breakwater. The works ,
awarded to Bouygues in 1996, are scheduled for delivery this fall.
In the design-and-build tendering in 1995, the bidders had
the latitude to submit:
a proposal based on the preliminary design suggested by CDR's
proposal based on an alternative design.
Bouygues were awarded the contract on the basis of their
alternative design, aimed at reducing the hydrological pressure
of major waves.
The design, endorsed by Sogreah and approved by CDR, involved:
submerged reef, forming the first defense line, extends for an
average of 100 m seawards along the full extent of the corniche.
reinforced concrete caissons, each 17.5m wide, 27.75m long and
10.5m high, form a second defense line. They support a concrete
superstructure providing continuous promenades at two levels
over 1.3 km.
Backfilling behind the caissons provides both a stabilizing
bond and a third promenade, 5.5m above sea level.
The Bouygues design results in a widening of the corniche
from 40m to 100m, thus extending the new waterfront land by
around 37000 sq m compared to the original BCD master plan. As
advised to CDR, this additional area, to remain non aedificandi,
constitutes part of the public promenades planned within the
The project suffered several interruptions in backfilling
and dredging works, and their complete suspension since March 7,
2000, by decision of the Transportation Ministry. As the defense
structure's design and execution had proceeded according to
tender specifications, contractual agreements, and technical
approvals by CDR, SOLIDERE lodged a claim for damages on July 7.
On September 8, 2000, the Council of Ministers issued decree
3808 approving the amendments to the BCD master plan entailed by
the sea defense design. The decree, published in the Official
Gazette on September 21, 2000, has allowed SOLIDERE to resume
landfilling works for the defense structure and sea promenades.
The reason invoked for the suspension of work, namely the need
for a decree officially approving the Bouygues design, was
totally unjustified. Accordingly, the Company intends to pursue
its claim for damage.
companies have trespassed on the Beirut Marina since spring 1999. In
1995, by allocating to them 11000 sq m of land to be backfilled on
the public domain, the Council of Ministers had rescinded former
authorizations to occupy areas of the maritime public domain. The
companies have ignored CDR and Transportation Ministry resolutions
ordering them to vacate the marina.
Despite SOLIDERE's, requests, no effective action was taken
by the authorities to evict the trespassers. SOLIDERE has taken the
necessary legal measures to preserve its rights in the marina and to
obtain compensation for the violations obstructing its works. The
delay is also depriving the State from the income to be generated by
the marina concession.
The Souks of Beirut were finally given the green light. In a
resolution dated September 27, 2000, the Council of Ministers
sanctioned the Souks master plan, by approving related amendments to
Sector E of the BCD master plan. The approval is soon to be issued
The Souks of Beirut redevelopment will provide 100000 sq m of
leisure and commercial facilities. SOLIDERE has finalized the
project's detailed design and completed the 2500 car underground car
The superstructure was delayed by more than a year, as SOLIDERE
went through various stages of the regulatory permission process.
Following approval by the Higher Council of Urbanism and
Beirut Municipal Council, on March 31 and May 15, 1999, the Souks
master plan was successively forwarded to the Ministers for
Municipalities and Public Works and to the Council of Ministers. On
July 26, 2000, the Prime Minister appointed a review committee. The
two above-mentioned ministers, though having already formally
approved the master plan, were on the committee, together with the
The issuance of the decree should pave the way for the Souks
of Beirut building permit. SOLIDERE can then proceed with the
construction of the superstructure.
Assuming a release of the building permit during next
quarter, most facilities - gold souk, supermarket, entertainment,
center, department store and multipurpose building - should be ready
beginning 2002, with the souks proper following by mid-year. This
will allow the closing of pre-sales covering the entire gold souk
and the finalizing of leasing and management agreements for the
Souks of Beirut anchor tenants and international operators. The
completion of the project is bound to have a profound impact
on the profitability of all central Beirut developments.
The Souks of Beirut are destined to be a major magnet in the
city center, perhaps even the jewel in the crown.
of the public domain
roads, squares and public gardens executed in accordance with
SOLIDERE's agreement with the State, shall become public domain. The
areas forming the newly reconstituted public domain, to be delivered
by the Company to the public authorities, were agreed upon in 1998
with the Mohafez (Administrator) of Beirut, based on an opinion by
the head of the Beirut Municipality legal division.
In April 1999, the current Mohafez, invoking considerations of
administrative authority, forwarded the procedure to the Council for
Development and Reconstruction (CDR). SOLIDERE followed up on the
matter with CDR and the Mohafez. In January 2000, the Prime Minister
formed a committee grouping all concerned administrative
authorities, to finalize the location and areas of the reconstituted
public domain. Another committee was formed to resolve all obstacles
to the BCD development. The meetings held by these committees have
not resulted in a definitive resolution of outstanding issues.
The delay in reconstituting the public domain has greatly
harmed the development of the city center, by retarding the issuance
of the BCD maps on a 1/500 scale, and impeding the issuance the
issuance of easement and alignment certificates, as well as
regulatory construction and occupation permits. Ongoing projects
were obstructed and new investment discouraged. Major BCD developers
formed a pressure group to deal with government-related issues.
SOLIDERE itself has actively addressed matters with relevant
authorities. Decree 2370, dated February 7, 2000 gave exceptional
powers to the High Council of Urbanism, over a period of six months,
for the interpretation of a number of the BCD master plan
provisions. SOLIDERE has asked for an extension of the period.
the Beirut Municipality's request, SOLIDERE prepared the BCD master
plan 1/500 maps and regulations and submitted them in October 1999
The latter transmitted them to the second above-mentioned
committee appointed by the Prime Minister. The approval of the plans
by the Council of Ministers in the form of a decree should remove
the hurdles currently hindering the issuance of construction and
and Alignment certificates
and alignment certificates are required for the conclusion of real
estate transactions, such as parcel subdivision and regrouping, sale
and purchase, and the release of construction and occupation
Normally issued by the Municipality upon verification of
conformity with the master plan, such certificates were withheld by
the current Mohafez, pending the finalization of the 1/500 BCD maps.
In March 2000, the Mohafez made their issuance conditional on
an undertaking by concerned property owners, including SOLIDERE, not
to hold the Municipality liable for any prejudice resulting from
inaccuracies in the maps, and to waive all rights to claim damages
in this respect. It is difficult to see how such differences might
occur since the maps are to be issued with the joint signature of
the Municipality and the Directorate General of Urbanism.
On September 12, 2000, the Company requested the Mohafez to
cancel this measure, which has in effect frozen most real estate
transactions in the city center.
to the above hurdles, more than 24 new projects are still awaiting
approval by government agencies on various issues.
Council of Ministers' decree 3862 dated September 20, 2000
has finally allowed the demolition (requested in 1999) of the old
Hilton hotel structure, paving the way for its reconstruction. Three
other internationally operated hotels have been delayed, pending
approvals by the Directorate General of Urbanism (DGU). Minor
modifications on the 'build-to-line', which controls building
alignments, are delaying a prime luxury residential project, as well
as three office buildings in the historic core. Permits have been
totally refused in other cases, most notably a petrol car service
station due to an opinion by the Ministry of Petroleum regarding
petrol storage in the BCD.
Beirut Municipality refused in many cases to issue occupancy permits
for BCD properties after the completion of restoration works. Owners
were unable to offer, as required, proof of the pre-war legality of
their buildings, since the Municipality, itself the custodian of
these records, had lost them during the hostilities, due to fire or
On February 11, 2000, the government released decree 2404,
allowing municipal authorities to remedy any noted violations
through the payment of a settlement tax. As this decree did not
resolve all cases, discussions being held between the Municipality
and representatives of the new owners and investors, are attempting
to address these issues.