BEIRUT: Arab Gulf investors have expressed trepidation over investing in projects in Lebanon, at least until the political picture becomes clearer.
Bader Ali, the vice chairman and managing director of the Kuwaiti based Gulf Investment House, is one of many investors watching with alarm the unfolding developments in Lebanon after the assassination of former Prime Minister Rafik Hariri.
“We don’t have any investments yet in Lebanon but we were considering the possibility after we held a conference in Beirut last year,” Ali told The Daily Star.
Arabs have invested heavily in the real estate and tourism sectors in the aftermath of the Sept. 11, 2001, attacks. Hariri, a self-made billionaire and the founder of real estate giant Solidere, was luring investments into the country thanks to his business skills and broad contacts abroad.
Ali said he was dismayed by the assassination and did not expect the resumption of investments in the near future. “We have a lot of investments in the Arab gulf states and other countries in the world.
Naturally we were looking at the investments prospects here,” Ali said. He added that the political tension between the opposition and government loyalists show that the road to recovery is still far away.
Ali said he expected real-estate prices to fall as the demand for properties may decrease.

“Some investors may be encouraged to buy properties when the prices become reasonable,” he said. However, not all investors were worried about the future of investments in the country. Nabil al-Hadi, the chief executive officer of a Bahrainbased real-estate investment company, said Lebanon would continue to attract investment despite Hariri’s death.
“We must admit that Hariri left his mark on Lebanon. If it was not for the former prime minister, no one would have considered investments in this country,” Hadi said.
Although Hadi believes investments may start picking up in the future, he said he has less faith in the current government. “This government or any other government cannot do 5 percent of what Hariri did.”
He said he hopes that other Arab governments will be run in the future by open minded businessmen like Hariri. One of the key investors in Lebanon is Dubai tycoon Khalaf Habtoor who has built a five-star hotel, a residential complex and an $80 million theme park in Lebanon over the past three years.
According to the Investment Development Authority of Lebanon – a one-stop-shop system developed to speed investment applications, $850 worth of projects were screened in 2003 alone.
It added that these projects created more than 3,000 jobs. It is difficult to estimate the total value of foreign direct investment (FDI) in Lebanon with some sources putting it as high as $1 billion and others as less than $700 million. Experts say that despite the rise in FDI over the past two years, investments in Lebanon were still very low when compared to other emerging markets in Asia.
One real-estate broker said some of his clients in the Arab Gulf states have already decided to pull out their investments. “I had lot of inquiries about real-estate projects in Beirut and the mountain before Hariri’s death but now the situation has changed,” the broker said.
He added that Solidere would be one of the first companies to be hard hit this year. “Solidere sold and rented a large number of residential units in 2004 but I don’t think investors are willing to take any chance now until tension eases,” the broker added.