| Interview with GEORGE CHEHWANE |
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| Staying on the Plus side |
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| Launched in July 2007, Plus Properties has quickly established itself as one of the most innovative and ambitious real estate developers in the Middle East. The company develops luxury residential projects in the UAE and throughout the region.
With a mission to provide customers with the highest quality residential apartments, Plus Properties also acts as a real estate agency advising on property investments and helping with the full range of property transactions. With services focused on the UAE, KSA, Bahrain, Kuwait, Syria and Lebanon, Plus Properties currently has offices in Dubai, Abu Dhabi, Jeddah, Riyadh, Kuwait, Bahrain, Beirut and Moscow.
Plus Properties is owned by George Chehwane, a renowned media mogul.
REAL Magazine met Chehwane in his office in Beirut. A shrewd businessman, Chehwane knew how to make the most of opportunities that were on offer in the recent boom the real estate sector experienced in the region. Yet, when the global credit crunch severely hit the sector, Chehwane was one of the few who had the vision and plan in place to safely emerge from the crisis by successfully consolidating the company’s operations.
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When was Plus Properties launched and what are its target markets?
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| We started operations in 2007 when we launched two projects: one in Dubai and one in Abu Dhabi, both targeting he UAE market in general. Our Dubai waterfront project took shape from within our strategy to focus on waterfront developments. On the other hand, when we initiated the Sky Garden in Abu Dhabi, we were labeled “adventurers” as the market where real estate boomed at the time was in Dubai and not Abu Dhabi. |
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Being a renowned media group in the region, what prompted Group Plus to diversify its business into real estate development?
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| Actually, our decision to go into real estate was based on a diversification strategy to have a line of business other than advertising. We have media contacts and solid marketing tools and strategies that we can benefit from in another business sector. We have strong presence in the outdoor media field year round and throughout the Arab World: Lebanon, Syria, Bahrain, UAE, and KSA; this gave our real estate business a competitive advantage in terms of exposure and awareness. The campaigns that we have launched for Plus Properties were huge using not only our media but other media channels as well, since we believe in the role of marketing and advertising in launching any project. In addition, we spotted a good opportunity in the booming properties market of Dubai and Abu Dhabi. |
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What are some of the projects that you’ve launched so far?
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| We’ve launched many projects in 2007 and 2008. Currently, three projects are under construction. Two of these are in Dubai (The Waves) and Jebel Ali’s waterfront (Pixel), and one is in Reem Island (Sky Garden), Abu Dhabi. At the same time, we have frozen two projects in Dubai, and one in Abu Dhabi, because of the global economic crisis. We have also frozen a project in Al-Zora, Ajman. This was part of a consolidation plan in 2008 and 2009, where we shifted the sale of 500 apartments from the delayed projects to more active ones in the UAE and Beirut. As for the active projects, Abu Dhabi’s Sky Garden will be completed in three years, while Waves of Dubai and Pixels of Jebel Ali will be completed within two years; the three projects are on schedule. |
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What can you say about your clients? Are they investors or end-users?
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| 75% of our Abu Dhabi clients are end-users, while in Dubai only 25% of them are end-users. However, and as per our consolidation plan, we have reduced the number of apartments an investor can buy from say 10 down to 4.
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So, you have operations in Dubai, Abu Dhabi, and Beirut?
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| Our development operations are in these three cities. Our sales operations however stretch to KSA, Bahrain and mainly to all countries of the region.
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How do manage such a big operation?
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| A company is founded for each project, with a holding company for the administrative management. In fact, Group Plus is a sales company with 550 employees between media and real estate. It has its own engineering department, owner representative departments and offices. Plus Development is a new company that we will be launching soon, and this is an exclusive announcement through your magazine. Last month, we started operating Plus Properties as a sales and marketing company for other developers. The Venus Tower project in Beirut for instance was an exclusive sales and marketing contract.
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How do you finance your projects?
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| In Lebanon, we finance our projects through bank loans. In the UAE, we use self-financing through pre-sales, a thing that placed our projects in a better position than others in the UAE. At the breakout of the crisis in 2008, and despite being the only Lebanese development company in the Emirates, Group Plus remained active in Dubai. In the first six months of the crisis, everybody anticipated our downfall. The consolidation plan that we adopted last year was a very wise and smart step on our part. We met with all our clients and investors, and shifted their investments from the frozen projects to the active ones. |
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Do you think that you succeeded in managing the impact of the global crisis on your company?
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| The crisis had a lesser impact on whoever started projects and sales in 2007. Those starting in 2008 took a much harder hit. Our strength vis-à-vis the crisis stemmed from the fact that most of our sales were done in 2007 and the first three months of 2008, when the prices were still reasonable. Additionally, the company did not invest more money to initiate other projects, nor did it benefit from any bank loans. I, as chairman of Plus Properties, personally met with nearly all the clients to work out a solution for their investments, a thing that created confidence in the continuity of our company. Furthermore, we started construction during the crisis using the right marketing tools to promote the projects while also negotiating payment modes with the plots’ owners to create cash flow. All this gave our company good credibility and gained customer confidence. The fact that we had a basket of locations: Dubai, Abu Dhabi, and Beirut – the last two being safe and promising locations – was a helping factor. I must mention that we have a good crisis management policy and an excellent team in support of all our operations. |
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Having now built some knowledge about Dubai’s market, what do you really believe happened there following the global economic crisis?
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| Simply, at a certain time, Dubai created the impression that you can double and triple your money in less than three months. This led 85% of its investors to become speculators.
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What is the solution in your opinion?
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| All developers are reducing their investments to sustainable levels. The government of Dubai, in turn, has frozen some projects like Palm Deira, and is reducing waterfront developments to a smaller scale. |
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What about laws and regulations?
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| They are currently working on new laws and regulations as well.
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Venus Tower was launched in Beirut, and Plus Properties was the marketing and sales representative of the project which made a record $140 million (USD) in sales within two days. What is your secret?
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| Our secret is that we do the right thing at the right time, and in the right way. First of all, we know how to attract people. Today in Solidere, the average apartment goes for $6000/m2. So we priced one or two apartments at $4100/m2 to draw attention and create a buzz. With a hit-one-time aggressive marketing campaign that lasted for a few days, we were able to achieve excellent sales. Of course, we must not forget that Plus Properties has the largest portfolio of investors in the Middle East, comprising 22,000 to 23,000 mails collected from Plus Properties’ data base, and our airport and Cityscape stands. So, Plus Properties’ credibility, the project’s location, the marketing and sales tools all worked together to bring about phenomenal sales.
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Do you think the healthy environment of the Lebanese real estate market is due to a shift in focus from another market or is it inherent?
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| I am a little bit cautious of the real estate market in Lebanon. It is true that it is safe to invest in, but this does not mean that the demand will remain high at any price and at any location. For example, I believe that Ashrafieh is reaching a point whereby the prices will stabilize, because investors and end-users want competitive prices in the presence of a multitude of projects. I believe that low budget real estate markets are going to flourish in the near future.
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What is next for Plus Properties?
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| The specialization of Plus Properties into sales is our next step. We are launching a new company specialized in development: Plus Development Co. It will initiate projects, prepare feasibility studies for every project, and invite investors either to buy an apartment in one of its projects, or become a shareholder in a specific project in an investable area. Under Plus Development, we will be founding 10 companies for 10 projects within the next two to three months. We are now negotiating with some Lebanese banks to become nominated as the financial advisors of these companies. |
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Usually, who are your clients in Lebanon?
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| 80% of our clients are Lebanese, most of which are end-users. In Solidere, 75% of the clients are Lebanese, while 25% are GCC nationals.
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What would be your closing word for this interview?
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| I believe that the real estate market will prosper, especially the lower budget apartments. At least one thousand apartments must be built in Lebanon to face the demands of millions of Lebanese expatriates. REAL magazine is being started at the right time in Lebanon. In the absence of a serious and professional magazine, it has become a reliable tool and reference for any investor and end-user. |
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