What have Demco Steel
been over the past year?
We have shifted our interest
from the steel industry to various
other sectors over the past
few years. Real estate in Lebanon
has become one of our main businesses.
We have also expanded
our shipping business overseas.
And while we have maintained
our position as market leader in
the Lebanese steel market, we do
believe that diversification is the
key to growth today.
What type of real estate developments
are you involved in?
We have several projects that
mainly consist of small-scale
housing in very interesting
residential buildings, including
some products unique to the
country. In our latest launch with
RedRock Village & Spa project,
we are creating an entire village
in the Faqra mountains with a
spa, a farm, solar panels, and bio
waste facilities. There is huge interest
from the Lebanese people
in this kind of development, and
so we’re starting to develop in
this area and have done very
well. We sold more than half the
project in three days, and it is a
very large one. We are beginning
work to lay down the necessary
infrastructure as we speak, and
are set to start the construction
of the project in April 2014.
What makes the RedRock
Village & Spa project different?
The initial RedRock master plan
was designed by Foster & Partners
in London, one of the best
architectural firms in the world.
The total area of the project is
500,000 sqm, of which 250,000
sqm will be dedicated to public
gardens and roads. We are ready
to lose more than 50% of the potential
exploitation to make sure
we keep a maximum amount
of green areas and a beautiful
landscape for RedRock residents.
This non-commercial approach,
which is something we are very
proud of, will definitely be a first
in Lebanon. We are building exclusive
high-end chalets, where
families will live in apartments
ranging from 50 sqm to 130 sqm
in size. There will also be gardens
and individual swimming pools.
The farm is key to the project as
it will provide a place for families
to experience a healthy lifestyle
with daily products such as eggs,
dairy products, and fresh organic
vegetables. Furthermore, we will
have facilities to provide numerous
sports activities within the
sports club in the spa or natural
jogging track/hiking trail in
the forest. Despite the current
instability we are faced with,
this is yet another example that
specially tailored projects will
sell out irrespective of political
stability. An “outside the box”
approach combined with our
unique products are the main
reasons why we sold more than
1,000 apartments/offices in various
projects, enabling Demco Properties to become market leaders
within a very short time.
What trends can you identify in
the demand for apartments?
In Europe 50 years ago, many people
were accustomed to live in
apartments of 200 sqm-300 sqm.
Today, people live on average in
70 sqm residences because prices
are much higher. People want
smaller places in good locations
and with excellent facilities, but
they cannot afford large apartments.
Five years ago, I started
a small apartment project in the
Metn area of Beirut, with units of 122 sqm. It was a huge success.
At that time, we were the first to
develop 100-sqm apartments. In
fact, we sold all of the 122-sqm
units in record time, with the 166-
sqm units selling out immediately
after. People want to be very close
to Beirut, but cannot afford to be
in the heart of the city because it
is too expensive.
What other projects are you
We are working on three towers
on the coastal highway, including
30- to 45-story buildings. That
was also different in the sense
that the highest building on the
highway is currently seven or eight stories high. People never
liked to live high up, but due to
today’s demographics there is an
increasing demand for this kind
of housing unit. With land being
so expensive the only thing you
can do is to erect higher buildings.
These apartments have
magnificent 360° views of Beirut
city and the Mediterranean Sea.
None of the available projects
have these facilities and views
at these price levels. There is a
market for the right product, and
there is adequate liquidity in the
country. The banks in Lebanon
are fully liquid and need to lend
to their customers who are looking
for the right products.
What is your outlook for
the shipping business?
Today, shipping has changed.
First of all, the last two or three
years have been extremely
difficult for the shipping business
because of the global recession.
I believe that the US
and Europe are beginning to
emerge. Although there are still
many issues to overcome, I am
convinced that one year from
now things will start kicking in
again. We have ordered a few
large ships. These are ships that
save around 30% of fuel over
the previous models, and that
have a capacity to move 30%
more goods. Their new design
enables them to go faster than
previous models. They can trade
anywhere in the world, which is
another way of diversifying our
assets. The main play was based
on the reality that the market
today is very bad, with very low
ship prices, though with new
technology for better ships
emerging. When you save 30%
on fuel, you are basically saving
about $1 million per ship per
year on energy costs alone. We
are selling off the old assets and
replacing them with new ones.
The new ship designs will eventually
be so much more competitive
that they will make the rest
of the world’s fleet obsolete.
This new approach should result
in a significant increase for our
How is the steel market
performing in Lebanon?
To this date, the quantities of steel
that are being demanded in the
country are the same in 2013 as
they were in 2012. That was a surprise;
we had expected demand
to drop due to a slowdown in the
economy. I don’t expect the 2nd
Quarter of 2014 to be the same,
and am anticipating a slowdown
over the coming months. The price
of steel is set by the international
market, and not the Lebanese
market. Therefore, what happens
in the construction sector in
Lebanon affects the demand for
steel; however, it doesn’t affect
the price. The main problem that
we are having today is that there
is a lot of competition between
players in the steel business. The
margins are very slim and interest
in growing a business with
such margins and very little added
value is falling. Hence, this is the
reason why we are focusing most
of our energy on other sectors.
What is your vision for Demco Steel
The biggest obstacle in
proper forecasting is the political
situa- tion in Lebanon today.
Visibility in this country varies very
quickly. It is very difficult to be able to
tell you where I see Demco in the near
future because most of our activities
are still regional, or within