Nasser Chammaa in Conversation with Nick Hackworth
Interview conducted in Beirut whilst researching Solidere for Quintessentially Magazine.
Nasser Chammaa is chairman and general manager of Solidere and chairman and chief executive officer of Solidere International. Solidere is involved in the development of large scale and mixed-use projects and premium real estate projects in the Middle East, North Africa and the Mediterranean regions, and Nasser has been chairman and general manager since the company's inception in 1994.
Nasser Chammaa holds a doctorate in operations research from the University of California, Los Angeles, and a degree in electrical engineering and computer science from the University of California, Berkeley. He is a member of the International Chamber of Commerce of Lebanon, and he received an Officer Decoration from the Order of the Cedar in 2004.
NH: Were you confident the Solidere project was going to work right from the start?
NC: Well I was very confident—yes—that we were able to execute the project. I say that because initially the whole execution was in doubt because there were so many difficulties. This area was—, we had thousands of families squatting in here. There was a lot of opposition to this idea of entrusting the reconstruction of downtown Beirut to a private company. There was political opposition to this. There were many questions. In a sense, the whole idea was in question. I, personally—and maybe it was not logical —I never questioned whether it would happen, because it seemed the only logical solution,—there was no other solution.
NH: What was the main argument against it being a public project?
NC: Well, you have the geographic centre of the capital of a country that had gone through war completely destroyed, and the property there owned by tens of thousands of people. On top of that you have other property right holders like the tenants. So you had a really very entangled structure. How do you get these people,—even if you build the infrastructure,—how do you get these people to start developing,—and who starts first,—and according to what plan? And so on. So it all seemed to be full of complications. This approach of changing property right holders’ ownership of land, or real-estate into ownership of shares in a company, seemed to be the only approach. Then the company could lead the development, based on a master plan that had to go through the whole approval process. But this, obviously—, you know, people have different ideas. When you have such a large number of stakeholders you invariably would get opposition,—and that was the case.
NH: Are most of those stakeholders—the original stakeholders—still shareholders now, or have some sold out?
NC: A lot of them are [still shareholders]. Of course, some have been in and out, and now our shares are traded publicly. The majority of them have held on to those shares.
NH: Who originally conceived the project?
NC: This idea of reconstructing areas that have been affected by war has been studied by various government agencies here,—especially the Department of Urban Planning,—and by different committees in the parliament. Even before that,—even before the war,— in the urban-planning laws there was the possibility to create real-estate companies to help in urban regeneration. The area didn’t only suffer from destruction, but it suffered from many other urban problems. So this idea existed in the urban-planning code here,—how you reshape a whole area.
NH: Was the option to go with a private company,—and the kind of thinking that generated that idea,—is that related to Beirut’s history as a centre for laissez-faire capitalism? Is it to do with the political and economic heritage of these areas intellectually?
NC: I wouldn’t say that. I think the realities of having an area that was absolutely demolished, that was so important,—how could the country move forward when the heart of its capital is absolutely destroyed? It’s not only the heart of the capital,—it’s the geographic centre. So the country needed to move forward and needed to restore this area.
NH: Do you think it’s a concentric circles type effect,—so once Solidere has finished the BCD it will spread to—?
NC: This is already happening. I think what is happening here, in terms of the approach we are adopting for urban regeneration, is being copied in other areas. That is already taking place.
NH: Presumably, there were studies on the number of jobs created by BCD, when it’s regenerated,—impacting on some of the areas immediately around Solidere?
NC: Definitely this project has been a big plus for the overall economic activity, in terms of job creation, but also in terms of creating a space that is attractive for tourists.
NH: We were talking to other people—like Jamil Mroueh—about the prospects for Lebanon and Beirut. Would finance and tourism, in your opinion,—maybe separate to Solidere itself,—be the major two areas where you would see economic growth for Lebanon?
NC: Absolutely. Definitely.
NH: Would there be any other major sectors, or would those be the prime two sectors, in your opinion?
NC: No,—there are other sectors,—but this seems too obvious. It’s clear, I think, that this is happening. We see it all the time, that this has been attracting investment, and attracting tourists as well,—these two sectors.
NH: Do you see the continuing instability,—in the Israel-Palestine issue, and some of the other areas—, is that a long-term potential obstacle to economic growth, or can Beirut grow irrespective of what’s happening outside?
NC: I think Beirut is growing, obviously in this environment that exists,—but definitely if we have a better environment in the Middle East, I would argue that growth would be positive.
NH: But you don’t think it’s necessarily an obstacle?
NC: It has not been an obstacle.
NH: So far.
NC: It’s clear that it has not been an obstacle, not only in Lebanon, but in other countries in the region. But one could easily argue that the potential is not fully realised because of the inconsistencies that have resulted from this regional conflict.
NH: Are there any comparable projects that you know about happening in the world at the moment, like [the Solidere project]?
NC: Berlin is somehow comparable, but it was done differently. Berlin would be the closest.
NH: After reunification, right? I don’t really know what happened,—was it the redevelopment oof the area around the Reichstag?
NC: Yes, in that sense. Being also the capital of a country that needed complete restoration.
NH: In terms of size, this must be one of the largest urban developments happening in the world,—would that be right,—in terms of capital?
NC: Not in terms of capital, but in terms of development rights. Our plan is to develop 4.5m square metres. That’s larger, for instance, than the development of La Défense on the outskirts of Paris. [I don’t want to say it’s the largest in the world, but it’s definitely one of the largest!]
NH: What have you been most proud of with what’s happened with Solidere over the last ten years?
NC: That we have been able to create a quality urban environment. I think eventually this will be one the finest city-centres in the world. I’m almost sure this will be the case.
NH: One of the most impressive things is just the quality of the architecture, and the look of it. How did you do that,—was there a specific plan to bring in architects from all around the world,—or was it mainly Lebanese architects you used?
NC: I think what you see today is the quality of the restoration work, because most of the work that has taken place up to today is restoration work. Obviously, we have new developments as well. It is our intention to attract international architects, and we are doing so through the work that we’re executing ourselves, being a real-estate company as well. We are the land development company, but we also execute real-estate projects, so we’ve attracted international architects to do specific projects. We’ve also convinced other developers of the importance of doing that.
NH: Originally, when Solidere was set up, was there any mixed funding from international bodies,—say like the World Bank,—in terms of infrastructure?
NC: No,—we’re totally a private company,—we have no public funding whatsoever. We have funded completely the installation of all the infrastructure within the BCD, which is normally a government—
NH: Solidere took it upon themselves to do that?
NC: Yes. Including the reclaimed land, yes,—including the sea-defence, including the treatment of landfill,—every aspect of infrastructure, including street furnishings. This job is not complete, because we still have to—, once we finish the work on the reclaimed land we’ll have to put in the infrastructure.
NH: That means there’s some inaccurate information elsewhere, because I remember one of the guidebooks I read,—the Lonely Planet guide which all the backpackers would buy,—when it talks about the redevelopment of BCD and Solidere, it—obviously inaccurately—says there was World Bank funding or something for some of the infrastructure.
NC: No,—no World Bank funding whatsoever. It’s all done by Solidere.
NH: There are quite strong connections between the government and Solidere,—is that fair to say,—just in terms of shareholders?
NC: No, there’s no connection in terms of shareholding. The government is not a shareholder in the company.
NH: Is Rafic Hariri a shareholder?
NC: Yes, as a private individual.
NH: That’s an indirect connection, rather than an official one.
NC: Well, it’s definitely not an official connection, but—you know—he’s the prime minister of Lebanon today, and he was, when the company was incorporated, and he was a primary shareholder. You asked me earlier on, and I didn’t finish expressing fully this idea of who was responsible for the idea [of Solidere]. He was the prime mover behind the idea. For the company to be incorporated and be able to acquire all the real-estate property, and issue shares against that to the property right holders, a law was enacted in parliament. This law was based on previous legislation that existed in the Lebanese laws of urban planning, but under different—.
NH: The idea was already enshrined in law, but not the specifics?
NC: Exactly. So,—Rafic Hariri was the prime mover behind this whole concept. He was committed to it before he became prime minister, because he felt all along that this would be the only way to move forward with the reconstruction of the downtown. During periods of the 17-year-long war, there were periods where governments thought that the war was over, and they tried to redevelop the downtown area. These efforts failed, partly because the legislation was not enacted, and partly because the war started again.
NH: Do you think that original law, on which Solidere was founded, would not have been possible or as legitimate to pass had Lebanon not gone through this drastic civil law?
NC: I think the realities dictated such a lot. Government finances were in bad shape. This is a project where you would be expected to declare this whole area as eminent domain, and the government would expropriate it and become a real-estate developer. I believe this is not the ideal solution, and I’m sure that for the shareholders—or the original owners of land—this would have been definitely an alternative that they would not have welcomed.
NH: Because they would have done it less efficiently?
NC: Not only because of that,—but because expropriation and ownership by the government means that they are outside the development process,—they would not take part in the potential of the development. The law that was enacted changed their ownership from ownership of real-estate into ownership in this real-estate company as shareholders. So, instead of owning a piece of land, now they have a stake in a bigger company, whose objective is to develop the whole area and realise the full potential. So they’re not outside the development process. They’re not necessarily deciding what will happen in their property, but they’re part of this bigger organisation. So in that sense they’re not outside the process. I believe that the realities have dictated this, and the realities being,—the government finances being in such bad shape,—this area was absolutely destroyed, and needed complete restoration of the infrastructure,—the fact that the property rights were so entangled, because this is the oldest area in the city. The city of Beirut historically has grown out of this area. We know now, after all the archaeological work, that the Venetian settlements were in the downtown area, and the city grew traditionally out of this area. Most of this property has been passed on from generation to generation. In some lots you would find thousands of owners. Typically a real-estate lot would be owned by several families.
NH: How could they own the same lot?
NC: They own shares in the same lot. It would be like another company, with different shareholders. So you needed to change this to be able to move forward with the development process.
NH: There’s obviously been very careful planning in terms of the residential-commercial mix,—not just one or the other,—is that fair?
NC: The idea is not to create a single-use environment, like many downtown areas in the world. The idea is to emphasise mixed-use. The objectives of the planners from the beginning were to create a city that would be active day and night. You’d have residential development and office space as well, recreational space and commercial space. I think it’s working very well and everybody is happy with that.
NH: How close is it to completion?
NC: There’s still much to be developed, even within the traditional BCD.
NH; Basically, it’s been on time, hasn’t it, as a project?
NC: Well, there was never a timetable fixed in stone, because we knew that this development would have to—, I mean, the economic conditions would dictate how quickly this would be developed. I think it is a bit delayed vis-à-vis our original expectations. In terms of infrastructural work it is definitely on time, but in terms of the development target, we’re somehow behind what we expected.
NH: In terms of planning, were there any particular models of other city-centres that exist that were looked at?
NC: Definitely the planners who devised the plan looked at many models, though not necessarily to emulate. The studies behind this took several years. The company was incorporated in May 1994, but all the founders who were involved in financing all the studies had worked on it since 1992, and they built on previous studies that had been done by the government for the redevelopment of this area since 1984.
[UNKNOWN]: In other parts of Lebanon, outside of BCD, there are other projects that Solidere has been putting money into. Are there other projects like that?
NC: We’re contributing now to this project on the outskirts, but,—no, we’re not contributing to other projects in other parts of the country. But you spoke about these concentric circles. I think a lot of the work that we do and how we do it is affecting other municipalities, and our contribution vis-à-vis other areas is we always share our ideas with other municipalities,—we open our books and show them what we can do,—we give them advice is they seek our advice.