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. Last Updated: 07/27/2016

Arab Money Drives Beirut Luxury Boom

BEIRUT, Lebanon -- At Beirut's five-star seaside Movenpick resort, built by a Saudi prince for the super wealthy, $30,000 will buy a tiny beach hut.

Another $375,000 would pay for a one-room chalet overlooking the brand-new beach, its white sand imported from Egypt. But the chalets are not on the market -- they are already sold out.

Lebanon's battered economy is faltering under the weight of a $29 billion public debt. Jobs are scarce, the stock market is stagnant. But for those catering to the mega-rich, especially those from the oil-rich Gulf, business is booming.

"We made a big bang," Movenpick general manager Frank Reichenbach said of the hotel's opening this summer. "Many [chalets] were bought without seeing the finished product."

"[But] you can feel the economy is not really kicking. ... There's quite a bit of unemployment," he added.

Just up the street from dirt-poor neighborhoods in Beirut's Shiite Muslim southern suburbs, glittering new residential towers and luxury hotels are rising on the city's seafront.

Saudi Prince Alwaleed bin Talal, one of the world's richest men, who built the Movenpick for $140 million, is also building a 250-room Four Seasons hotel in Beirut.

The luxury Crowne Plaza Hotel opened in the capital this autumn, and the head of Lebanon's hotel association said more five-star hotels were in the works.

Over the summer Lebanon blew up a never-opened Hilton hotel in downtown Beirut used as a sniper's nest in the 1975-1990 civil war to make way for a new five-star hotel.

Lebanon, once dubbed the Paris of the Middle East for its relative social and political openness, has struggled to attract tourists since the civil war left its infrastructure and reputation in shambles.

But analysts say the Sept. 11 attacks on U.S. cities and the anti-Arab and anti-Muslim sentiment the attacks fostered in the West have been a boon to Beirut as more Gulf Arabs choose to spend their time -- and their money -- in Lebanon.

"Muslims, they have feelings they are not welcome in Europe and the States," said Pierre Achkar, head of the Lebanese Hotel Association. "Every Saudi here is a prince."

Analysts say Gulf investors have brought in several hundred million dollars this year to Lebanon in the form of real estate investment and tourism.

They said Gulf Arabs were some of the biggest buyers of luxury properties, but that wealthy Lebanese expatriates and other Arabs were also behind the boom. "They feel it is a safe haven," said independent economist Ahmad Jachi. "They say, 'We don't want to go to the States. We are humiliated. We don't get visas.'"

Analysts said they expect demand for luxury real estate to continue as property in downtown Beirut gets more scarce.

"The demand is there but the supply will shrink. Most [projects] will finish in 2003-04 and there will be no supply left," said Karim Chamseddin, senior corporate analyst for Capital Trust Real Estate Holdings.

"We expect an appreciation of value [in luxury residences] in two to three years of 20 to 25 percent," he added.