Is it profitable to open at the Zaitunay Bay?

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I posted few days ago on how the average price per 1 square meter in Beirut is over 3000$ and how Beirut’s average rent was $1,872 for a 150-square-meter apartment, higher than the Arab average of $1,526 per month. [Link]

I was also told yesterday that renting a 200m2 place (+ terrace) at the newly open Zaitunay Bay costs at least 1 million dollars a year. Let’s assume the price is exaggerated and say a restaurant named X pays 750,000$ a year for a 150m2 place that can fit 80 people.

750,000$ means 62,500$ a month and almost 2000$ a day.
– If a meal costs on average between 30 and 50$ at restaurant X, it will need between 40 and 70 customers EVERY day to break even.
– This will only cover the rental fees without taking into consideration wages, maintenance and operating fees etc…

Given that Zaitunay Bay won’t be working that well during the winter season, and that I’ve never seen a restaurant full in the three times I went already, I don’t know how restaurants will profit from opening there.

Update: I spoke to Ziad Kamel, Founder/CEO of the Alleyway Group, and Treasurer of Syndicate of Owners of Restaurants in Lebanon, and he told me restaurants at the Zaitunay bay pay approximately $400-500K per year.

17 thoughts on “Is it profitable to open at the Zaitunay Bay?

    1. Najib Post author

      Alf,
      Do you have exact numbers? I asked at least 6 people and least I got was half a million. Even for 500,000$ it’s merely profitable to open there.

      Reply
  1. jad

    I don’t know the prices but $1000000 is way over reality..

    Plus it has only been open for the winter season and i don’t know when you went, but anytime the sun is out, weekday or weekend, you can’t find a single place in any restaurant.. Well any restaurant but zabad that’s always empty

    Reply
    1. Najib Post author

      Jad,
      If the real price is around 400,000-500,000 for a regular restaurant, a large restaurant might cost as much as 1 million dollars a year.

      All the times I’ve been there were at night and Classic Burger Joint was the one place really crowded. Others barely had anyone in them.

      Reply
  2. Habib

    Interesting post. Where did the original 1 million figure come from? I’m also curious where do payments go? Are all these millions of dollars per year gong to Solidere’s board? Are dividends being paid to shareholders?

    Reply
    1. Ali Sleeq

      Why does it matter where the money goes? Do you ask the landlord what he does with his money?

      If you question their tactics and business practices don’t support them by going to downtown.

      Reply
  3. carlo

    the rent is 1500 $ per square meter per ,its one of the highest in Lebanon not counting the maintenance and a certain percentage of sales negotiable on a case to case basis ,so it is high …

    Reply
  4. Habib

    Thats interesting Ali. Do you consider Solidere to be the landlord of Zaituna Bay?

    As a multibillion-dollar corporation–and the biggest company in Lebanon, which holds a monopoly over development in the historic city center, yes I am curious about how Solidere spends the money it generates as I think any citizen concerned with the development of his city would be. Plus its a publicly traded company, isn’t it?

    But I feel you are offended by my questioning of Soldiere’s finances. I’m genuinely curious, why does that offend you so much?

    Reply
    1. Ali Sleeq

      Why would I be offended? I’m merely stating my opinion.

      You can choose not to support it; the shareholders are responsible, and the board of directors is to be held accountable for any actions it takes, good or bad.

      Prices are set according to supply / demand, and land value. While it would be great to get low cost real estate (a rarity in Lebanon) this is not an arbitrary thing; the government is involved in valuing property too.

      You pay to get a service, like my landlord example. I don’t consider Solidere the landlord of BCD but who are you renting it from? If they are the property managers then yes you are paying them for a service, in this case a place to set up a business. What they do with the money is all (and should be) declared to their shareholders. Unless you are a shareholder why does it matter if some random John Doe got his dues?

      Remember BCD is under a public tender; while Solidere is the developer they do not (and should not) run it as they wish. The government is ultimately responsible and if there is any conflict they are the ones who should intervene and set the course. In the end, they gave them the go ahead to develop the area.

      Reply
  5. Habib

    Ali, I’m all for opinion and debate, but In both comments you are saying essentially the same thing: I have no business questioning Solidere if I am not a shareholder. I would say that is more of a reaction than an opinion and one I frequently encounter as a journalist, i.e. don’t ask questions, theres nothing wrong here.

    I happen to think it is very healthy for citizens, journalists and bloggers to ask questions about major corporations and institutions that influence their societies: what they produce, how they operate and how their books are kept. This encourages transparency and public accountability; No, I don’t think we should rely on the government and corporate power to regulate itself as you suggested above:

    “The government is ultimately responsible and if there is any conflict they are the ones who should intervene.”

    Really? I wouldn’t rely on government and big corporations to regulate themselves in the most advanced and representative of democracies, let alone in Lebanon, where chaos and impunity are celebrated.

    You also say: “Unless you are a shareholder, why does it matter if some random John Doe got his dues?”

    If that logic was applied across other cases, we wouldn’t have any journalism about private or public companies. Do you suggest that corporations NOT be questioned by journalists, bloggers, citizens? Would you have required the directors of “Inside Job,” the Oscar-winning documentary to be shareholders in every publicly traded American company they investigated?

    Clearly Ali you are not interested in questions about Solidere and its finances and that is your prerogative. What I don’t understand is why you suggest that other people, such as myself, also not be interested in asking questions about Solidere and its finances. Why exactly are you discouraging discussion of this topic?

    Reply
  6. Ali Sleeq

    My statements come from your comment “I’m also curious where do payments go? Are all these millions of dollars per year gong to Solidere’s board? Are dividends being paid to shareholders?”

    I’m not discouraging discussion; we as citizens are also responsible for our country just as much as the government is.

    But, perhaps the way you worded it made it sound skewed in a particular direction, ie “We do not know where Solidere’s money goes”. Well it is possible, since it’s on the BSE, that all this information is easily obtainable. If shareholders were not getting their dues, obviously there would be a lot of talk about it. I read somewhere that $100 million were paid as dividends some year or two ago. All the accounting is (or is supposed to be) mentioned publicly.

    I think the main concern would be to understand why real estate in Lebanon is so high and how to bring it down, rather than blame a corporation. Because again, and if I am mistaken I apologize, the government is the final authority on real estate prices. Otherwise I would love to sell my apartment for 750 million bucks (dollars).

    Reply
  7. Gianni

    Habib,

    Is Solidaire a public corporation with its shares traded publicly? If yes; should not its accounting records be of public knowledge? Don’t they publish their annual statements at the year’s end?

    Ali; no government should be the final or any authority in determining the real estate prices. The market should decide it. Off course in Lebanon where Monopolies and under the table (or in your face blatant deals) deals are celebrated I doubt the presence of any regulatory body will make a difference. BTW is there a regulatory body that would scrutinize if laws are honored and not broken?

    Reply
    1. Ali Sleeq

      As much as I support the free market, without some sort of regulation prices should soar to extreme heights, especially in a volatile country like Lebanon.

      Reply
      1. Gianni

        But Ali; for that same reason; as you have devious and unscrupulous politicians you have to be careful what you wish for. They can manipulate the prices by legislation…

        Reply

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