February 27, 2008 / 8:42 PM / 12 years ago

UPDATE 2-Gulf firms unveil Syria projects, shrug sanctions

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By Khaled Yacoub Oweis

DAMASCUS, Feb 27 (Reuters) - Two large Gulf property companies plan to invest $450 million in Syria as part of their expansion in emerging markets, executives said on Wednesday.

The projects were announced as Washington expanded economic sanctions on Syria to raise pressure on the Damascus government for supporting anti-U.S. groups in the Middle East.

Qatar’s state-owned Diar will build a $350 million resort on the Syrian coast while Emaar Properties EMAR.DU of the United Arab Emirates signed for a $100 million venture with Cham Holding, which is controlled by Syrian tycoon Rami Makhlouf, on Wednesday.

Makhlouf, who was personally targeted by the new U.S. sanctions, said the project will have the support of the authorities to reorganize areas where illegal buildings are rampant in the Syrian capital.

“Good housing will be provided for inhabitants of these chaotic areas. Historic sites will be preserved,” Makhlouf, who is the cousin of President Bashar al-Assad, told Reuters.

Diar’s Chief Executive Officer Ghanim al-Saad said expanded U.S. sanctions on Syria would not delay his company’s project on a 244,000 square-meter beachfront plot.

“Syria is a brotherly country,” Saad said.

He did not give a start date but said construction would take three years to complete. Diar has issued a tender for building marine works for the resort near the city of Latakia.

Saad said Diar has $30 billion invested in property worldwide, which it planned to double with expansion focusing on the United States, Singapore, Vietnam and Cambodia.

Gulf investors have announced a number of megaprojects in Syria in the last three years that have not started as the 2006 Israeli invasion of southern Lebanon and a 2007 strike on Syria has raised the level of political uncertainty in the region.

Emaar laid the foundation stone in June 2006 for a $500 million residential complex near Damascus but construction has not begun. UAE construction company Arabtec was awarded a contract in January of this year to build part of the project.

Investors have also struggled to clear regulations and bureaucratic hurdles in Syria, although the government has relaxed laws restricting private investment and property prices have risen sharply.

Syria’s economy underwent heavy nationalization when the ruling Baath Party took power in a 1963 coup. Gradual liberalization measures have helped attract a limited inflow of capital, mostly from the Gulf and from Syrian expatriates.

Lebanon has been traditionally the primary magnet for Gulf investment in the Middle East, with the late premier Rafik al-Hariri establishing a private company to rebuild the center of Beirut from the 1975-1990 civil war.

But a 15-month political crisis in Lebanon and armed conflict with Israel, as well as a boom in oil prices, have helped turn investors’ eyes to real estate projects elsewhere in the region. (Editing by Gerald E. McCormick)

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