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Katerji Restores Carlton Citadel Hotel in Old Aleppo

26-11-2024/in HLP, News /by Rand Shamaa

In November, the company Reviving Old Aleppo LLC commenced restoration work on the Carlton Citadel Hotel in Aleppo. The company had signed a contract with the Ministry of Tourism in February 2020 to invest in the hotel project but only managed to obtain the necessary permits at the end of 2023.

Reviving Old Aleppo LLC, whose bylaws were approved by the Minister of Domestic Trade and Consumer Protection under Decision No. 2862 in October 2019, is a company specialising in importing, exporting, and trading building materials; maintaining and restoring buildings, roads, and facilities; designing and executing interior and exterior decorations; and establishing and managing commercial complexes and malls. The company’s founding partners are Ahmad Mohammad Adnan Al-Shehabi and Ahmad Ghazal Ghazal. According to its bylaws, the company is prohibited from building, selling, or trading in residential properties of any kind.

Local sources in Aleppo told The Syria Report that Reviving Old Aleppo LLC is affiliated with Katerji Group Holding. This claim is supported by various indicators, including a January 2022 video by the Aleppo-based Facebook page “Sada FM Syria,” introducing the company as part of the Katerji Group Holding.

Brothers Baraa and Hussam Katerji, along with some of their companies, have been under U.S. sanctions since 2018 for “facilitating oil shipments and financing for the Syrian regime” and acting as intermediaries between the Syrian regime and ISIS in oil deals. Through companies like Arfada Oil, Arman Hotel Management and Tourism, and AA Syria for Towers, the Katerji Group operates in sectors ranging from engineering and oil to tourism and construction. Baraa Katerji served as the chairman of Katerji Group Holding until he was killed in an Israeli airstrike near the Syrian-Lebanese border in July 15.

The Carlton Citadel Hotel, rebranded this year as Arman Citadel Hotel, overlooks the Aleppo Citadel and is located near the historic Khan Al-Shouneh. It is a 20-minute drive from Aleppo International Airport and within walking distance of the citadel, old markets, the Umayyad Mosque, the Museum of Popular Arts and Traditions, and several traditional hammams, making it a significant attraction for tourists.

In February 2020, Naila Shahoud, the head of the Directorate of Tourism in Aleppo, told the official local newspaper Al-Jamahir that the investment contract included rebuilding and operating the hotel under a Build-Operate-Transfer (BOT) system for 40 years, with an annual investment fee of 16 percent of the hotel’s yearly revenues. The reconstruction involves restoring the destroyed sections to their historical condition and adding a complementary building in harmony with Aleppo’s heritage. The project’s implementation timeline was set at five years, with plans for the hotel to be a five-star establishment featuring 80 rooms and four restaurants.

Ms Shahoud added that, alongside encouraging investor interest, the project aims to motivate local residents to restore and return to their homes around the citadel and old city.

The building hosting the Carlton Citadel Hotel dates back to the early 19th century and was originally built as a courthouse on endowment land. However, the 1822 earthquake destroyed the building. Between 1883 and 1897, the site was developed into the “Hamidian Strangers’ Hospital” with funds from donors and inaugurated in 1900 by the Ottoman governor of Aleppo, Jamil Pasha. The hospital included 32 rooms, two large halls, two lounges, and a pharmacy. Over the years, it became a national hospital, a nursing school, and later a health institute in 1988. In 2011, the Ministry of Tourism converted the building into a four-star hotel with 90 rooms, 180 beds, and 584 restaurant seats. The Carlton brand is, in Syria, the property of Shamra Hotels and Resorts Investment Company, which is affiliated with the Attar Group, and is not related to an international chain.

It remains unclear how the property transitioned from endowment ownership to state property under the Ministry of Tourism. This is notable because endowment properties are neither state-owned nor privately held, despite originally being donated by individuals.

After opposition forces took control of parts of Old Aleppo in mid-2012, regime forces and Iranian militias transformed the Carlton Citadel Hotel into a military base due to its strategic vantage point over opposition-controlled neighbourhoods. On May 8, 2014, the opposition group Islamic Front detonated mines planted through tunnels beneath the hotel, partially destroying it. Subsequent shelling in 2015 further damaged its foundations.

A source from Reviving Old Aleppo LLC told The Syria Report that the project spans 7,000 square metres, and is set to create around 1,000 job opportunities “breathing new life into Aleppo’s historic centre”. However, the project faced prolonged delays due to mismanagement within Aleppo’s city council, disagreements with the Directorate of Old Aleppo, the Old Aleppo Protection Committee, and the technical committee of the city council. According to the source, the company took four years to secure the construction permit, despite the contract stipulating a five-year implementation period. The project site was handed over to the company in April 2020, but bureaucratic hurdles and deliberate stalling from official entities delayed the project’s start.

In late 2022, Baraa Katerji personally intervened with the Minister of Tourism to pressure the city council to approve the initial project plans. Despite this, the council did not grant the construction permit until late 2023. According to the source from Reviving Old Aleppo, the Katerji Group accuses unnamed entities of exerting pressure on the council and the Old Aleppo Directorate of delaying the permit issuance.

The company has renamed the hotel from Carlton Citadel to Arman Citadel. If completed, the hotel will join other Katerji Group-operated hotels in Aleppo, including Arman Hotel in New Aleppo, Lorus Hotel in the Mohafaza neighbourhood, and the Quattro Hotel in the Martini neighbourhood, which is expected to open in November 2024.

Explained: State-owned Properties in the Law for the Establishment and Management of State-owned Companies

19-03-2024/in Analysis & Features, HLP /by Rand Shamaa

On February 14, Law No. 3 on the establishment and management of public joint-stock companies and joint ventures was issued to contribute to the development of the public economic sector, i.e., state-owned companies. The law stipulates the creation and regulation of three types of companies: public joint-stock companies, public holding joint-stock companies, and joint ventures.

Law No. 3 of 2024 allows public sector institutions and companies to transform into public joint-stock companies or public holding joint-stock companies, ensuring their ownership remains with the state. Moreover, the law permits public sector companies and institutions to enter into partnerships with the private sector under specific conditions outlined in Law No. 5 of 2016, which regulates the provisions of the partnership between the public and private sectors.

Law No. 3 of 2024 is the latest in a series of laws issued recently to modernise the legislative framework for companies in Syria. This began with Law No. 3 of 2023 regarding the merger of companies and their conversion into joint-stock companies, followed by Law No. 40 of 2023 concerning the establishment of joint agricultural sector joint-stock companies in both the plant and animal sectors and Law No. 43 of 2023, which deals with the creation of the General Commission for the Management and Protection of State Properties.

Public Joint-Stock Company

According to Law No. 3 of 2024, a public joint-stock company is one in which the state holds all shares, with no private sector partnership. Its establishment requires a decree from the Council of Ministers based on a proposal submitted by a relevant ministry.

A public joint-stock company is managed by a board of directors formed by a decision from the prime minister based on a recommendation from the company’s general assembly. The board of directors can consist of five to 13 members, with a tenure of four years, renewable once. The board has the authority to manage the company and oversee its operations. This includes developing plans, monitoring their implementation, preparing projects, submitting proposals, studies, and approvals. Additionally, the prime minister appoints the company’s CEO for a term of four years, renewable once, upon a recommendation from the board of directors. The CEO is the highest administrative officer responsible for executing the board’s decisions, preparing the annual budget and budget plan or conducting contracts according to the new law.

The law grants the movable and immovable assets of the public joint-stock company the status of the state’s private property. As a result, these properties cannot be sold, acquired, or seized by others. According to Law No. 252 of 1959, the state’s private properties are classified into 12 types, including Amiri land, properties registered in the land registry in the state’s name, properties listed in the state property department’s records, resolved properties, and vacant available lands or abandoned lands.

This relationship between the public joint-stock company and the state’s private properties makes Law No. 3 of 2024 closely related to Law No. 43 of 2023, which concerns the establishment of the General Commission for the Management and Protection of State Properties. The Commission aims to generate steady and permanent resources for the public treasury through the management, maintenance, and investment of the state’s private properties.

A public joint-stock company can obtain loans from the state and also be dissolved, merged, or divided by a decision from the Council of Ministers. Public sector companies can transform into public joint-stock companies by converting their capital into shares owned by the state, but these shares are not offered for public subscription. As the state-run Tishreen newspaper reported on February 26, public institutions such as the Public Establishment for Transmission and Distribution of Electricity or the General Establishment for Drinking Water and Sewage can be transformed into a public joint-stock company. The company’s board of directors assumes responsibility, including pricing flexibility and market competition, without waiting for governmental decisions, thus allowing more ease in operations and service evaluation.

Before Law No. 3 of 2024, public joint-stock companies were subject to the provisions of closed joint-stock companies organised by Companies Law No. 29 of 2011.

Public Holding Joint-Stock Companies

Law No. 3 of 2024 defines a public holding joint-stock company as a public joint-stock company that manages or owns other public joint-stock companies or any other joint-stock companies, including joint ventures and limited liability companies. The Council of Ministers, by decree, determines which companies are owned or managed by the public holding joint-stock company. The shares of the companies owned or managed by the holding company form part of its capital, as do the shares it holds in partnership with other companies, as well as its real estate and fixed assets. This company can own movable properties and real estate necessary for its operations. It also has the right to invest its funds in public or private sector entities and own shares in joint-stock companies.

Law No. 3 of 2024 does not provide for the public offering of shares of the public joint-stock company or the public holding joint-stock company.

Joint Ventures

According to Law No. 3 of 2024, a joint venture is considered a private company if the state’s contribution is at most 49 percent of its capital. If the contribution surpasses this percentage, it is regarded as a public joint-stock company.

A joint venture is established following the approval of the Council of Ministers for public companies and institutions to partner with the private sector. Such a company has bylaws that specify the amount of capital, the state’s contribution percentage, and the company’s structure, including the general assembly, the board of directors, the CEO, and their respective powers. The movable and immovable assets of the joint venture are considered private assets.

Contrary to Law No. 3 of 2024, Law No. 40 of 2023 sets a minimum state contribution in the joint-stock companies in the agricultural sector at no less than 25 percent of their capital. However, Law No. 40 considers a joint-stock company in the agricultural industry a private company regardless of the extent of state contribution. This is assumed to grant the company greater freedom in operations compared to the bureaucratic restrictions imposed on public sector companies.

Property Prices and Construction Material Costs Soar

31-10-2023/in HLP, News /by Rand Shamaa

The prices of construction materials continue to rise in both the official and black markets in areas controlled by the Damascus government, leading to a steady increase in property market prices. However, the decrease in demand is pushing the market towards stagnation.

The rising prices are primarily linked to the depreciation of the Syrian pound and increased energy costs. Construction material prices are subject to official government pricing policies, mainly since a significant portion of production is carried out by public sector institutions and companies, which also control marketing and distribution.

In a phenomenon parallel to market stagnation, the prices of some residential units have become lower than the current construction costs, at least in Damascus, according to The Syria Report’s sources. The construction cost per square metre on a basic level ranges from SYP 700,000 to 1 million, varying by location. Meanwhile, the finishing costs per square metre have risen to a minimum of SYP 500,000.

On October 4, the Ministry of Domestic Trade and Consumer Protection issued Decision No. 3219, raising the price per tonne of cement produced by the General Organisation for Cement and Building Materials from SYP 700,000 to 1.76 million, at factory costs (equivalent to USD 150 at the official exchange rate and USD 129 at the black market rate). The ministry’s decision was based on a recommendation made by an economic committee affiliated with the Council of Ministers during its 50th session held on October 2. The ministry clarified that the increase in cement prices was due to the Ministry of Petroleum and Mineral Resources’ recent increase in fuel prices and other energy resources, constituting about 70 percent of the input for cement production.

Over the past years, the Ministry of Domestic Trade has raised the price per tonne of cement several times: from SYP 125,000 as per Decision No. 2603 in 2020 to SYP 175,000 as per Decision No. 1115 in 2021 to SYP 400,000 as per Decision No. 1260 in 2022, and to SYP 700,000 under Decision No. 1677 in June 2023.

A correspondent for The Syria Report in Damascus pointed out that the black market price for cement rose to SYP 4 million per tonne following the Ministry’s Decision No. 3219. Notably, prices in the black market are higher than in the official market. Other sources put the price in the black market a bit lower, around 2.8 million, but still much higher than its official price.

The OMRAN – General Establishment for Domestic Trade of Metals and Building Materials, also known as “Omran” and affiliated with the Ministry of Domestic Trade, is responsible for marketing construction materials produced by the public sector in the official local market, including cement, iron, timber, paints and ceramics. Omran was established by Decree No. 163 in 1970 and has virtually monopolised the cement market since its inception, despite the entry of private sector producers into the market after 2000. Omran compels private cement producers to sell their production to it exclusively during certain seasons, deducting a commission of up to 10 percent on the value of sales. In other seasons, Omran refrains from purchasing from the private sector, leading to an accumulation of their products amidst difficulties in local marketing.

Omran primarily focuses on securing cement for projects undertaken by public sector companies. However, it also provides contractors and citizens with specific quantities of building materials in accordance with the quantity tables included in the official construction permits they hold. The company refrains from selling cement outside these conditions, subject to confiscation and legal accountability. No bag of cement can be sold without an official document to those with an original building permit, a renewal of the permit, or a restoration licence, in addition to craftsmen with monthly vouchers issued by the Craftsmen’s Association.

The recent increase in cement prices has directly reflected in the prices of other building materials. The price of breeze blocks has reached SYP 4,300 per block, whereas last year, it was around SYP 1,000. The increase in cement prices also affects the overall costs of construction work such as plastering, tiling, ceramics and stone cladding.

Omran also dominates the distribution of construction iron produced by public sector companies. However, the presence of private companies producing iron, owned by prominent businessmen such as Ayman Jaber, Mohamed Hamsho, and Samer Foz, who are close to high-ranking officials in the security and military leadership of the regime, reduces the monopoly of the institution on the market and allows for some competition between producers. The price of construction iron has risen from SYP 4 million per tonne in 2022 to SYP 12 million currently.

Sand and gravel are also essential materials in the construction process. They have seen significant price increases, even though a significant portion comes from quarries and rubble dumps managed by prominent businessmen connected to the Fourth Armoured Division of Maher Al-Assad. The cubic metre price of sand has risen from SYP 45,000 in 2022 to SYP 225,000 currently, while the price per cubic metre of gravel has increased from SYP 55,000 to SYP 200,000 currently.

Hotel Construction Resumes in Damascus Despite Legal Disputes

31-10-2023/in HLP, News /by Rand Shamaa

After a 13-year hiatus, a private company resumed construction work in October 2023 on a hotel project in the Kafr Sousseh district near the Council of Ministers building in Damascus. The work continued despite existing court rulings in favour of the local residents against the construction company for infringing on their easement rights.

Kafr Sousseh is a residential area built on part of the Kafr Sousseh orchards south of Damascus city in the 1980s. The area is well-planned, its buildings are licensed, and it is inhabited by the upper echelons of the middle class, particularly businesspeople.

In 2007, Orient Engineering & Contracting, a part of the Toumeh International Group, obtained a licence from the Damascus Governorate to establish a hotel and commercial mall in Kafr Sousseh under a Build-Operate-Transfer (BOT) system in collaboration with the Mövenpick International Group for restaurants and hotels. The BOT system is a method for implementing large projects, particularly those related to infrastructure, through a concession granted by the public sector to a private entity to finance, design, build and operate a facility for a specified period.

Toumeh Group acquired the right to operate the tourist facility for 25 years, agreeing to pay 11 percent of its annual revenues to the Damascus governorate. The implementation period was set at 1,000 days from the date of signing the contract, with a total value of SYP 500 million at that time (approximately USD 10 million).

According to the certified zoning plan for Kafr Sousseh in 2007, the project site was designated for residential construction, comprising four plots prepared for construction with a total area of 10,000 square metres. Construction was allowed on 12 percent of this area, with a height limit of seven storeys (meaning the area occupied by the building is only 1,200 square metres). The rest of the space (8,800 square metres) was allocated for gardens and amenities owned by the Damascus governorate.

However, before signing the contract with Orient, the Damascus governorate changed the zoning of its plots at the project site from residential to commercial and tourism, based on Urban Planning Law No. 5 of 1982, citing public interest requirements. As a result, the governorate was able to merge the four plots into one to establish a single construction block with a floor area of 8,500 square metres and vary heights ranging from four to 13 storeys, in addition to basements for services and car parking. This area includes malls, swimming pools and recreational spaces.

Orient started the construction in 2008. According to a correspondent for The Syria Report, the company committed multiple “construction violations,” including building without a licence on a heritage Endowments Ministry site from the Ayyubid period, which includes a dome and a mausoleum registered as historical buildings in Damascus city. Building regulations require a 30-metre clearance around heritage sites. Nevertheless, Orient isolated the heritage site with concrete walls and a roof, restricted access to it, and continued construction around it, despite official objections submitted by the Directorate of Tourism and the Directorate of Religious Endowments in the Damascus governorate.

Additionally, the residents who own housing units in the regulated area surrounding the project site have objected to changing the regulatory status of the site and, consequently, to the implementation of the project. Some justified this to The Syria Report’s correspondent, saying that when they bought their flats, they considered the area residential, overlooking gardens. However, the area has been transformed into a commercial-touristic zone, meaning that it will lose its residential character, becoming a source of noise and congestion, and the taller buildings will block their view.

Those residents believe that these changes will cause a decrease in the value of their properties, which, when announced in 2007, exceeded one million dollars per flat (approximately 45 million Syrian pounds). By the end of 2021, the price of an average-sized flat, between 120-170 square metres, in the Kafr Sousseh zoned area was around 2-3 billion Syrian pounds (USD 500-750,000).

The bigger problem was the encroachments made by Orient on the common obligations with the adjacent residential buildings, infringing upon the residents’ rights to easement, all considered violations of the building code in Damascus. According to civil law, the right of easement is an obligation imposed on a specific property for the benefit of another specific property owned by another person. The rights of easement include the right to pass through someone else’s land, to place pillars and towers in shared spaces, to extend electrical and aerial cables, and also the right to access lighting and ventilation. The building code imposes an obligation that prevents construction within five metres on the side of public properties and 10 metres between residential blocks. Orient did not adhere to these obligations and built on the entire plot.

Some of the residential unit owners behind the Mövenpick building filed lawsuits against Orient. In 2010, they obtained judicial rulings confirming the occurrence of violations and infringement of their easement rights, demanding compensation. The financial compensation for those affected by easement rights violations is calculated as a percentage of the value of the property they own.

However, the objectors have not received compensation, and the Damascus governorate did not remove the unlicensed construction. Instead, Orient completed the implementation and construction works, thereby converting the unlicensed construction into a fait accompli, a practice many private entities exploit, leveraging their relationships with influential individuals in the regime. In similar cases, the implementing entities resort to later reconciliation according to the prevailing building violations law after paying bribes to government officials to reduce fines.

At the beginning of 2010, after completing the main building block, Orient stopped its work, closed the project site, and abandoned it. It appears that this decision came after the emergence of engineering and financial disputes with Mövenpick International Group, which withdrew its brand from the project.

In October 2023, Toumeh International Hotels and Tourism Investment, part of Toumeh International Group, began working on the project site from where Orient left off. It is still unclear whether Toumeh International Group has reached a solution with Mövenpick International Group, what happened to Orient, or whether the hotel will eventually bear the Mövenpick name.

In any case, Toumeh International Group belongs to businessman Nabil Toumeh, a member of the Syrian People’s Assembly, involved in tourism investments, contracting, information technology and television production. It is a financier for several local media outlets such as Azmena, Al-Bahithoun, Al-Muaarad, and Al-Aswaq Al-Duwaliya. Mr Toumeh has been on the US sanctions list since 2020 for his activities supporting the regime.

Damascus University Launches Online Platform for Student Dorm Applications

17-10-2023/in HLP, News /by Rand Shamaa

After a campaign by the National Union of Syrian Students and in line with government digitisation trends, the Ministry of Higher Education and the University of Damascus announced on September 20 that they had launched a mobile application named “Sakn,” or “Housing”. The app aims to facilitate the electronic registration of students for university accommodation and to enable online payment of accommodation fees.

The government digitisation trends work – albeit still modest – is the culmination of years of effort to automate specific processes as part of an e-government plan launched two decades ago alongside the United Nations Development Programme (UNDP). According to the program, 100 percent of Syria’s main government services should now be available electronically. However, for various reasons, including the past decade of war, little progress has been made toward that goal.

According to the semi-official Al-Watan newspaper, Sakn results from a collaboration between telecoms company Syriatel and the Sakn digital platform. Students can now register for the academic year 2023-2024 housing through the Sakn platform or the mobile app. The Sakn platform, a website affiliated with the National Union of Syrian Students, was designed by Engineer Ali Saleh, a participant in the Business Opportunity Forum, an event sponsored by the National Union of Syrian Students and the Syria Trust for Development.

Syriatel said in a statement on September 20 that accommodation fees paid through the Sakn app would be processed using the Syriatel Cash electronic service.

Law No. 29 of 2022 converted university campuses into independent public entities financially and administratively. This move aims to provide student accommodation, maintain, refurbish, construct new housing units, manage facilities, and capitalise on them. According to Law No. 29, each governorate with a university governed by the Universities Regulation Law No. 6 of 2006 and its amendments will establish an administrative public entity. These new entities will own all lands, buildings, facilities, kiosks, clubs, restaurants, theatres, furniture, equipment, machinery, and tools, either existing or contracted.

The public entity’s board of directors will be led by a director-general appointed by the prime minister and include the university’s president, vice-president for student affairs, the general manager of the public entity, their assistant, and a representative from the National Union of Syrian Students.

Law No. 29 stipulates that these entities must have at least three housing units. The largest and oldest is Damascus University City, with 27 housing units across three complexes: Mazzeh, Tabaleh, and Barzeh. Aleppo University has 20 housing units, Al-Baath University in Homs has 12, and Tishreen University in Lattakia has 14. There are 86 housing units across Syrian universities, housing around 100,000 students.

Law No. 29 has given the National Union of Syrian Students a legal role in the boards of the university housing facilities. The Union, affiliated with the ruling Baath Party, monopolises political and organisational activity amongst Syrian university students. Founded in 1963, the Union effectively grants security clearance on student accommodation applications. Their assessments of these applications are based solely on security databases shared with security agencies. They are supplemented by their network of informants among students and staff in universities and university cities. Additionally, the Union has been involved in trading and selling university accommodation receipts and controlling and capitalising on university housing facilities.

Since 2011, the National Union has played a security role in all university cities and student housing units in Syria, resulting in the arrest of students handed over to Syrian security forces. The Union also participated in forming pro-regime military militias, fighting on various fronts against the opposition.

The university accommodation platform project has faced widespread criticism from students due to its reliance on an electronic application. This comes when the country is experiencing significant power rationing and poor service from communication and internet networks. Many students fear any delay in registering through the platform will cost them their housing.

University housing management requires students who wish to live in university units and housing to be residents of areas at least 40 kilometres away from campus. Additionally, they should not have faced disciplinary actions or failed their courses. However, the administration exempted students who have deceased or missing family members from the regime forces and security apparatus from the latter condition.

With the launch of Sakn, the Ministry of Higher Education increased the annual housing allowance from SYP 22,000 to 88,000. In 2021, the ministry had raised the housing allowance from SYP 3,000 to 22,000. The ministry justifies this increase by using the funds to improve services and provide better living conditions for students. University housing authorities receive 50 percent of the initial payment, with the remaining 50 percent going to the state’s public treasury.

However, the war since 2011 has exacerbated the poor state of university housing units, which now desperately need refurbishment. Amidst chaos and overcrowding, often a single room houses more than six students, and in some cases, as many as nine. The Ministry of Education’s reduced expenditure on refurbishing housing units has led to the degradation of its infrastructure, including electricity and sewage networks, a complete lack of heating, declining cleanliness standards, and a shortage of beds, tables, and chairs. Many residents of these units now sleep on the floor.

Several university housing entities had previously cancelled plans to renovate or rehabilitate their buildings. This is mainly due to the limited budget for such tasks and contractors’ reluctance to enter into contracts with official entities. This hesitation comes from the official entities’ delay in disbursing financial dues to their contractors, coupled with the continuous decline in the Syrian pound exchange rate, which diminishes the value of these dues over time.