Chahe Yerevanian took his family’s struggling real estate development business and turned it into one of Lebanon’s biggest players. Here’s how the company remodeled from the bottom line up. The turn of the millenium bore ill for the three brothers of the Yerevanian family, Vahe, Chahe and Serge. Ara Yerevanian, their father and founder of the family real estate development firm, passed away after months of fighting cancer – and having led the family through a host of other struggles besides. Ara had shuffled his family between Paris and Lebanon with the ebb and flow of conflict in the civil war, and eventually landed his family in Canada. The war hardly could’ve come at a worse time for Ara; just three years before the calamity began in ‘75, he’d been elected a member of the Lebanese parliament. Yet Canada cast its own set of troubles on the family’s fortunes. The recession of the late ‘80s hit the real estate development partnership they’d established with the Armoyan family, a successful Armenian-Canadian clan. The threat of bankruptcy drove the Yerevanians back to Paris in 1990. Only the conclusion of the war offered a reprieve: In 1995, the family returned to Lebanon. Ara marked the return with a whole new venture: the development company SAYFCO-Ara Yérévanian and Sons. Their focus was to provide affordable housing. “Since the ‘60s and ‘70s my father had chosen the middle income bracket,” Chahe says. “His slogan was ‘a home for everyone’; he believed that since the government couldn’t help provide housing, he would take the task on himself.” Serge, the youngest, was still in school; but Vahe and Chahe joined their father. Vahe was in charge of managing the construction, while Chahe was to cover sales and marketing. Business finally began to pick up for the family. From 1994 to 1998, they report averaging a turnover of $3 million to $5 million a year. But the death of Ara suddenly tossed the company’s future into doubt. The company was at the time built around him, and the trust that he himself had personally garnered. No one knew his sons. The family business had at that time taken on more risk than it had in the past, all while the Lebanese real estate market was foundering. The family had just purchased $5 million of land in New Rawda – paid for entirely by credit. Saddled with debt and with sales at a standstill, by 2001 the business was on the brink of a collapse. So the family called on Chahe in 2002 to rescue the business. “I believed,” Chahe declares, “that if I proved that I could take this middle sized family business that was going through rough times to the next level, I could prove that I deserved to be the chairman.” To do so Chahe had to leave his other ventures. He’d been a co-founder in Allô Taxi, and a far more personal project, the real estate portal OneEstate.com. During the time of its operation the website was one of the top real estate sites region wide; Chahe reports that they achieved $15-20 million dollars in sales from which the site took a commission. “It was back in the dot com days and the company was doing well,” Chahe recalls. “I’m not going to say we were on the verge of a groundbreaking IPO, but business was solid.” Nevertheless, the connections he made through OneEstate.com would be the foundation on which he’d rebuild the family company. But the first item on the agenda, of course, was to grapple with the ballooning debt and interest rates. The bankers were calling. So Chahe sold land – and lots of it. Though the ledger was steeped in red, the company was nevertheless flush with assets A few thousand square meters went in one direction, ten thousand in another, fifteen thousand elsewhere. In short, Chahe hit the reset button on the company. What they’d acquired during their father’s tenure was lost; but so too the debt they’d taken on. In doing so he was able to acquire new financing to finish the projects which they’d started but were unable to complete. OneEstate.com gave Chahe a unique insight into buyers from the GCCs. He knew there was an interest in buying property in Lebanon, but also how poor the reputation of Lebanese developers was abroad. “Talk to real estate veterans,” Chahe says. “They’ll tell you how often Lebanese were just conning buyers in those days. They’d sell the same apartment to three different buyers. The approach was hit and run; ‘let’s make a quick buck.’” A few clients from OneEstate.com e-mailed Chahe about his Lazare development project in New Rawda. They received a response within the half hour. Communication: It’s the base line for demonstrating professionalism. “We didn’t follow the typical Lebanese way of not following up with clients,” Chahe remarks. What the clients found, Chahe believes, is a level of customer service more in line with the United States or London. The first clients amounted to no more than eight Bahrainis; but from their positive experience working with the family, they talked. Word-of-mouth suddenly made “Yerevanian” a minor brand in Bahrain, and then the GCCs at large. As Chahe notes of the Middle East, if you make one misstep, the client will never come back to you again; if you do well by them, they’ll talk about you to everyone they know. Chahe followed up the word-of-mouth marketing and persistent communication with roadshows when they were launching a new product. “I’d go to a hotel, organize an event, involve the local brokers we know, and put announcements in the local newspapers for the project,” he recalls. “More and more, people saw that we sold, delivered on time and with a quality that was greater than expected.” Chahe re-branded their new success in 2004. No longer SAYFCO-Ara Yérévanian and Sons, he tucked the company’s real estate development work beneath the umbrella of SAYFCO Holding. Until 2005, Chahe kept the company’s focus on middle income housing. The approach adhered to the company’s past, his father’s original vision, and the market demand. But he then foresaw the coming luxury boom. “So we were known as a middle income house builder,” he remarks. “But I wanted to increase our range of products; I wanted to show that we could be the very best for even the most luxurious projects.” This was the premise for SAYFCO’s project Clouds, a breakthrough development near Faqra Club. The 11 villas at Clouds would sell for between three and twelve million dollars. “When I started, people said I was crazy,” says Chahe. “At the time, there were no developers there; if you were wealthy and wanted a home in the mountains, you’d build your own.” But its success even drove up the value of real estate throughout Faqra. “Prices for land there were stagnant for ten years at $200 per square meter,” he states. “In less than a year and a half, those prices rose to $1,500 per square meter.” Chahe says he foresaw this effect and went around buying land nearby Clouds while it was under construction. “I bought over 1.2 million square meters on the only undeveloped mountain left in the Kfardebian region; it’s in proximity to Faqra club. The property is as large as Solidere,” he boasts. “My vision there was the Ahlam Golf Resort.” At this stage he sold part of the company to his now ex-partners, who would continue with Ahlam. But he kept 200,000 square meters to develop the resort Eden. Moving his firm in the luxury direction, and at a time when luxury real estate developments weren’t yet seen as a sure-fire moneymaker, required carefully crafted conversations with the rest of the family. And while Chahe didn’t have to pitch his vision to a boardroom, he did need his brothers on board. “My older brother’s vision was completely different,” Chahe says. “He believed we were taking on too much risk. But after I cleaned up the company, I was able to sell him on my ideas for the future.” His younger brother Serge was more receptive to the direction Chahe was driving the company. At the time, Serge was back in the United States. He’d graduated with a masters from the University of Texas at Austin, and was working at JP Morgan’s Houston, Texas offices. Chahe asked Serge to return to the family business. “I needed a strong right-hand man financially, who also shares my vision,” Chahe remarks. “Serge understood my vision, and knew that he could provide that financial backup that I needed.” Together, he and Serge have recently bought out their older brother Vahe. “At the end of the day, not all families stay together in business,” Chahe notes. “Though they still stick together as a family.” Negotiating brotherly relations requires a deft touch. For nothing quite can damage relationships with friends and family like money – especially when each brother bears a strong personality. “You have to be flexible, you have to be a good listener, and you have to understand them – where they’re coming from,” Chahe advises. “You have to analyze how they think, and put your idea in terms they understand. Put the same idea in different terms and they’ll come back, asking ‘Just who do you think you are?’ When I believe in an idea, I go for it. But with people that are on your side, your investors, your friends and family, you can’t dictate. At the end of the day, I’m managing managers.” Chahe’s aim throughout has been to create a real estate development brand; he cites Apple as his inspiration. “When Steve Jobs made a new product, everyone stood in line. I’m certainly not comparing SAYFCO to Apple, but today, whenever we have a new project, we sell one third of the units without any plans even drawn up. This is why I believe in branding.” Whereas Apple designed its products to be user friendly, SAYFCO goes for client friendly. The rapid response he delivered to the Bahraini customers early on in his position as CEO of the company remains a hallmark of his focus. Chahe went for “quality headquarters, nice development designs, trustworthy construction and product delivery that’s always on time.” A regular challenge is to increase his brand’s presence on the market. “Maybe I can do two to three projects a year – but not 20. With the financial limits that I have at the end of the day, how do I grow exponentially?” Chahe asks. So SAYFCO began offering “service agreements” with landowners: Rather than purchase the land, SAYFCO takes charge of the property’s development from start to finish. “A landowner will come to me and say ‘listen, I want the SAYFCO brand,’” Chahe remarks. “I say ‘fine, but it has to be a SAYFCO project. That means I design it, I build it, I market it, and I put my name on it.’” Through these agreements, SAYFCO has the opportunity to work beyond its means through the strength of the brand. Whereas they now offer new projects in the single digits, Chahe expects them to be able to offer well over 20, perhaps even 50 projects each year. “I’m not greedy,” Chahe declares. “At the end, I give the landowner the keys and the profit. Our first such agreement secured three to four times the landowner’s original investment.” Ultimately Chahe’s ambition is for SAYFCO to be the dominant real estate developer; he wants the company to be the first to come to mind when anyone is looking to buy a home or office space. Getting there means getting the name out. A commitment to professionalism is step one; increasing the array of projects to get their brand on more buildings is step two. An exceptional, adequately funded communications plan is step three. Chahe has pursued the traditional routes here. Across online news portals such as annahar.com, lorientlejour.com and lebanonfiles.com, he’ll secure the main banners. “You of course have to pay for it,” he says. “But we’ll invest maybe $40,000-50,000 a month to get our name out there, so that people keep seeing the SAYFCO brand.” Though his focus (and pride), curiously enough, is the company’s activity on Facebook. The social networking site has typically posed a challenge to businesses: How do you take advantage of the fact that just about every single one of your potential clients has a profile? And for real estate, the challenge is particularly acute. Homes and offices are rarely impulse purchases trending across Facebook and Twitter news feeds. Real estate projects take years to come to fruition, and only small, set number of people can actually enjoy the buildings – those who are the buyers. A ten unit residential development means ten families at most. And each of those ten families will generally come to the decision to buy that home only after a lengthy decision-making process; it’s not the sort of product you “add to cart” and pay by credit card. Homes aren’t iPhones. Yet Chahe has placed an immense emphasis on his company’s Facebook page – and at the time of this article, he has well over 1,600,000 likes. There’s no real estate company in the world that has anything near that number. A Youtube video advertising a recent development in Faqra garners nearly 35,000 likes in less than a week; photos posted of a completed house might get 47,000 likes and over 3,000 comments. Getting those fans on Facebook hasn’t been cheap. Chahe estimates that each “like” costs the company over a dollar. “We started with a few hundred friends,” he recalls. Kickoff was slow. So Chahe devised a plan to get peoples’ attention: Everyone who “liked” the page would have the chance to win a drawing for a $1,000,000 apartment. Suddenly their fan base exploded. And he kept up the Facebook-based deals. Fans, for instance, might also receive a $25,000 discount on apartments going for $225,000. Despite the cost, Chahe believes that these numbers are invaluable. “When I advertise a project on Facebook, 1.6 million people are there, seeing it on their screen. No other media out there can match it. And with the expat population fivefold that of the Lebanese population actually living in Lebanon, we can reach maybe five, six, or even seven million.” Around half of those who “like” the page are between the ages of 18-24. There might only rarely be buyers in this age range, but they, Chahe believes, are his future clients. “This is how you create a brand: When a guy finishes university, gets married, and starts searching for a house, the first place he’ll look is SAYFCO.” His aspiration and efforts are paying off. SAYFCO today sells more than 500 units per year. And as Chahe sees it, there’s only room to grow from here.
