FOR foreign dignitaries visiting Lebanon, a tour of the Beirut central district (BCD) has become obligatory. The massive redevelopment project, being overseen by local property company Solidere, is the embodiment of Lebanon's ambition to salvage the remnants of its past while laying the foundations for future prosperity.

However, as clouds gather over the government's economic recovery programme and foreign observers warn of the risks attached to investing in Lebanon, Solidere faces an uphill struggle. Infrastructure works continue apace and the wraps are coming off selected old buildings, meticulously restored to pristine condition. But for all Solidere's achievements, the rebuilding project - dubbed 'the world's largest urban redevelopment'- has yet to attract the all-important interest of international banks and businesses.

Land sales helped Solidere to a 32 per cent rise in profit for 1997 to $77.8 million after a disappointing first half but prices for the company's A and B shares are down 7 per cent this year. Analysts were encouraged by the results and say that customer interest in the BCD remains high even though it was shaken when a Four Seasons hotel project was cancelled earlier this year and Malaysian investors withdrew from another project (see below).

So far, most of the land sales have been to local companies keen to relocate to a prestige area. Banque Audi, for example, is building its new headquarters on a prime site. Several of Solidere's main construction projects have fared less well and progress has been grindingly slow. Some are at a standstill. MEED reviews some of the leading developments in the area:

A centrepiece of Solidere's scheme is the refurbishment of the former Murr Tower, a 36-storey skeleton of a building that has dominated the Beirut skyline since it was abandoned half-built at the start of the civil war. Solidere insists that the completed and expanded building, to be renamed the Beirut Trade Centre, will offer the most sophisticated office space in the Middle East.

However, the tower's metamorphosis has yet to begin. A consortium of the Saudi Binladin Group and the local/Saudi Almabani General Contractors Company submitted the low bid for the revamp in 1996. Last year, Solidere claimed that it would sign the contract once it had pre-let 70 per cent of the building - a target it expected to meet by the end of 1997. However, the contractors say they have heard nothing since receiving a letter of intent more than four months ago.

Another of Solidere's priority developments is the reconstruction of the Beirut souks, which will be rebuilt in a new style on top of two underground car parks. Work on the designs by a number of international architects and local consultants has taken more than two years. The final designs were submitted to Solidere in mid-February. The local Arabian Construction Company is due to complete the $21 million construction of one of the car parks in September. Solidere intended to tender the contract for the other car park late last year, but has yet to do so. It declined to indicate when it will invite bids for the construction of either the car park or the superstructure of the Souks.

Prince Alwaleed Bin Talal Bin Abdulaziz of Saudi Arabia and his Kingdom Holding Company signed a memorandum of understanding with Solidere in late 1996 to build a new Four Seasons hotel in the BCD. The project was hailed as a new landmark for the city - and a new commitment to its future by the half-Lebanese prince. A year later, the talks broke down over disagreements concerning the specifications of the building. Solidere provides developers with tight guidelines for new structures in the heart of Beirut, regulating everything from the height of new buildings to the number of windows. Kingdom says it expected its development to cost up to $120 million. 'With an investment of that size, it was expected that Solidere could have been more flexible,' says one source close to the scheme. Kingdom is now concentrating on a new Moevenpick hotel on the west Beirut seafront, out of the reach of Solidere.

A group of Malaysian investors last year agreed with Solidere to purchase a site in the BCD for development as a touristic and residential complex. The proposed building was expected to cost about $75 million. However, the plans by Malaysia's Premier Equity have subsequently fallen through as a result of the financial crisis in the Far East.

The BCD was once the location of some of the most famous hotels on the Mediterranean: names like the St Georges and the Phoenicia still conjure up images of Lebanon in its heyday. Disappointingly, for all the reconstruction taking place in the area today, most of the hotels remain battle-scarred ruins.

In 1996, the local Societe des Grands Hotels du Liban (SGHL), owner of the Phoenicia hotel, raised almost $80 million to restore it to its former glory. Binladin submitted the low bid for the revamp, and even reduced its price to bring it into line with the client's budget. However, the negotiations dragged on for more than a year, causing the financial arrangements to lapse. SGHL has now reduced the scope of works and awarded the contract to a smaller local contractor, Fahmi Caragulla Engineering & General Contracting.

Another local firm, Contracting & Trading Company (CAT), has recently begun a $6 million revamp of part of the former Holiday Inn, now renamed the St Charles City Centre. Two other buildings at the site have yet to be refurbished, and no date has been set for an upgrade. Local consultants Dar al-Handasah (Shair & Partners) have drawn up plans to rebuild the Hilton hotel nearby. However, the project will require the demolition of part of the existing structure - a move that requires the approval of the cabinet, which is not expected to make a hasty decision.

No one expected an overnight transformation of the BCD but the delays, cancellations and downscaling that have affected key projects is symptomatic of a malaise that is setting in over Lebanon's renaissance. As the centrepiece of the national reconstruction project Solidere's halting progress is eloquent testimony to the difficulty of turning Lebanese dreams into realities.