Meanwhile, Bahrain Marina Development, the company in charge of managing the project, expects the second phase, which consists of piling work, to begin either at the end of this year or in early 2018.
Construction is also under way on the Diyar Al Muharraq project, one of the largest urban developments in Bahrain.
Located on 12 artificial islands at the northern tip of the Bahraini archipelago, the development includes a range of residential, commercial and retail properties, community amenities such as schools and hospitals, and 40 km of beaches.
In August the Diyar Al Muharraq Development Company announced that infrastructure work for the second half of its Al Bareh residential zone had begun, with the section to be completed by the end of next year.
The other major projects showcased include Durrat Al Bahrain, a 21,000-sq-metre development comprising offices, luxury hotels, spa resorts and retail space across 15 islands; CanalView, a residential, recreational and health development in Dilmunia; and Bahrain Bay, a luxury $2.5bn, 450,000-sq-metre project featuring residential, commercial and retail space.
Growth data suggests opportunities for real estate
The substantial pipeline of major projects comes amid strong overall growth in real estate, led by the rising demand for residential and retail developments. The sector expanded by 4.5% in the first quarter of the year, according to the EDB, well above overall economic growth of 2.9%, and generated $1.7bn, with residential sales alone jumping by 8.1% year-on-year.
Meanwhile, in a sign of further growth, the number of residential applications is expected to rise by 5000 units per year, according to the Ministry of Housing (MoH).
“Recent figures demonstrate the resilience of Bahrain’s real estate sector and highlight the increasing demand for housing not only in the kingdom, but across the wider region,” Khalid Al Rumaihi, chief executive of the EDB, told the Cityscape Global conference, adding that government intervention and cooperation with the private sector had helped spur interest.
“Strong growth in this sector has been supported by the implementation of economic and legislative reform and forward-thinking policies such as the public-private partnership model by the [MoH] and the recently issued real estate law,” he said.
Significant growth in the residential sector contrasts with greater geographic variation in demand for commercial real estate, where there is an oversupply.
Regulatory reform aimed at improved stability and increased trust
One development expected to support growth in the sector is the new real estate law, which intends to stabilise the market and improve relations between investors, buyers and developers.
Passed in early August and to be fully implemented early next year, the law includes the introduction of an industry regulator, which stakeholders say could lead to greater market clarity and help attract more international investment if carried out successfully.
“One of the challenges of implementation will be establishing a capable body with sufficient knowledge and experience,” Mohammed Khalil Alsayed, CEO of Ithmaar Development Company, told OBG.
Following introduction of the law, in late October King Hamad bin Isa Al Khalifa issued a decree creating the Real Estate Regulatory Authority and appointing Sheikh Mohammed bin Khalifa bin Abdulla Al Khalifa as the chief executive. The board will be comprised of the Minister of Works, Municipalities Affairs and Urban Planning; the Minister of Industry, Commerce and Tourism along with members from the Survey and Land Registration Bureau, the Economic Development Board, the central bank, the Bahrain Property Development Association, the Bahrain Real Estate Association and stakeholders from the private sector.
Another key change aimed at increasing trust between buyers and developers limits off-plan sales for residential developments by requiring funds to be held separately in escrow. This ensures that the developer has the funds available to complete the development for which a buyer has already paid, and allows for the quick return of the investment should the property fail to be completed.
“This is a welcome addition to the sector and an important step towards restoring trust in the market,” Alsayed told OBG. “It will contribute to healthier competition in the sector as high-quality developers benefit from increased investor trust. We want to be sure, however, that implementation is balanced to avoid excessive financial pressures on developers,” he added.
The new regulations will also include a BD12 ($31.80) per-sq-metre infrastructure tax, which is intended to ensure that infrastructure investment keeps pace with the requirements of new developments, despite the government’s budgetary pressures.
© Oxford Business Group 2017