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Bahrain: Construction industry building momentum throughout 2010

Tuesday, 19 January 2010 15:49

Increased state investments in housing and infrastructure projects, combined with accelerated spending by private companies, are expected to see the Bahraini construction industry build momentum throughout 2010.

The local construction sector will be buoyed by a $2.6bn scheme to redevelop an area of downtown Manama, aimed at creating a city within a city and revitalising the old central market district. At the core of the project are four 28-storey office and shopping towers, residential blocks, a redeveloped central market, hotels, parks and recreation space.

According to Majeed Millad Al Jazeeri, chairman of the Manama Municipal Council, which is backing the development, the company awarded the contract for the project - Tashgeel for Commercial Buildings Management - is drafting a five-phase strategy on how to carry through the scheme from beginning to end.

"Tashgeel will have 18 months to complete a five-phase plan it has presented us with and if things go according to schedule, then work on the project could begin as early as the end of 2011," he told local media on January 3.

Another long-term project that will bolster the sector's returns is the plan to significantly expand Bahrain International Airport, announced in October 2009. The first stage of the $4.8bn development, a new terminal capable of handling 5m passengers a year, is scheduled to be opened in 2012, with work set to begin shortly.

The government has also been laying the foundations for a revival of the construction sector, pumping additional funds into utilities and infrastructure projects. In late November, the parliament ratified a government request for additional funding to capitalise a series of projects, most of those being carried out by the Works Ministry. Of the supplementary budget's $945m, $370m will be allocated to the ministry, mainly to support infrastructure schemes.

The parliament also voted to approve an increase in the government's borrowing limits, allowing a further BD1bn ($2.6bn) of funds to be raised on the market. Isa Abu Al Fateh, of the parliament's Financial and Economic Affairs Committee, said these funds would help the state to carry through large-scale projects, primarily construction-based, that regular funding could not meet.

"Those include housing projects in addition to expansion of electricity and water networks, amongst others," he said on November 20.

While final figures have yet to be released, most experts have predicted that the Bahraini economy will have either contracted marginally in 2009 or at best been flat. For the Kingdom's building industry the past year has been a lean one, with a recent report by Business Monitor International (BMI) estimating that the sector may have contracted by just over 4.5% last year, a sharp turnaround from the 21% growth averaged between 2005 and 2007. While predicting a return to positive territory this year, the study forecast that it would not be until 2012 that the construction trade will start to really pick up, expanding by 4% as demand climbs.

With demand for high-end residential properties falling amidst the economic slowdown, a number of builders have been looking to remain active by turning to the lower end of the market. While there are some private low-cost housing developments on the drawing boards, it is mainly the state that is working to fill this segment, with plans to contract the construction of up to 38,000 units by 2013. Tenders have already been opened for some of these state-sponsored projects, with more expected to be launched throughout the year.

Global Arab Network

This article is published in partnership with Oxford Business Group

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Last Updated on Tuesday, 19 January 2010 16:05

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