In October 2014, Kamal bin Ahmed, Bahrain’s transport minister and acting CEO of the Economic Development Board (EDB), said $22bn was expected to be invested in infrastructure projects in the country over the next four years.

Highlighted schemes currently being invested in or seeking further funding include the modernisation of Bahrain International airport, the development of Al-Jazair Beach and the island city project at Durrat al-Bahrain, as well as work in the energy and industrial sectors, such as the expansion of the Aluminium Bahrain (Alba) smelter and the modernisation project being carried out by Bahrain Petroleum Company (Bapco).

Modest gains

The investment will build on modest gains that have been made by Bahrain’s projects sector in recent years. After dipping to a low of $746m of contract awards in 2012, the market has recovered steadily over the past two years, with $833m of awards in 2013 and an encouraging $2.1bn of new orders in 2014.

According to the EDB, the construction sector saw significant growth in the third quarter of 2014. It increased at an annual pace of 12.3 per cent, compared with annual growth of 3.6 per cent in the second quarter.

Despite the improvement in 2014, there were still only two contract awards topping $100m in the building, transport and water sectors. The largest was secured by Abu Dhabi-based National Marine Dredging Company (NMDC), which won a $236m deal for dredging and reclamation work on the East Sitra Town housing development.

The other $100m-plus contract award was a $203m deal secured by a joint venture of Saudi Arabia’s Nabaa Contracting and the UAE’s Tamcon Contracting from the Housing Ministry for the construction of 1,560 houses in Bahrain’s Southern Governorate.

The two contracts have one crucial element in common: funding. Both are financed by Bahrain’s GCC neighbours as Manama starts to benefit from the pledge made in 2011 to improve services on the island and shore up the economy with new projects.

NMDC’s reclamation contract was the first housing development construction deal to be funded by Bahrain’s neighbours, and the Southern Governorate housing scheme is financed by the Saudi Fund for Development.

Causeway upgrade

The largest award in 2015 so far has also been for dredging and reclamation works. The King Fahd Causeway Authority (KFCA) awarded Beijing-based China Harbour Engineering Corporation a contract to build a new island that will increase the capacity of the causeway linking Bahrain and Saudi Arabia.

The marine works contract involves dredging and reclamation of about 6 million cubic metres of material, together with rock protection. Another deal, covering the construction of a similar island close to the Bahraini coast, is expected to be tendered later.

The new islands will be used to house upgraded immigration facilities planned to increase the vehicle capacity of the causeway, which often suffers severe congestion during peak periods. This will allow the existing single island between Bahrain and Saudi Arabia, where passport control for both countries is based, to be converted into a tourism and leisure centre. The existing causeway, which opened in 1986, serves about 45,000 vehicles a day on average. That figure increases to about 60,000 during weekends.

Raising the capacity of King Fahd Causeway is just part of the plans for enhancing Bahrain’s connections with Saudi Arabia. For the longer term, two other causeways are in the planning stages. A feasibility study on the construction of the first new link is due to be completed by Canada’s SNC Lavalin in the first quarter of this year. It is investigating two alignment options, both of which are to the north of the existing one.

The possibility of building a third causeway, to be used exclusively by trucks, is also being considered. The causeway rail link will form part of the GCC rail network. In addition to this, Bahrain plans to build 87 kilometres of railway line serving the mainland, although little progress has been made with these plans.

Private sector

For the rest of 2015, foreign funding and the private sector are expected to help the construction industry overcome any fall in government capital expenditure due to lower oil prices. It is anticipated Manama will have to consider cutting capital spending plans in its yet-to-be-announced budget.

Bahrain has an estimated breakeven oil price of about $125 a barrel, but with prices forecast to hover around $55 a barrel for the rest of this year, the government’s finances will be under pressure.

Jarmo Kotilaine, chief economist at the EDB, said in early March that a lot of infrastructure is being built using funds that have nothing to do with the government budget. He also said that increasing private investment, foreign direct investment and financing from the GCC Development Fund will help support new infrastructure, filling the gap if the government cuts back on spending. Public-private partnerships (PPPs) will also play a key role, particularly in affordable and social housing.

Enticing opportunity

The most enticing opportunity for contractors in 2015 is the expansion of Bahrain International airport. Bahrain Airport Company plans to tender the main construction contract for the expansion in the first quarter of 2015, and is preparing a shortlist of prequalified firms.

UAE-based contractors are expected to feature heavily in the shortlist as the development is being financed by the Abu Dhabi Fund for Development. The project involves the construction of a 170,000-square-metre terminal building, together with associated buildings and infrastructure such as car parks and aircraft parking areas. It also involves managing nominated subcontractors working on specialist packages for baggage-handling systems, passenger loading bridges and information technology (IT) systems.

When completed, the new terminal structure is expected to increase the airport’s capacity to 13.5 million passengers a year.

Twelve firms have submitted their bids for enabling works on the project. The local GPZ Group has submitted a low bid at $26m, with Bahrain’s AMA Group submitting the highest proposal at $40m. In February 2014, French consultant ADPI was appointed by Bahrain Airport Company to perform all studies on the development of the airport over the next 20 years.

As well as developing the new terminal, the study includes determining future projects that will support the airport operations. Earlier, in January 2014, US-based Hill International was awarded the project management deal.

Road projects

In addition to new housing schemes, the construction sector will be supplemented with smaller-scale infrastructure schemes. In December last year, the Municipalities & Urban Planning Affairs Ministry said $49.9m-worth of road projects were planned in Bahrain for 2015. The minister confirmed that 2015 will see all planned schemes either implemented or completed next year.

First among the proposed road projects, costing $13.3m, is the Muharraq Ring Road, which includes a fourth causeway connecting the island to Manama. Phase one of the scheme was implemented in April last year and is now half-complete. Other projects are the Sheikh Zayed Highway, which is planned to become a major route capable of handling more than 50,000 vehicles a day, and the upgrade of the Sheikh Khalifa bin Salman Highway.

The private sector will also develop new schemes, although the backdrop of lower oil prices is expected to stunt their progress. In early March, local developer Amlak Real Estate said its Marina Club project, which was expected to be completed by 2019, has been delayed to 2020. The mixed-use scheme includes a luxury hotel and serviced apartments, waterfront villas, a shopping mall, and a recreational waterfront space with dining and retail facilities.

Ras al-Barr

Another long-term project is the Ras al-Barr Resort. The project’s developer, PK Development Company, recently appointed Kuwait’s SSH to provide masterplanning, architecture and engineering consultancy services for the new 1.5-square-kilometre waterfront scheme sited south of the Durrat al-Bahrain development.

Located on several islands of reclaimed land, it will offer a range of waterfront housing options, themed hotels, retail and souqs, and public waterfront areas, together with community facilities.

Ras al-Barr will be developed in two phases. The first phase is an open-gated development and consists of three islands comprising small-to-medium-sized residential clusters, waterfront apartment blocks, a souq, a yacht club, four hotels, schools, a commercial area, a mosque, and a beach area. The second phase is a gated community development comprising medium-to-large-sized, mix-spread, waterfront residential properties on 14 islands.

For Bahrain’s construction sector to stay in growth during 2015, it needs at least one major contract award, and that means the airport expansion must move forward. With Abu Dhabi backing the scheme, funding will not be an issue, so the onus is now on Manama and the companies working on the project to build on the momentum gained in 2014.