Bahrain took an important step in addressing its affordable housing shortage this week with the announcement that the first-ever public private partnership (PPP) housing project in the kingdom was able to reach financial close.

Although the scheme took three years to secure funding and was trimmed in size by a third due to concerns about its viability, the project could set an important precedent by showing that governments and the private sector can work together to find creative ways of delivering low-cost housing. 

Once touted as the key to solving the affordable housing shortage in the Middle East, PPP housing projects have failed to materialise due to a host of financial and contractual reasons. But governments in the region are increasingly finding that they do not have the resources and expertise to provide sufficient levels of quality housing for their rapidly growing populations.

If structured correctly, PPP programmes offer a promising alternative to addressing the housing problem as they enable governments to outsource the professional management of large-scale residential projects and help mitigate risks for all parties involved.

For Bahrain, addressing affordable housing is critically important as it was one of the key issues that fuelled unrest in the kingdom during the Arab Spring in 2011. As is the case in many other countries in the region, high land prices and low profit margins have prompted developers in Bahrain to shy away from low-cost housing projects.

But facing a growing shortfall that has risen to over 50,000 housing units, Bahrain is wise to pursue PPP schemes as a way to tackle the problem.