Affordable housing project to move forward after receiving $450m loan
A consortium led by Bahraini developer Naseej is planning to begin construction on a long-delayed social housing scheme in the country, after reaching an agreement with the local Ithmaar Bank on financing.
Touted as the first-ever public private partnership (PPP) housing project in the region, the landmark scheme was launched in 2010, but never got off the ground due to financial and contractual challenges. Earlier this year, it was trimmed in size by a third as a difficulty in securing funding threatened its viability.
However, the scheme is being revived now that Ithmaar Bank, which owns nearly 30 per cent of Naseej, has agreed to invest $450m.
While the scheme will contain many of the elements of a traditional PPP contract, the financing is believed short-term, about five years, rather than the traditionally accepted 15-25 year agreements under the model.
We just closed the first PPP housing project in Bahrain two days ago, said Abraham Akkawi, partner, infrastructure advisory services, Ernst & Young, which was advising the government on the housing scheme. It was a hard sell, as a lot of people look at it as a high cost of housing. It was tough getting government to agree on the formula for the private sector to build [almost] 3,000 houses.
The work involves the development of more than 2,800 affordable housing units spanning one site at Al-Luwzi and two sites at Al-Madina al-Shamaliya.
Chase Manara, a joint venture between a local firm and a Malaysian contractor, has been appointed as the main contractor. US-based Aecom is masterplanning the development and URS/Scott Wilson and Ansari Engineering Services have been appointed as infrastructure designers.
Naseej is also putting in equity to fund the scheme, which was originally budgeted at BD208m ($550m) when the project still featured more than 4,000 units. The downsizing of the scheme was seen as a blow to the government, which had hoped the model would be a blueprint for a 20,000-unit house building programme.
Housing is one of the most contentious issues in Bahrain. The lack of government housing for poor Shia families is one of the roots of a two-year uprising against the rule of the Sunni Al-Khalifa family. There are more than 50,000 Bahraini citizens on the waiting list for government housing.
The first phase of units is expected to be delivered during the summer of 2016.
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