Bahrain to negotiate lower cost on housing project

05 January 2011

Naseej consortium in advanced talks

The government of Bahrain is due to start talks with the local Naseej about the development of a social housing project as a public-private partnership (PPP.

The talks will centre on getting the firm to lower its bid price because the Finance Ministry considers the prices to be too high.

Two bids were submitted for the project on the 12 August 2010 deadline. The low bidder Al-Moayyed International Group with a price of BD217m ($575m), and Naseej, which bid BD260m for the project. Further clarifications and new prices were sought in October 2010, and the government is now understood to be in talks with Naseej, despite its original price being the highest.

Bahrain housing statistics
Number of families awaiting social housing53,000
New social housing applications each year4,000
Number of Bahrainis in employment138,000
Monthly income to qualify for social housingUnder BD400 ($1,061)
Source: CB Richard Ellis

Al-Moayyed could still be called back into talks if Naseej is unable to satisfy the government’s affordability criteria.

The project involves the construction of 5000 homes, with a minimum of 3,500 for low-income Bahrainis. Several ministries are involved in the project, including the Housing Ministry, Finance Ministry, and the Economic Development Board (EDB).

Bahrain’s Vision 2030, an economic development plan, envisages reducing the waiting time for Bahrain’s 53,000 families waiting for government assistance with housing from nine years to five years by 2014.

Since the release of the request for proposals (RFP) for the scheme in April, progress has been slow. There was some expectation that a preferred bidder would be named by the end of October 2010 (MEED 8:10:10). The government had initially hoped to make quick progress on the scheme and use it as a pilot that could be rolled out for the development of 20,000 low-cost homes.

The government of Bahrain is being advised by Ernst & Young, the UK’s Mott MacDonald and law firm Freshfields Bruckhaus Deringer.

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