Construction will soon start in Bahrain on thousands of homes following a finance deal for the region's first-ever housing public private partnership (PPP), said a top official.
Ithmaar Bank has provided nearly $450 million for the project that brings together public and private entities to deliver social and affordable housing solutions, Naseej chairman Khalid Abdulla Janahi announced at a Press conference at the Capital Club yesterday.
"This takes the shared vision of the Housing Ministry in Bahrain and Naseej another step closer to reality," he was quoted as saying by the Gulf Daily News (GDN), our sister publication.
The PPP, a first for the kingdom and the GCC region, involves the development of more than 2,800 social and affordable housing units in two strategic locations: Al Madina Al Shamaliya (also known as the North Bahrain New Town) and Al Luwzi.
It is the largest housing project ever to be developed in Bahrain in partnership with the private sector.
"It has been a difficult and very challenging three-and-a-half years but this has only strengthened our resolve and reinforced our vision," Janahi said.
"We have, despite the many hurdles and continuous challenges, stood firmly by our shared vision," he said.
Ithmaar Bank acting chief executive Ahmed Abdulrahim said the bank was contributing directly to both increasing shareholder value by financing a major, government-backed project and delivering a meaningful solution to Bahrain's housing challenges.
The government of Bahrain has announced it will develop 50,000 social housing units to meet demand.
"Finalising financing agreements for the PPP marks a significant milestone," said Naseej board member and managing director Mohammed Khalil Alsayed.
"It is the first affordable housing PPP in the GCC region to come to fruition, providing a much-needed boost to business confidence," he said.
Cebarco Bahrain chairman Khalid Abdulrahim said the PPP sets a new precedent for the entire Mena region and could usher in a new era for the construction industry, particularly the fast-growing affordable housing sector.
Following the signing of the project agreements with the Housing Ministry in January last year, Naseej incorporated a wholly-owned project company, Sharaka for Housing Projects Company, to execute the project and assembled a team of large contractors, namely, Cebarco Bahrain, Chase Manara and Terna to undertake work on different sites of the project.
Cebarco Bahrain will undertake work in Al Madina Al Shamaliya Island 13, Chase Manara will be responsible for developing Al Madina Al Shamaliya Island 14; and Terna Contracting will be responsible for the work in Al Luwzi site.
The consortium of international and local consultants include Ithmaar Development Company as the development manager, Hill International as the project management consultant, AECOM as the master planners, housing units design consultants and landscape design consultants, Ansari Engineering Services as housing units design consultants with AECOM, Scott Wilson with Ansari Engineering Services as infrastructure design consultants, Davis Langdon as the cost consultants and Olive VFM as the facilities manager.
The first phase of units is expected to be delivered by June 2016, and the rest by 2017.
The vast majority of the homes to be built, more than 2,400, will be social housing units for the Housing Ministry. The remainder (367) will be of two kinds, apartments and villas, to be sold in the open market.
Declining to specify a price range, officials said it would be at par with prevailing market levels.
An industry source said affordable housing as per current norms is in the price range of BD100,000 ($265,250) to BD135,000.
Another source said the pricing would be such that it would allow for mortgage payments that do not go beyond the debt servicing ratio of 20 per cent of total household income.
Janahi said that despite challenges Naseej has invested more than $7 million in the PPP even before the project could begin.
"Other developers backed away from this deal because it did not offer quick returns," said Janahi.
He said through the project, Naseej would demonstrate that social responsibility translates into good business sense.
"Affordable housing is one of the most pressing socio-economic challenges we face today," he said. "We've declined very promising opportunities in the wake of the global financial crisis to focus, instead, on this project."
Naseej said further details of the project would be announced later.
Trowers & Hamlins are the legal advisers, PricewaterhouseCoopers the financial advisers and Norton Rose the lenders' legal counsel
Copyright 2021 Al Hilal Publishing and Marketing Group