Bahrain pressing on after slowdown

Digby Lidstone
Foreign correspondent

• Last Updated: October 19. 2009 8:29PM UAE / October 19. 2009 4:29PM GMT

When the financial crisis hit last year, severely hurting the global property sector, the cranes in Bahrain merely slowed. Jaime Puebla / The National

MANAMA // This city’s annual property exhibition is a modest affair compared with rivals such as Cityscape in Dubai, but the healthy throng of visitors this weekend suggests there is life yet in the Bahraini real estate market.

When the financial crisis hit last year, severely hurting the global property sector, the cranes in Bahrain merely slowed. Hammer blows echo at night from Marina West, a group of luxury high-rises emerging from the palm plantations on the island’s east coast. Bahrain Bay, a vast reclaimed development off Manama’s north shore, is still “on track”, billboards reassure passing motorists.

The organisers of the Bahrain International Property Exhibition (Bipex) have yet to release official figures, but about 10,000 people are thought to have visited the show, compared with a record 13,500 last year. Judging by the licence plates in the exhibition centre car park, a high proportion came across the causeway from neighbouring Saudi Arabia.

“The number of participants was very healthy, even if it was fewer than last year,” said A. Majeed al Gassab, president of the Bahrain Society of Engineers, which organised Bipex. “What is more important, you could see that confidence had returned to the buyers and sellers on the floor. There is a strong sense that the worst is behind us and that the market is recovering quickly.”

Several major projects, feared abandoned when the financial crisis took hold in the Gulf a year ago, have been resurrected. Nurana, a US$1 billion (Dh3.67bn) artificial island on the north coast, returned to the headlines last week as local councillors debated the merits of the proposed scheme. The $1bn Al Areen project, an oasis-like development under construction in Bahrain’s southern desert, is also back on schedule, local newspapers reported on Sunday.

Yet Nurana is also a sign of how much the Bahraini property market has changed since 2008. In the past, coastal schemes such as Durrat al Bahrain and Amwaj Islands, the modest cousins of the Palms and Worlds of Dubai, were approved without a murmur. Nurana will not have such an easy ride. Developers have been asked to stump up BD80,000 (Dh779,206) for a charitable fund for the nearby villages of Karranah, Jannusan and Jid al Haj, it was reported last week.

“Residents are also demanding that developers leave space for a public coastal walkway and a fishermen’s jetty, in addition to a sports hall for Karranah villagers,” said councillor Sayed Ameed al Mousawi.

A lack of affordable housing is a source of grievance for the country’s poorer, mostly Shia communities, and has stoked political tensions in the kingdom. At the height of the building boom last year, many of the island’s ritzier projects were the target of public protests.Bahrain’s mortgage market offers considerable scope for growth. Personal loans secured by property stood at BD300 million (Dh2.922bn) in the first quarter, which, at about 5 per cent of gross domestic product, is a low penetration rate compared with countries in the developing world, where mortgage-to-GDP ratios are typically 25 per cent or more.

“Confidence needs to return to the banking community, as a shortage of loans is still preventing many individuals from investing in property and putting money into the economy,” said Mr al Gassab. “Confidence has returned, but if banks can ease up lending, then we will really see more growth.”



business@thenational.ae