Interview: Mohammed Khalil Alsayed
How do you view the attractiveness of Bahrain’s property market for foreign investment, and what could be done to enhance its appeal?
MOHAMMED KHALIL ALSAYED: While the current framework for foreign investment in the local property market is appealing, the government is looking for ways to enhance the visibility of the market and position the kingdom as a favoured place in which to reside and buy property. It is also working to attract non-GCC property buyers.
To that end, in February 2022 the Ministry of Interior announced a Golden Residency Visa programme aimed at attracting and retaining residents, investors and talented individuals from overseas. This is an excellent initiative that will allow non-GCC expatriates to consider Bahrain as their second home. This should, in turn, help to attract capital and contribute to wider economic expansion.
One area in which improvements could be made is in the imposition of additional regulations amid economic stress. This not only impacts end users, but also reduces the risk appetite of private sector players to undertake more projects due to concerns over excessive compliance burdens. Capital allocation to a sector like real estate may get thus diverted to other, less lucrative – but also less regulated – sectors.
Where do you expect to see public-private partnerships (PPPs) deployed to meet infrastructure needs in the coming years?
ALSAYED: Bahrain pioneered electricity and water PPPs to develop infrastructure more than two decades ago. Since then, many other projects have been developed using the model, including sewage treatment facilities. Moreover, projects related to the construction of roads, bridges, utilities and civic amenities have traditionally been awarded to private contractors based on clear government guidelines. This underscores how integral the private sector and PPPs have been to Bahrain’s growth trajectory.
There are several major initiatives in the works that will bolster Bahrain’s infrastructure landscape, including Bahrain Metro and the GCC-wide rail network. In late 2021 the government announced that construction on the first phase of the metro would begin, with tenders awarded in April of the following year. The project will be developed on a design-build-finance-operate-maintain-transfer basis, with a 35-year contract period and demand risk borne by the government.
It is also expected that the country will issue more housing PPPs in the coming years. Both the private and public sectors have a wealth of knowledge and experience in such projects, which should help to accelerate future programmes. Housing PPPs are complex from a technical, commercial and legal perspective. As such, more clarity about equity risk, return on investment, tenor of debt and bankability of projects will help players launch developments.
In what ways can improved environmental, social and governance (ESG) awareness and compliance benefit the construction and real estate sectors?
ALSAYED: ESG initiatives such as sustainable construction, energy conservation and inclusive development are already part of the strategy and developer approach to many projects in the region. It is expected that banks will increasingly factor ESG criteria into project-financing decisions in the coming years. This will drive the real estate sector towards the wider adoption of ESG principles while developing proposals and executing projects.
Indeed, it is only a matter of time before the real estate sector as a whole adopts ESG principles. This bodes well for long-term viability, as future growth has the potential to be more sustainable and responsible. More importantly, it would mean that the end user has a more sustainable living and work environment that can unlock intergenerational equity.
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