Interview: Sheikh Mohammed bin Khalifa Al Khalifa
What is being done to ensure that private sector interests are given due weight in new regulations?
SHEIKH MOHAMMED BIN KHALIFA AL KHALIFA: The legislation that led to the creation of RERA, Law No. 27 of 2017, clearly outlines our role in ensuring that the interests of all sectors and stakeholders are represented when it comes to designing and implementing new regulations and by-laws. The RERA Board of Directors and working group includes representatives from across the private sector. Our key objective is to ensure that we develop an ecosystem that will make Bahrain a leading destination for real estate investment both regionally and globally.
How sustainable do you consider the sector to be?
SHEIKH MOHAMMED: We are encouraged by the leading-edge design and innovation employed by developers in the Bahrain real estate market. The performance of the sector as a whole has been encouraging; Bahrain’s non-oil sector is the fastest growing in the region and expanded by 4.8% in 2017. Growth converged with the regional norm to an annual pace of 2.4% in the first three quarters of 2018. The real estate and professional services sector posted 5.5% growth in 2017, growing by more than 7% in the last quarter of the year. The year-on-year growth of the real estate and professional services sector reached 3.2% in the first three quarters of 2018. We are confident about the sector’s outlook going forward. We are developing an information management system which will provide reliable and up-to-date information to developers, investors and other key players who are looking at the performance and potential of the Bahrain real estate market. We are also collaborating with other agencies such as the Bahrain Economic Development Board to ensure the provision of timely information, which will help developers assess the market for innovative and sustainable projects. The real estate sector also benefits from business-friendly regulations, which reflect an open and liberal approach to investment. On the whole, Bahrain has not been exposed to the volatility that can affect regional real estate markets, and is seeing considerable investment in the property and construction sector. A priority programme of infrastructure projects worth $32bn includes several mixed-use real estate developments, such as Bahrain Bay and Diyar Al Muharraq. There is major investment in social housing, all of which is taking place in partnership with the private sector. The government aims to deliver 25,000 housing units by the end of 2018, as well as a further 15,000 by 2022. We are also seeing strong growth in the retail sector and further potential in other sectors such as tourism, with growing visitor numbers driving increased demand for accommodation and real estate.
On top of this, Bahrain is an attractive investment location due to the fact that there is no corporate or income tax liability or restriction on repatriation of capital, while 100% foreign ownership is allowed in 98% of business activities. RERA licensing requirements were recently extended to other categories, including property managers, owners’ association managers and valuers. Additional resolutions on issues such as joint property of master communities, gated communities and layered owners’ associations will also come into effect in 2019. These new regulations will ultimately lead to greater confidence in the sector, and create a more mature and sustainable real estate market.
What measures have been put in place to expedite licensing and approvals?
SHEIKH MOHAMMED: We have clarified the requirements and processes to be followed by developers in order to ensure an effective and efficient licensing and approval process for all off-plan sales development projects. We have also introduced an innovative market research licence option whereby developers can test the market for a particular type of product while at the same time protecting prospective buyers. In addition, RERA provides ongoing assistance to developers.
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