Economic Update

Published 29 May 2019

Significant progress has been made on two mixed-use real estate projects being built in Bahrain’s north-east, as the kingdom looks to major developments to help unlock its economic potential.

Dilmunia, a 125-ha, man-made island being built in the Muharraq Governorate, is one such project. Local firm Ithmaar Development Company (IDC) is master developer for the site and recently completed phase 3 of infrastructure work on the $1.6bn island, according to Mohamed Abdulrahman, the manager of IDC.

Dilmunia, which derives its name from the ancient kingdom of Dilmun, will comprise hotels, residences, and health and leisure facilities.

IDC is currently selling 500- to 700-sq-metre plots to investors for residential property construction; however, the largest residential development on the island will be a resort built by Kuwait-based real estate firm Al Tijaria. The complex will include 16 villas, 14 houses and 351 luxury flats over an area of 30,700 sq metres. According to local media reports, the firm will launch the first phase of construction work later this year.

See also: The Report – Bahrain 2019

New mall to enrich shopping experience

Dilmunia will also host its own shopping centre, which is expected to open its doors before the end of this year.

The Mall of Dilmunia ­will have a total built-up area of 125,000 sq metres and a gross leasable area of 47,300 sq metres; 50% of the retail space had already been leased as of February, when commercial real estate services firm JLL was announced as the official leasing partner.                                   

As well as retail and food and beverage outlets, the shopping centre will feature an aquarium, an indoor ice rink and zip line, two football pitches and a boulevard concept aimed at recreating a European cityscape.

The variety of entertainment options being developed at Mall of Dilmunia reflects a broader trend among brick-and-mortar retail developments in Bahrain, which are increasingly focusing on enhancing the shopping experience.

“Traditional retail is changing before our eyes as e-commerce and other digital innovations disrupt the entire sector,” Amin Alarrayed, CEO of Edamah, the real estate arm of Bahrain’s sovereign wealth fund Mumtalakat, told OBG.

“This is proving to be an exciting time for developers, who will need to be ever more creative in their approach, with a focus on creating unique destinations and experiences.”

Sa’ada secures official financing partner

Edamah is also leading development on its own mixed-use destination in Muharraq Governorate, and signed an agreement on April 25 with Kuwait Finance House-Bahrain to make the lender its official financing partner for the first phase of the project, priced at $25m.

Work on the development, named Sa’ada, started in early 2018 and involved the construction of sea walls and jetties, and the reclamation of 1.8 ha of land.

Core and shell construction of the site’s seven retail and restaurant buildings – which range from 319 sq metres to 1707 sq metres in size – started in the third quarter of 2018 and is scheduled to finish by the final quarter of this year. 

Phase-2 design work began in the first quarter of this year, at an estimated cost of $17m, and includes a multi-storey parking building, retail shops, plazas, and a footbridge between Sa’ada phases 1 and 2.

According to Alarrayed, the waterfront project’s development first phase will be completed this year, while leasing and operations will be finished by early 2020.

State-backed real estate developments expected to spur growth

Sa’ada is one of four construction projects earmarked by Edamah in November last year as part of a seven-year development strategy.

The others are a 600-space car park for a public hospital, a smart city-style car park named The Terminal and a 1.3-sq-km beach development called Bilaj Al Jazayer.

Through these projects and its 200-plot land bank, much of which is undeveloped, Edamah aims to stimulate economic growth and diversification in line with the goals of the kingdom’s Economic Vision 2030.

The Bilaj Al Jazayer project is likely to be particularly pivotal in this regard, given its potential to bolster Bahrain’s current tourism offering: the site is set to house 300 chalets and several public beaches.

Two local firms – Al Haasanin Company and Nass Contracting – were signed as contractors for work under the project’s first phase of development in November 2018. This will involve executing improvements to the existing 1-km stretch of vacant beachfront, as well as the creation of two new beaches and a pedestrian footpath, and is set for completion by the third quarter of this year.