Bahrain's bold steps boost real estate sector

GMT 19:08 2015 Thursday ,26 February

Arab Today, arab today Bahrain's bold steps boost real estate sector

Bahrain's real estate
Manama - BNA

The issue of stalled real estate projects has been given constant support and close follow-up by the country’s leadership in a bid to resolve it.
This is reflected in His Majesty King Hamad bin Isa Al Khalifa's issuance of Decree-Law 66 / 2014 in November on the settlement of stalled real estate development projects.
It is also clear in His Royal Highness Prime Minister Prince Khalifa bin Salman Al Khalifa's sound directives, as well as the constant follow-up of His Royal Highness Prince Salman bin Hamad Al Khalifa, the Crown Prince, Deputy Supreme Commander and First Deputy Premier
The leadership's efforts aim to resolve the issue through putting forward the necessary means to finalise it in a manner that preserves the rights of both the investors and shareholders and guarantees justice for all relevant parties.
They are also part of the leader’s keenness on taking the necessary procedures that ensure the continuity of business within a secure investment and stimulate economic development.
Moreover, the government has been keen to achieve the sustainable development of the real estate sector through resolving stalled projects, which will contribute to enhancing investors' confidence in the sector, on the one hand, and stimulating the real estate market in the kingdom, on the other.
This approach been affirmed by the government's thoughtful and well-studied steps to follow-up on stalled projects in order to ensure the success of future plans, and thus the development of the national economy.
Those measures aimed to maintain the kingdom's leading status in the investment fields for the sake of diversifying sources of income in a qualitative way and supporting development with impacts that reflect directly on the citizens through generating employment opportunities for national job-seekers and attracting investments that consolidate the role of the main economic sectors in the kingdom.
The efforts exerted regarding stalled real estate projects, and the ways of dealing with them within legislative and legal frameworks, have led to positive results.
The positive indicators include the announcement of the re-construction and development process in Villamar and Riffa Views projects. More results that are promising are expected in light of the continuous cooperation among all parties.
Supportive decrees and laws:
The government has exerted tireless efforts to enforce Decree-Law 66 / 2014 on the settlement of stalled real estate development projects according to the pre-set plans and phases, implemented in accordance with criteria and standards that guarantee the rights of investors and shareholders, and ensure justice for the relevant parties.
The consolidation is in line with the commitment of Bahrain’s relevant institutions to regulatory and procedural standards that ensure a safe investment climate.
In this regard, the cabinet discussed at its session on September 14 last year ways to develop legislation and laws that improve the investment atmosphere through encouraging real estate development and protecting it from possible stalling.
The laws would also improve ways to address stalled real estate development projects in a way that maintains the progress of real estate sector, ensures the continuity of the economic activities and safeguards the investment process. The cabinet referred the issue to the Ministerial Committee for Legal Affairs for further studies.
On October 19, 2014, the cabinet approved a draft decree law on stalled real estate development projects. The decree law, aiming to resolve and examine the situation of stalled projects, protect the interests of investors, is in line with the government's keenness to put forward bold solutions that ensure the settlement of the issue of stalled real estate development projects, their speedy examination of the situation, and the protection of the interests of investors and beneficiaries. It also aims to create specific mechanisms to prevent the faltering of such projects in the future.
After the issuance of a series of resolutions and decrees, the Executive Branch has dealt with this issue seriously, and implemented them quickly in accordance with the regulations and laws in force in the kingdom.
In this context, the Cabinet decided, on January 19, 2015, to set up the Ministerial Committee for Reconstruction and Infrastructure as a competent body in charge of studying the stalled real estate development projects referred to it by the cabinet according to atipulations in Article III of Decree Law 66 / 2014 on the settlement of stalled real estate development projects.
Specislised committees to settle the issue:
On February 17, 2015, Deputy Prime Minister and Chairman of the Ministerial Committee for Construction and Infrastructure Shaikh Khalid bin Abdullah Al Khalifa issued edict 1 / 2015 concerning the regulations and criteria to consider a real estate project as stalled.
According to edict, if it is found out that the developer shows no seriousness in carrying out the project, has not started construction work with no plausible justification despite receiving the needed licences from the competent government authorities or failed to implement the project due to gross negligence, the project is considered stalled.
The criteria are regarded as a reference to decide if any project is considered stalled as per article 2 of Decree Law 66 / 2014.
Royal Decree 14/2015, stipulating the formation of the Committee for Settlement of Stalled Property Development Projects reflects serious steps towards the implementation of the sound directives to resolve the issue and rectify the situation of these projects as required, according to justice and the law in order to preserve the rights of all parties.
The Committee comprises three judges and two experts and enjoys judicial powers stipulated by Decree Law 66 / 2014 that allow it to take actions that can make tangible progress in this issue relating to the settlement of rights and boosting confidence in the real estate sector.
The main goal behind establishing the committee is to reach settlements based on clear regulations and legal systems.
In August, Al Mazaya Holding Company announced that the total losses incurred by stalled projects, including investment and residential projects, had exceeded BD400 million ($1.06 billion) by the end of 2013. One month earlier, the Central Bank of Bahrain (CBB) revealed that the debt of stalled projects Bahrain had exceeded BD177 million ($ 473 million).
The announcements were made amid calls for the need to find a commercial understanding between the projects and banks to resolve this issue.
The Prime Minister in December 2012 had given directives to make appropriate recommendations to address the troubled real estate projects dating back to the beginnings of recession that hit the real estate sector with the global financial crisis and the exploitation of available liquidity due to the economic activity in the implementation of further development projects.
In December 2012, HRH Premier issued directives to submit recommendations on the best ways to address and rectify the situation of projects that were stalling as a result of the recession that hit the real estate sector following the global financial downturn and the use of the available financial liquidity in implementing more development projects.
Real estate developers believe that 2014 was the year of real estate legislation after the issuance of four laws related to rentals, real estate registration, real estate development and stalled real estate projects’ settlement. They said 2014 marked the gradual return of active real estate transactions, which exceeded BD1.100 billion, with the increasing number of areas with high demand for residential and office real estate.
With the return of real estate development projects and the resumption of construction in a number of stalled projects, the sector will be given fresh impetus and the kingdom is expected to achieve new successes and to make giant leaps in the next years through focusing on the economy as one of the core priorities in the Government Action Plan.

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