Bahrain – an Arab state located on the southwestern coast of the Gulf, is an archipelago comprising of Bahrain Island and around 30 smaller islands. The kingdom is located in one of the world’s highest oil-producing regions. Given that it only has small reserves of hydrocarbons, the kingdom and its economy has long relied on processing crude oil from its regional neighbors.
In the recent past, other sectors such as financial, communication and tourism have grown noticeably. The country’s capital city, and port – Manama is located on the northeastern tip of Bahrain Island. The Kingdom of Bahrain, not having sizes in reserves of hydrocarbons as compared to its neighbors, long struggled to provide its citizens with extensive social services and employment opportunities, particularly at the beginning of the 21st century during its phase of a rising youth population.
Along with the blossom of the youth population, it was assessed by the Ministry of Housing in Bahrain that an estimated 46,000 people were on a waiting list for government subsidized housing at the time. It was then that the Bahraini government started exploring new avenues for improving the availability of housing – in the form of public-private partnerships. Up until the rupture of the Bahraini real estate bubble in 2008, private developers were mainly focused on luxury real estate.
It was at this point that the Abu Dhabi Fund for Development stepped in and announced it would grant the Kingdom of Bahrain a total of AED 2.6 billion in phases for the development of the Northern City. The funds would finance projects in housing, electricity, water, infrastructure and social services. The Abu Dhabi Fund for Development’s (ADFD) efforts towards social and economic development for Bahrain began in 1974. The Kingdom of Bahrain has been a strong focus of the ADFD, having received about AED 10.6 billion in total grants and loans.
The fund has provided financial assistance for 26 projects in various segments of sectors; Electricity & Water, Social & Health services, Housing, Industrial and Transportation. Among these projects is the construction of the Northern city, which aided in appeasing the housing shortage. Madinat Salman (previously known as Al Madina Al Shamaliya / North Bahrain New Town) was originally planned in the year 2003 and is a 10 islands residential complex located on the northern coastline of the Kingdom of Bahrain.
Laying the foundation
The Northern City Residential and Infrastructure Project had been developed as part of the AED 9.2 billion (US$2.5 billion) grant provided by the UAE to Bahrain within the Gulf Cooperation Council (GCC) development programme for Bahrain. The grant is managed by the ADFD. The projects funded by ADFD in the country have translated into profound benefits for the Bahraini society. The Northern City project was said to be one of the most strategic housing projects implemented, by the Ministry of Housing (MoH). It is in fact the largest development in terms of area and housing unit numbers provided.
The project was built after 37.5 million cubic meters of land were filled in the shallow part of the Island kingdom. The scope of the project was not limited to housing units, but also included the construction of roads and dedicated pedestrian bridges, as well as the infrastructure for sewage services. In 2016, the construction of the Northern City was underway after a part of the total grant was disbursed by the ADFD to begin preparations for land reclamation. The initial part of the grant amounted to AED374 million ($101 million). This was to be rapidly succeeded by the initiation of phase 2, which comprised of building the initial 2,694 houses.
Basim Bin Yaqoob al Hamer, Minister of Housing for Bahrain, said: "We are hugely appreciative of this funding which will help us alieve some of our chronic housing shortages here in Bahrain with the North City project part of a much broader plan to build 40,000 new homes for our people." Considering the status of the project as of December 2018, a total of around 3,041 social housing units and 367 housing units are already been delivered. As per the Ministry of Housing, around 1,421 villas were built with a total monthly employment estimate at 30,000 individuals during the period July 2012 & July 2017. Despite this drive to solve a national housing predicament, the kingdom faces challenges, as is expected with projects of such magnitude.
The most prominent challenge that calls for attention pertaining to the social housing sector in Bahrain is the ever increasing waiting list for housing services, mainly the housing units. The demand for housing units for the last seventeen years (2000 – 2017) has increased from 754 to 3,740. The compound annual rate of growth rate is estimated at 10%. The increase in demand had eventually resulted in longer waiting times for applicants of housing units. The average estimated waiting time for social housing in Bahrain between 2000 & 2017 was 12 years. The scenario was even more complicated with the advent of decline in international oil & commodity prices during the period 2014 – 2018 as this exerted pressure on the national revenues that pre-dominantly partially funded social housing projects.
Taking these challenges into account, the relevant authorities are taking concrete steps to address the issues. Solutions include considering household income/salary as eligibility for housing service applications, the promotion of modern and apartments. In addition, house plot size would be reconsidered given the decrease in household size over time and aligned with the aggregate income of the household. Finally, an optimized approach must be considered for a proportionate mix of land use, financing and administrative & regulative procedures. The complex is of national importance as it helps to improve the geographical area of the Kingdom of Bahrain. The project proves to be socially and economically beneficial, as stated under the United Nations sustainable development goals (SDG), the project ties into industry, innovation and infrastructure (SDG 9) and sustainable cities and communities (SDG 11). The approximate cost of the total project is around BHD 1 billion and considering the macro-economic multiplier at 1.12, the future value of the project is estimated at BHD 1.12 billion.