Bahrain: Affordable housing through a mix of increased funding

  Still high on Bahrain’s schedule is to bridge the shortfall in affordable housing through a mix of increased funding and better involvement by the private sector. The twin benefits are seen as boosting the construction industry and contributing to social instability.

On December 14, Basem Bin Yacoub Al Hamer, the minister of housing, said the government was considering various models of cooperation with the private sector to help overcome the residential accommodation shortage. Part the proposals is to have private construction firms take on social housing projects from the initial stage through to completion, again handing over the finished developments to the national for distribution to families on the accommodation waiting inventory, Al Hamer said.

“We are working in conjunction with the private sector to look for innovations that would help strengthen and enhance the sector,” Al Hamer said.

The Ministry of Housing is currently launching a pilot project in conjunction with the private sector, though the final details have from presently on to be agreed. The development project will see 500 houses built in a number of areas in 2013, said Al Hamer.

If the private sector is able to win a better share of national contracts for affordable housing, this will go a long way to replace the fortunes of the industry, which has seen business trail off in the wake of the world financial crisis. Though not as glamorous as skyscrapers or high-end residential complexes, the affordable housing market is one that offers good returns on large-scale projects.

The request for low-cost and government-funded housing is pressing, with official figures showing a waiting inventory of some 54,000 applicants for national accommodation. Even though 6000 housing units were built in 2011 and an extra 7000 were due for completion by the end of last month the waiting inventory for affordable housing continues to grow.

According to data from the Housing Projects, Construction and Maintenance Directorate released in December, around 8000 applications for national housing are lodged each year. Even the accelerated construction programme is not making inroads into the deficit, which is growing.

In an effort to get in front of the rising request for housing, the government is to step up its building programme from presently on additional in collaboration with private sector construction firms. In mid-December, officials announced that $1.5bn would be allocated for the construction of 16,000 new housing units over the next two years, with much of the funding coming from assistance provided by fellow GCC members, and the balance coming due from national coffers.

Some of the construction on these projects, which cover amount of Bahrain’s five governates, is by presently under way. Indeed, about $64.7m worth of reclamation work for sites to provide land for 5000 units was expected to be concluded in early 2013.

This reclamation work is one of the challenges in the provision of housing. An extra is the difficulty the construction industry must contend with at the same time as working on reclaimed land, which requires additional preparation work. This is particularly the case in the governate of Manama, which includes the capital, where there is only limited public land available. In the city itself there is no waterfront area available for the extension of land through reclamation works.

One proposition put forward by the Manama Municipal Council to overcome this shortage is for the demolition of older houses and the construction of multi-storey apartment units in their place. An extra potential solution is for the national to buy up available land from private owners, though the high price of units may make the cost of such a plan unappealing to the government.

By going the high-rise route, the government should be able to better utilise the private sector’s skills set, as a lot of firms focused on the construction of office and residential towers during the successful building period of the completed decade. With at least $1.5bn to be spent on affordable residential units over the next two years, and far additional in subsequent years as the government seeks to slash the waiting inventory for housing, the construction sector should have ample incentives and opportunities for increase.