Phoenix from the Ashes – Bahrain’s Stalled Projects Revival
Since the implementation of Legislative Decree No. 66/2014 (the Stalled Projects Law) in 2014, several stalled real estate developments have either been revived or referred for sale at public auction by the Committee for Stalled Real Estate Projects.
Of the four projects referred to the Committee, Juffair Views was successfully auctioned for BHD 3.6 million in December 2016. Amwaj Gateway was auctioned on 31 October 2017, but bidding failed to meet the reserve price of BHD 36 million. As such the Committee announced that a second public auction would take place on 29 November 2017, with a new reserve price of BHD 30.5 million. If the project again fails to meet its reserve at the second auction, the Committee will divide the project for sale in separate lots.
The remaining two projects referred to the Committee under the Stalled Projects Law are Marina West and Sunset Hills. The Committee confirmed that Marina West will not be undergoing a public auction, as the developer is working on refinancing the project. Sunset Hills is still under review by the Committee.
Other stalled projects have now recommenced, including Villamar and the Landmark Cityview Tower. Villamar faced a series of delays until restructuring agreements with financiers were finalised, and work on the Landmark Cityview Tower was resumed in 2016 following a five-year delay in construction works.
On 3 August 2017, Legislative Decree No. 27/2017 (the Regulation Law) was issued. The Regulation Law establishes the Real Estate Regulation Authority (RERA), and imposes penalties and fines for any individual or developer who does not comply with its rules and regulations.
Decree No. 69/2017 was issued on 30 October 2017. The Decree covers the objectives of RERA, which include protecting investors, encouraging good practice in the sector and further achieving economic growth and attracting foreign investments.
RERA will have a board of directors (the Board) consisting of the director of the Survey and Land Registration Bureau and 11 ministers, directors and representatives in the real estate sector. The Board must meet at least once every two months and a majority of the directors must be present in order for the meeting to have a quorum.
The Decree also states that RERA will have a Chief Executive Officer who will be in charge of its strategic plans, general policies, organisational structure, financial, administrative and creative affairs, general supervision, implementing the Board’s decisions, reviewing RERA’s work, and any other responsibilities in accordance with the RERA Law. Pursuant to Decree No. 70/2017, which was also issued on 30 October 2017, Shaikh Mohammed bin Khalifa bin Abdulla Al Khalifa was appointed as the first Chief Executive Officer of the Real Estate Regulatory Authority with the rank of Undersecretary.
This new legislation demonstrates Bahrain’s commitment to resolve the stalled projects in the country and to prevent further stalled projects in the future. The number of stalled development projects that have been resumed illustrates Bahrain’s determination to ensure a strong economy and a thriving real estate sector.
This article was first published by Lexis Nexis in the MENA Business Law Review in the 4th quarter of 2017.
This article was written by Sarah Bennett-Hughes and Durra Al Ali. For more information please contact Sarah on +973 17 133202 or at sarah.bennett-hughes@crsblaw.com or Durra on +973 17 133261 or durra.alali@crsblaw.com
