$1.1bn airport renovation part of wider investment in tourism infrastructure in Bahrain

Tourism’s GDP contribution is set to soar in the next few years, buoyed by billions of dollars of investment in new infrastructure. Big-ticket projects, including mixed-use real estate developments and a $1.1bn overhaul of the Bahrain International Airport (BIA), have driven investment levels to new highs in recent years. A new passenger terminal will enable the kingdom to significantly augment passenger handling and flights services on offer, and help the kingdom widen its reach as it seeks to attract tourists from high-potential markets in Europe and Asia.

Infrastructure Investment

In December 2017 the Bahrain Economic Development Board (EDB) reported that investment in 14 prominent tourism infrastructure projects had reached $13bn, representing a significant proportion of the country’s $32bn large-scale infrastructure development programme.

According to the EDB, $10bn of total infrastructure investment is being undertaken by government-related entities such as holding companies and funds, $7.5bn by the GCC Development Fund and $15bn via private sector entities. Developing tourism infrastructure will be critical for the country as it seeks to boost economic diversification and attract new foreign direct investment inflows. At present, the sector contributes 6.3% to Bahrain’s GDP, according to the EDB (see overview), with Ali Ghunam Murtaza, the director of real estate, tourism and leisure business development at EDB, telling local media in April 2018 that he expects this to rise to 20% in the coming years as ongoing projects, including mixed-used real estate projects and the new terminal at BIA, come on-line.

Mixed-Use

Mixed-use developments have become an important component of tourism development in Bahrain. “The real estate, retail and tourism sectors are highly complementary. Tourism offerings support residential development; people want entertainment and a place to visit with their family, and increasingly we see that in retail developments, where the mall serves as a community hub and recreation destination,” Eman Al Mannai, general manager of sales and business development at Royal Ambassador, told OBG. Bahrain Bay Development (BBD), for example, integrates high-end residential real estate projects with luxury hospitality and retail components. BBD is a 1.45m-sq-metre, master-planned development located in the centre of Manama, under development since 2007. Major tourism projects located within the BBD area include the $159m The Avenues shopping centre, the 273-key Four Seasons Hotel, which opened in November 2015, and the 263-key Wyndham Hotel, located in United Tower, which opened in December 2017.

Airport Upgrade

Perhaps most importantly, BIA is currently undergoing a $1.1bn modernisation programme which will significantly boost passenger-handling capacity, operational efficiency and safety standards. Some 70% of project financing was sourced from the GCC Development Fund, mainly the Abu Dhabi Fund for Development, with the government of Bahrain supplying the remainder.

In January 2016 a joint venture between Turkey’s TAV Construction and the UAE’s Arabtec won a contract to build a new passenger terminal at BIA, the largest component of an expansive overhaul that will boost annual passenger-handling capacity to 14m. The new terminal will also include $11.7m of new passenger air bridges, a $31m baggage-handling system, $29.7m of security screening equipment and $12.5m of investment for horizontal and vertical transfer systems.

Speaking to local press, Mohammed Albinfalah, CEO of Bahrain Airport Company, said that this new development is the largest such project ever undertaken at the airport. An anticipated increase in airlines operating from the new terminal is forecast to give rise to a three-fold increase in direct flights to the kingdom, supporting plans to increase tourist arrivals from Europe and Asia. A soft opening of the terminal is expected to take place towards the end of 2019.