Faisal Faqeeh, Chairman, Bin Faqeeh Real Estate Investment Company: Interview

Interview: Faisal Faqeeh

How would you describe the growth prospects of Bahrain’s real estate market in 2016?

FAISAL FAQEEH: My main complaint now would be that investors are being overly cautious and just trying to watch the market and see how it behaves before spending any of their own money. Banks are not financing real estate projects, claiming they are too risky, while individual investors are also biding their time. This means that in Bahrain now there are really only four or five major players in the real estate development market, compared to the thousands we see in Dubai. In order to counter any fear of recession or geopolitical turmoil, people need more confidence, and the private sector should be picking up the slack.

The new development laws from 2015 are being modified, as they still have not been implemented. As a member of the Bahrain Property Developers Association, I am happy we were consulted this time before they were re-written. The new rules will be more flexible for investors by having alternatives to the escrow account requirement when more dependable investors are involved. There are some new players in the market who are not really knowledgeable or reliable developers. They are only working on small projects, but if they begin to work on larger projects, there could be some concern for instability in the market.

Kuwaiti and Saudi developers are investing heavily in Bahrain in 2016, which is good and bad. While it brings money into the economy, it also brings gigantic foreign players into this tiny market. It does reaffirm the GCC member countries’ confidence in Bahrain, which has the healthiest real estate market in the GCC right now.

What is Bahrain’s current position in terms of attracting international investors?

FAQEEH: Overall, Bahrain is well positioned to attract investors, but the rules and regulations of the country need to be adjusted to allow greater ease of travel in terms of visas and access in order to unlock this potential. When investors come, they want a good return on investment, which Bahrain’s real estate market can certainly provide. However, with more open access to the country, it would be a more attractive destination. We already have some investors from the US, Germany, China and other countries, but they are all people who already live in Bahrain. The government is now working on making investing easier, but the effects of these changes will be evident only one or two years after they are implemented. I am happy about Dnata’s management of the airport expansion, because it means they will be injecting value into the economy.

Real estate investment trusts (REITs) are a new option for fundraising, appealing to both investors and developers. However, rates would need to be high to compete with government bonds, and thus it would require a property with 9-10% returns to use a REIT for fundraising in the current climate.

Does the current entertainment and tourist offering encourage real estate demand?

FAQEEH: Bahrain needs to concentrate on entertainment and family offerings, which is why we are beginning to develop more entertainment-linked freehold apartments. Avenues Mall is a great option for families entering the country, and Marassi Galleria will be the same. Now we have Seef Mall and City Centre, but in a few years the number of shopping centres and entertainment options will be much higher.

We especially need to focus on turning Bahrain into a solid family destination due to Saudi Vision 2030, which will create direct competition, with the potential opening of ice skating rinks, cinemas and other family attractions across the causeway. Riyadh will have the world’s largest museum for Islamic artefacts, for example. Bahrain needs to be branded as a destination with a clear direction and an organised offering. Therefore, we still have some work to do in order to remain attractive in comparison with alternatives in the region.