Social Housing Drive Contingent On Local Industry
As part of a wider effort to placate a very volatile and negative public sentiment, the government in Bahrain have earmarked BHD580mn (US$1.5bn) for the construction of new, low- cost housing units. We see this as being a wholly Bahrain-based operation, with local contractors picking up the contracts, funded wholly by public money, especially as the risk premiums in Bah rain are too high compared to other countries in the region.
The government's plans include the construction of 16,000 housing units over 2013-2014. This is effectively a continuation, and it seems partially an overlap of the 2012 housing policy, when the government singed a US$550mn contract with local developer Naseej, to build 4,000 affordable housing units to 2014 ( see our online service January 5 2012, 'Social Housing PPP Offers Encouragement For Wary Investors). The plan - according to government sources cited in local press- is going to be financed by BHD240mn (US$636mn) earmarked in the 2013 budget and BDH340mn (US$901mn) from the 'GCC Marshal Plan', a regionally-funded pool of money set up to support the spending sprees of governments facing domestic volatility and opposition.
Housing policy is key to Bahrain's wider social policy agenda, as the deficit has compounded, with applications and waiting times rising. Slow land reclamation and appropriation procedures appear to be at the heart of the problem. The public-private partnership procurement model implemented with Naseej could speed the entire process up, though the developer will likely be subject to these issues as well.
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