KFH's $3.2bn project to be built on reclaimed island city in Bahrain

The Bahraini arm of a leading Islamic bank from Kuwait is developing two major real estate projects in the kingdom that are expected to change the architectural landscape and the property market of the country.

Kuwait Finance House (KFH), together with a group of private investors, recently announced a $3.2 billion (Dh11.7bn) master planned city called Diyar Al Muharraq, to be built totally on land reclaimed from the sea – the biggest ever private sector project in Bahrain.

KFH is also developing two other projects – the $4bn Durrat Al Bahrain project and the smaller Ishbiliya Village. KFH is a majority investor in all these projects, that will change the geography of the 708 square kilometre island kingdom.

KFH has been actively investing in the construction and real estate sector of Bahrain through a partnership with the Bahraini Government and high net worth investors from the private sector. The land price in Bahrain has reportedly risen by more than 400 per cent and the developers of the new island city on reclaimed land said they are not going to allow speculation on land.

Abdulhakeem Y Alkhayyat, Chief Executive Officer, KFH, who is also the Chairman of Diyar Al Muharraq, said: "The island's planned 30,000 houses and apartments will provide housing for roughly 10 per cent of the population of Bahrain, making home ownership achievable for more Bahrainis than ever before.

"Al Muharraq was the centre of political power and the pearling industry in Bahrain. The new project will bring back the traditional community life in Bahrain.

"We are focused on developing projects with economic and social benefits for Bahrain. We will not allow speculation on land. We will develop part of the [reclaimed] land and the rest of it will be allocated to genuine developers. Diyar Al Muharraq will have all infrastructure facilities – water, electricity, schools, roads and other public areas. There will be a six-lane highway linking the island to the main city and the Saudi-Bahrain causeway. There will be restrictions on the use and resale of land on the island."

Alkhayyat is also the chairman of the board for the multi-billion-dollar Durrat Al Bahrain project. He said KFH has high hopes on the property and construction market in the Gulf in general and Bahrain in particular. "KFH is bullish about the property and construction market in the Middle East, especially among member countries of the Gulf Co-operation Council. We believe in long-term projects of 10 to 20 years duration. Though there are ups and downs in the property market, as is happening in the US, these temporary fluctuations do not worry us," he said. Alkhayyat added that KFH is not keen to take away the profits from its projects in Bahrain. "We would like to put back the money into the country through new projects. We have projects all over the world including Turkey and Malaysia."

He said investors in the Bahrain real estate market have made more money than expected and the project is open for Bahrainis and GCC citizens. A part of it will be available for international investors. While the Durrat Al Bahrain project is targeted at middle and upper middle-class Bahrainis, Diyar Al Muharraq will have housing for all sections of society – not necessarily the rich and affluent.

Durrat Al Bahrain is owned by the Durrat Khaleej Al Bahrain Company, in which the Bahrain Government and KFH – Bahrain (together with its investors) each holds a 50 per cent stake. Durrat Al Bahrain, a 20 square kilometre area comprising 15 reclaimed islands off the south coast of Bahrain, is expected to be approximately the size of Manama – Bahrain's capital city.

Reclaiming land for 12 of the islands was finished in 2006 and the entire development is scheduled for a phased completion by 2010.

KFH is also developing Ishbiliya Village, a premier residential development for the middle to high-income market, situated on a large plot of land in a prime location of Al Qadam in Bahrain. The project will have 300 villas and 500 apartments of varying sizes, alongside high-class commercial and leisure facilities, modern infrastructure and community essentials such as schools, parks and mosque. It is located in close proximity to Manama City Center.

The developers of Diyar Al Muharraq and Durrat Al Bahrain projects are confident about the superior engineering skills of the international consultants they have employed and do not see any problems in reclaiming the huge areas of land.

"Bahrain has been facing a severe shortage of land and the use of land reclaimed from the sea is a very viable option. From the outset, the project was conceived as an environmentally conscious undertaking. We have hired the best international consultants and engineers to study the safety and stability aspects of construction on reclaimed land. In addition, we have conducted our own studies on these issues," said Alkhayyat.

Replying to questions about whether the project has factored in the impact of natural events such as tsunami and the rising sea levels due to global warming, he said: "Nothing will affect stability of projects on reclaimed land. The development risk on reclaimed land is almost zero."

Aaref Hejres, Chief Executive Officer of Diyar Al Muharraq, said various types of housing will be designed in the new island city project to suit every taste. These will range from practical and comfortable flats to multi-family dwellings, and from well-appointed condominium residences to elegant waterfront homes, that feature amenities such as swimming pools and gardens.

Dredging and land reclamation is almost complete and the project will be developed in four stages.

It will be tendered out in 18 months' time and the first house will be ready by 2010. The promoters will develop part of city and the rest of the project will be sold to property developers.

"We will develop separate utility services for water, electricity and other infrastructure in the new city. There will be public parks, playgrounds, entertainment centres, hotels and all other facilities. A six-lane highway will pass through the new island city," Hejres added.

Historical connection

John Yarwood, an Englishman who worked for the urban reconstruction of Bahrain, wrote in his book Al Muharraq: Architecture Heritage of Bahrain: "In the 1920s and 1930s, the Al Khalifa family built their own palaces and two major Friday Mosques on the highest ground in the centre of the urban area. This was due to climatic, symbolic and military reasons. The ruler's palace was the centre of administration, political patronage and upper class social life. Muharraq was a magnet for many people. It formed the centre from which the city grew in different directions. The town has grown by expansion on the land northwards and by reclamation from the sea."

A complete city

The master plan of this modern city is for a completely integrated community of residential, commercial, leisure and retail components. There will be public parks, children's playgrounds, private and public beaches, canals and waterways, public and private schools, easy access to marinas and yacht berths, hotels, resorts and other tourism destinations.

Initially, four major hotels are on the anvil and a Hotel Island featuring a range of hospitality choices.

Beyond the Hotel Island, there will be a marquee hotel, adjacent to the main shopping mall in the centre of Diyar Al Muharraq's commercial district.

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