Naseej achieves financial close – housing PPP project, Bahrain
Naseej, Bahrain’s first fully-integrated real estate and infrastructure company, announced (ed note: 26/10/13) that funding for the region’s first ever public private partnership (PPP) to address housing challenges has been finalized, and that the construction of thousands of housing units will start shortly.
The announcement, by Naseej Chairman Khalid Abdulla-Janahi, follows the completion of financing agreements for the almost $450m project that brings together public and private entities to deliver social and affordable housing solutions to Bahrain’s growing housing challenges.
“I am pleased to announce that funding for this key project has been secured by Ithmaar Bank,” said Janahi. “This takes the shared vision of the Housing Ministry in Bahrain and Naseej another, all-important, step closer to reality,” he added.
The PPP, a first for the Kingdom of Bahrain and the GCC region, involves the development of more than 2,800 social and affordable housing units in two strategic locations: Al Madina Al Shamaliya (also known as the North Bahrain New Town) and Al Luwzi. It is the largest housing project ever to be developed in Bahrain in partnership with the private sector, and is expected to set a new benchmark for housing projects across the MENA region.
“Work on this PPP started three and a half years ago, and the fact that it is finally becoming a reality is testimony to the vision, determination and perseverance of the Housing Ministry,” said Janahi. “The complexity of this project – for all involved – tested everyone’s commitment and demanded significant investments in terms of time, money and effort. Naseej, for example, invested more than $7m in the PPP even before the project begins to materialize,” he added.
“We are pleased to be able to work with Housing Ministry officials to make real and meaningful contributions to the people of Bahrain,” said Janahi. “We are particularly pleased that, through this project, we will also demonstrate that social responsibility translates to good business sense,” he added.
“Affordable housing is one of the most pressing socio-economic challenges we face today,” said Janahi. “It also makes for a particularly compelling business case for committed developers who value prudent, sustainable opportunities over short term interests. I hope other savvy investors and responsible developers will soon follow our example and, realizing the scale of both the business opportunity and the social implications, begin to take a more strategic view of their roles,” he said.
“This project, in particular, contributes directly to the long term stability of the country,” said Janahi. “It addresses a pressing, clearly defined need and provides the people with solutions to their demands,” he said.
Following the signing of the Project Agreements with the Ministry of Housing in January 2012, Naseej incorporated a wholly-owned project company, Sharaka for Housing Projects Company, to execute the project and assembled a team of large contractors, namely, Cebarco Bahrain, Chase Manara and Terna to undertake works on different sites of the project. Furthermore, Naseej had earlier put together a top-tier consortium of international and local consultants with world-class expertise in master planning and architecture, infrastructure design, housing and building design, landscape design, facilities management, financial and legal advisory, cost consultancy and project management services.
“We’ve brought some of the world’s biggest names, from across multiple industries, together for this PPP,” said Janahi. “We’ve also invested tremendous amounts of time, money and effort to make it happen, and we’ve declined very promising opportunities that presented themselves in the wake of the global financial crisis to focus, instead, on this project,” he said.
“We did so because we believe in the vision which is also shared by the Housing Ministry,” said Janahi. “We believe it presents a sustainable, mutually rewarding, long-term opportunity that will add tremendous shareholder value while contributing to the development of Bahrain and its people,” he said.
“Finalizing financing agreements for the PPP, and achieving Financial Close, marks a significant milestone for many reasons,” said Naseej Board member and Managing Director, Mohammed Khalil Alsayed. “It is the first Affordable Housing PPP in the GCC region to come to fruition. It’s been more than three and a half years since we started, and it’s taken commendable efforts by all stakeholders to converge on all issues,” he said.
“Most importantly, such a positive development provides a much needed boost to business confidence while providing affordable housing to Bahrainis,” said Alsayed. “Naseej is keen to proceed swiftly in this project in the months to come,” he said.
“As a pioneering Islamic retail bank, Ithmaar recognizes its responsibilities both to its shareholders and to the community in which it operates,” said Ithmaar Bank Acting Chief Executive Ahmed Abdul Rahim. “These are responsibilities we take very seriously – and we are delighted to be a part of this ambitious project,” he said.
“In particular, we are pleased to be able to help translate this bold vision into a tangible reality,” said Abdul Rahim. “In doing so, we are contributing directly both to increasing shareholder value by financing this major, government-backed project, and to improving our local community by delivering a meaningful solution to Bahrain’s housing challenges,” he said.
Khalid Abdulrahim, Chairman of Cebarco Bahrain reflecting the sentiments of the project contractors welcomed the announcement and said, “We have worked on some of the largest, most ambitious projects around the world – but this PPP is, conceivably, the most exciting project that we have ever been involved in. It sets an all new precedent for the entire MENA region and could usher in a new era for the construction industry, particularly with regards to the fast-growing affordable housing sector. More importantly, it allows us to make a tangible contribution to the community.”
Cebarco Bahrain will undertake works in Al Madina Al Shamaliya Island 13, Chase Manara will be responsible for developing Al Madina Al Shamaliya Island 14; and Terna Contracting will be responsible for the works in Al Luwzi site.
The consortium of international and local consultants include Ithmaar Development Company as the Development Manager, Hill International as the Project Management Consultant, AECOM as the Master Planners, Housing Units Design Consultants & Landscape Design Consultants, Ansari Engineering Services as Housing Units Design Consultants with AECOM, Scott Wilson with Ansari Engineering Services as Infrastructure Design Consultants, Davis Langdon as the Cost Consultants and Olive VFM as the Facilities Manager. Furthermore, Trowers & Hamlins are the Legal Advisors, and PricewaterhouseCoopers the Financial Advisors and Norton Rose are the Lenders’ Legal Counsel.
Naseej, which will announce the project launch details shortly, will also provide regular progress updates throughout the life of the PPP project. The first phase of units are expected to be delivered by June 2016, and the other phases by 2017.
“Having finalised financing for the PPP, we can now focus on delivering useable housing solutions and contribute to realising the aspirations of the people of Bahrain,” said Janahi. “It has been a difficult and very challenging three and half years but this has only strengthened our resolve and reinforced our vision,” he said.
“We have, despite the many hurdles and continuous challenges, stood firmly by our shared vision,” said Janahi. “I am confident this will pay off with significant returns both in terms of our social contributions and our shareholder value – and I hope this helps inspire others to follow suit,” he said.
“Other developers, for example, had backed away from this deal because it did not offer quick returns,” said Janahi. “Naseej stood by its vision and its commitments – and we are now seeing it through,” he said.