By Benjamin Millington
How will Bahrain's Amwaj Islands be affected by material problems and economic uncertainty?
Promising a life surrounded by sun, sand and sea, Amwaj Islands is set to be the first mixed use development on reclaimed islands in Bahrain. But will their future be as bright as the Kingdom faces material problems and economic uncertainty? Bahrain Editor Benjamin Millington checked in on their progress.
"Amwaj Islands boasts what every community needs and more in today's standards of modern life, a waterside development where almost all residents can enjoy the beachfront from their own backyard."
This is the dream that Amwaj Islands promises and walking around the development you do get a sense that this beachfront community on a group of six man-made islands is coming together.
The school is up and running, the lagoon shopping mall is almost finished, the marina is operational, there are people living in apartment blocks, the floating city of villas is fully occupied and the many buildings under construction are starting to take shape.
When completed, the US 1.5 billion (BHD 565 million) project will cover 278,700m2, boast six luxury hotels and accommodate more than 30,000 people who'll reside by turquoise waters as spectacular as a Tahitian travel brochure.
While there are several more similar developments under construction along Bahrain's coastline, Amwaj Islands was the first, having been conceived in 1999 by Ossis Property Developers.
Reclamation work started on site in 2001 and took around two years to complete. The infrastructure followed shortly after and the first construction works started in 2006.
Now more and more developments are nearing completion but Ossis CEO Martin Kay says construction works could carry on for several more years due to the structure of their business model.
"The way that the business model is being structured is that the land is being sold off in parcels to developers," he said.
"So the individual developers, rather than the master planner, are responsible for their own developments and therefore the pace of developments."
"Because of the nature of the model it is hard to predict the completion date, we predict 2014 to 2015 but there will be undoubtedly some bits and pieces still going on at that stage."While they can't manage the pace of construction, Kay says having less control over development does help to install a sense of variety in the community that they are creating.
"We're not like some masterplanned developments where a single developer, like Emaar, has taken a big parcel of land and controlled the entire construction of the development themselves."
What you tend to get there is a more uniform development which looks like a big estate.
"Amwaj Islands is a bit like an organic community because it is done by different developers."
And this can be seen on the site. There is a wide variety of architectural styles on display as you pass through different developments.
From the Mediterranean-inspired villas of Tala Island to the ultramodern Amwaj Waves apartments to the network of canals linking the villas in Al Masra floating city.
Ossis is developing some of the plots themselves including the five-star Renaissance Hotel which is being project managed by client representatives Meena Projects.
Construction of the 17- storey hotel began one year ago and is now up to the first floor according to senior project manager Michael Oakley.
Oakley says the project is expected to be complete by 2010 but their schedule has been slightly delayed by problems with the supply of building materials in Bahrain.
"The cost of steel skyrocketed and cement was scarce because the Saudis weren't letting much through," he said.This tends to upset the contractors a little bit and they had to source cement from somewhere else.
"It's their own private affair really as to where they get their materials and when they buy it, but if they can't get it all in at a certain time then we've got to arrange an extension because obviously they've slowed down. We reprogram it (the schedule) to cater for these things."
The shortage and cost of building materials has also been a main bug bear for another of Amwaj Island's developments, the residential Amwaj Gateways project.
Covering an area of 33,000m2 and with a total build up area of 181,000m2, the $183 million Amwaj Gateways will consist of six 20-storey towers and 94 beachfront villas when completed around the second quarter of 2010.
Investment company Real Capita is head of a consortium of investors who bought the plot of land from Ossis and established Amwaj Gateway development company to manage the project.
Construction started in January this year and project director Simon Kynaston says they are still on schedule having poured 20,000m2 of concrete, completed all the foundation works and are now up to the 3rd - 4th levels of the towers.
Kynaston says they have achieved such progress despite the materials shortage because of the collaborative effort between the suppliers, contractor and developer.
"There's no secret to it, I think it's a people thing, it would have been very easy to take a hard line with the main contractor and leave them to their own problems but their success is my success, so it is in my interest to support them through those difficult times," he said.
"We've worked very hard to stay on track and had negotiations with them on material supply difficulties and we've resolved those difficulties as they occurred and the evidence is here to prove it.
"We've continued to make good progress, minimsed the effect of the local market, just by very attentive negotiations with all these people - that's the benefit of working on just one project."Kynaston said Amwaj Gateway development company is also employing a "lifecycle construction plan" to ensure the quality and sustainability of the buildings.
Within this plan they are hoping to achieve a Leed green building rating for the project by utilising things like energy conserving lighting and air conditioning systems.
"Lifecycle construction is pretty established in Europe and the US but is something new to the Middle East," he said.
"In essence we look at the operational cost of the building on a year by year basis for a set period of time from 15 years to 35 years and we look at the potential cost of operating the building of the lifecycle period.
"This gives you a different element of green because it may be wise to implement some costly measures at this point, not overly costly because I've still got a budget to achieve, but measures that will give you the lifecycle benefit.
For example, elevator company Otis, who are supplying 23 energy efficient elevators here, have given us an extended lifecycle warranty which means that our entire operational costs are protected and the elevators will sustain the lifecycle of the building. Financial crisis
While the financial crisis may have helped bring some stability to the price of raw materials, Kay says he believes an economic downturn will soon hit construction projects in Bahrain.
"The economy will slow down, there is no doubt about that," he said.
"Even though it's an oil economy that has traditionally had a lot of liquidity, international banks have been badly affected and there is a trickle down affect that takes a little while.
"The financial world is so interconnected and interdependent that it's unavoidable that the smaller regional banks will have to slow down.
"The effect will be that people will be more cautious in investing in property and it's unfortunate for developments that are just beginning now because they will suffer more than we do."Kay said the developments currently underway on Amwaj Islands will continue until their completion, but other planned developments may be scrapped or postponed as banks tighten their lending policies.
"Amwaj has kicked off and things are happening - it'll just grow a little slower than otherwise," he said.
"We could have postponements because that's exactly the sort of thing that happens when people start to think twice about where they're going to get the funding from and whether these are the right sort of economic times to develop.
Some new developments will go and some will be postponed, that's life.
Whatever the effect of the financial crisis on Bahrain, Kay says Amwaj Islands is developed to such an extent that it can already operate as a fully functional community with all the necessary amenities.
He definitely doesn't seem overly concerned about the financial forecasts; I guess that's just the island way of life.