Bahrain Real Estate Regulatory Authority (BRERA)

Central Manama Panoramic View

The Kingdom of Bahrain like any other country has witnessed a boom in the real estate industry which started in early 2000 with the announcement of three major projects at that time:

1. Amwaj Islands, in Muharraq area
2. Bahrain Financial Harbour, in Manama area
3. Durrat Al-Bahrain, in the Southern part of Bahrain

These 3 projects have set the pace for more to be announced at a time people were questioning the viability and if these projects were even realistically thought off in terms of demand. well after years passing by more projects come up and demand was always there as the Kingdom of Bahrain does poses a strategic location in the middle of the Arabian Gulf and surrounded by its neighboring GCC countries that is of course in addition to the culture, heritage and history; making it a nice weekend getaway for families in the area.

Having said that, and as this boom was unfortunately not monitored properly by the government; has resulted in many mishaps some were intentional and other were due to circumstances. We also witnessed lots of Commercial Banks deviating from their core business to have a share of the Cake, let alone that every single person wanted to have a bite so all were trying to make a quick buck by being brokers which included high position individuals in Banks and Government!

I am not here to try to preach to all what should or shouldn't be done, but I think the time has come for the Government to step in and try to regulate the real estate industry just like it did with the Telecom when it established the TRA. We need a Real Estate Regulating Authority to be established by the Government for a lot of reasons which I summarize the main in the list below:

• To ensure that the projects complete as they were announced or at least try to ensure that they don't deviate from the original as much as possible.
• To ensure that projects obtain all proper approvals prior to launching.
• To ensure that all "off-plan" sales are done using escrow accounts.
• To try to eliminate any fraud sale reports that in return hypes up the prices for no valid reason.
• To try to ensure that the investors money which was raised using the PPM's "Private Placement Memorandum" are regulated by the CBB "Central Bank of Bahrain" and have the project accounts checked on regular basis.
• To regulate the brokerage companies and monitor their authenticity. 
• To try also to help the projects that are in need by negotiating on their behalf with other governmental bodies to solve any problems.

The last point in the list of my summarized reasons or you can call them tasks of BRERA is one of the most important and needed points these days..

Marina West

Villamar

We see a lot of projects that have been effected by the World Financial Crisis that started in 2008 and ended in late 2010 as majority of buyers started using it as an excuse for not paying their dues which effected some of the projects cash flows. In addition to the buyers, our CBB set a rule for the local Banks not to finance real estate projects up to a certain percentage of the Banks capital; which is off course to protect the banking industry in Bahrain. However, as much as our CBB is trying to protect the banks by making them not finance the needy projects it has to take into consideration that all the projects in Bahrain DO have existing facilities with the Banks, and that rule as much as it was made in the interest of protecting the banks it actually has more damage to them in the long term. Logically, if the projects that are caught with a cashflow problem are not helped by the Banks they WILL collapse and if they collapse they wont be able to pay back the dues to the banks. More over, if the banks try to go legal, they are going to come after the actual buyers who paid in the project!

I know its complicated and it is a domino effect... Simply putting it.. If the Projects fall; a lot of the Banks in Bahrain will follow!!

That's why we in Bahrain are in dire need of a regulating authority to talk on behalf of the projects with the CBB to ensure that they are helped to fulfill their obligations towards their buyers and the banks; let alone the other tasks of regulating an industry which is considered to be the second biggest after the banking industry in Bahrain..