In Bahrain, officials are pushing for wider involvement of private investors in developing the kingdom's tourism sector. Yet, all indications suggest that the private sector is prepared to make the most of the country's tourism potentials.
In the most recent initiatives, the authorities approved the establishment of a $663 million (Dh2.43 billion) firm to acquire the government's stakes in numerous projects.
More importantly, the plan calls for selling 60 per cent of the new company to private investors through an initial public offering (IPO).
Once issued, the shares would then be traded on the Bahrain Stock Exchange. The government will offer the IPO by end-June, as per a report in Meed magazine.
The government is expected to transfer its assets in some major project to the new firm. These include its stakes at Durrat Al Bahrain, Al Areen Desert Spa and Resort, the Southern Area Development Company, Bahrain Family Leisure Company and Seef Properties.
Ongoing developments at some projects with government stakes could entice investors to buy the IPOs. For example, progress is being made at the $1.3 billion (Dh4.78 billion) Durrat Al Bahrain project.
At the moment, Kuwait Finance House (KFH) equally owns the scheme having purchased the share held by Dallah Al Baraka group of Saudi Arabia.
The ambitious project involves setting up hotels, residential properties and a golf course at the resort, located southeast of Manama, the capital.
Recently, Durrat Al Bahrain commenced the programme of selling villas to would be owners or investors. Foreign nationals are entitled to purchase property at the project, which in turn would provide them with residency permits in Bahrain.
Also, progress is forthcoming at the Al Areen project. Gulf Finance House (GFH) and the Government of Bahrain equally own the $750 million (Dh2.76 billion) complex to be built near the site of Bahrain International Circuit at Sakhir, south of Manama.
Bahrain will be hosting its second Formula One grand prix in early April. Lately, a team led by Erga Group of Lebanon won the job of carrying out the master-plan for the project.
To be sure, private investors are already busy developing a series of tourist projects. For instance, investors are developing a $1 billion (Dh3.67 billion) Amwaj project, close to Bahrain International Airport.
Multi-purpose projects
The scheme involves residential and commercial facilities. The project imposes no restrictions whatsoever on foreign ownership.
Yet, Islamic financial institutions have lately emerged as fresh investors in the development of tourism facilities in Bahrain.
Thus, First Islamic Investment Bank (FIIB) has entered into a joint venture with Bahrain International Golf Course Company to develop an extraordinary project at the cost of $300 million (Dh1.1 billion).
The scheme, located south of Manama, comprises 18-hole golf course together with 500 residential units and numerous recreational facilities.
This marks the second golf-related project for FIIB having signed a $500 million (Dh1.84 billion) joint venture with Dubai Sports City to set up a themed residential community. The project is part of the mega Dubailand development.
Additionally, a team of investors led by Al Khaleej Development Company (Tameer) are developing Adhari park in Manama at the cost of $24 million (Dh88.08 million).
Meanwhile, numerous hotels in Bahrain have unveiled plans to renovate facilities and rooms. For instance, The Ritz-Carlton, Bahrain's topmost luxury hotel, intends to renovate all its guest rooms and desires to open a second property on the island.
According to TRI Hospitality Consulting, currently there are 22 five and four-star hotels in Bahrain boasting nearly 3,500 rooms. But 5 new hotels with some 800 rooms maybe ready by 2008.
The government's drive to further involve profit-seeking private investors in tourism projects is a step in the right direction. Bahrain's economy stands to emerge as the ultimate beneficiary of the move.
The writer is assistant professor, College of Business Administration, University of Bahrain.
