Ready for customers

Tenants will soon take hold of their promised plots in the Bahrain Logistics Zone.

Everyone knows the typical story of Gulf real estate: buy your home, office or warehouse while the only tangible evidence of the property is a pile of sand; believe the developer’s promise that the entire area will be fully operational in X number of months; wait X plus 12 months to take hold of the property while the developer finishes surrounding roads and sets up water and electricity; move into the property
as soon as you can; and, having completelyforgotten what the original artists impression looked like, tell yourself, “At least I have a home/office/warehouse.”

This is why I’m a bit surprised when Hamad Fakhro, Assistant General Director for the Bahrain Logistics Zone (BLZ), tells me that his team waited until infrastructure such as roads and electricity on the one sq metre plot of reclaimed land adjacent to the new Khalifa Bin Sulman port was 100 per cent complete before asking customers to sign contracts. “We have handed the contracts over to the potential tenants, and we expect the signed contracts back within the next one or two weeks,” he says. “We made sure that everything was finished, and only then did we bring the contracts and the design codes to the customers.”

Over the past year, his organisation has signed memorandums of understanding
with large companies such as Landmark, CEVA, Danzas and Marina Furniture; and Fakhro expects all the contracts sent out to return signed. “Customers were very eager to join the BLZ in recent times, even with the economic crisis. Also, upon meeting each single company when we handed them the contracts, they were quite excited,” he says. “There are no signs that anyone will change their mind.”

Hamad Fakhro

“Companies will start construction within a few months, and it will take them a year to finish the construction,” he adds.

The new port is finished, however, having welcomed its first shipments the first week in April. “Now, the old port, Mina Salman, is closed. There are only a few small operations such for the flour mills and livestock,” says Fakhro. “The rest of the cargo and containers are coming to Khalifa Bin Sulman. Operations are running smoothly.”

He expects throughput to increase quickly. “Our current volume is between 250,000 to 260,000 TEUs,” he says. “But the new port capacity is 1.1 million TEUs with the potential of increase to two million TEUs by adding more equipment.” He says port operator APM Terminals has guaranteed to turn Khalifa Bin Salman into a transhipment hub. “There is a very good chance that before the end of the year we will see transhipment into Bahrain.”

Unlike other Gulf real estate projects, the BLZ’s greatest challenge is currently
excess demand. “The BLZ is a very small, boutique logistics zone,” says Fakhro. “Land is limited.”

Plots are unofficially full. “We have enough land for three to four players, and we have kept that because we are in discussion with a few companies and we are holding the land for them until deals are finalised,” he says. “The companies that we accepted are the ones that will provide the most value for the economy of Bahrain.”

His team, however, is already working on plans for Phase 2. “We are looking at the option of having the private sector contributing or being a partner to reclaim another 1.5 kilometres of land right next to Phase 1,” he says. “We are also working with the government to identify other locations on the island for specific logistics sectors such as petrochemicals.”

He hardly seems concerned about securing financing. “Because of the success of Phase 1, we are seeing a lot of interest from banks to support us, especially because the government is backing this,” says Fakhro. “Bahrain is considered very, very stable and there is a lot of trust from the financial institutions to support the Government of Bahrain.”