Changing with the tide

Benjamin Millington , June 6th, 2009

Bahrain Bay CEO Bob Vincent sets the record straight on the development's progress and discusses the challenges in today's stormy economic climate.

Is Bahrain Bay on track?

Bahrain Bay continues to run on programme. The construction of its infrastructure work is on schedule; we're running ahead of the curve in terms of our investor returns. Third party developers are also on track.

What flexibility has been given to third party developers?

We have had to face up to the realities of the market in our expectations on delivery. We have granted flexibility in land payment schedules, extensions of performance criteria such as submission of design and development, and delayed construction start dates. All developers have been assessing their business plans - a normal response to these conditions.

What is the revised completion date for the project?

The original completion date was 2013 but it's probably going to be more like 2015 before the project is realised.

Is Bahrain Bay facing any financial problems?

No. There's a very strong underpinning of the shareholders to follow through on the commitment of the project and that means they've got their cash on the table. They're committed to sensibly using that money over time so that the project is actually delivered. This ensures that the project has time to mature, investors have the opportunity to get a realistic return and that the co-developers have the best opportunity of being sustainable.

Will the concept of Bahrain Bay be delivered as it was first conceived?

As is the case with any master development plan, it must demonstrate some level of flexibility to change with the markets over the life of the project. Some of our architecturally iconic developments have changed because the markets won't stack up any longer. There has been a paring back in some of the design criteria from some of the developers. But the projects will be built. That's a much better outcome than hanging onto an unrealistic design expectation that will never be built.

Has the iconic design of the Four Seasons hotel changed?

Yes, the design changes that have occurred are primarily related to the height of the building and the uses associated with the hotel. The height of the building has changed as it was extremely expensive to build in its proposed configuration. The shift in demand justified a change in design - that's a realistic commercial assessment.

Does the Four Seasons have a new completion date?

The original timeframe was that it would be under construction now and be ready by 2011. That's obviously been pushed back as the design has just been completed, which means they will probably start construction in the first half of next year. So it's about a year, or a year and a half, behind.

How is construction of the Arcapita headquarters progressing?

The main structural elements of the building have been completed. Total construction is 65% completed and timing for completion for the building is end 2009. It's on track.

What factors will make Bahrain Bay a success?

There are several factors. We've been realistic on the way the land has been priced. Also, Bahrain Bay does not allow land speculation. If you purchase land in Bahrain Bay you're obliged to develop it, or you must offer it back to us with a penalty provision.

That stops speculation. In addition, you're obliged to provide a concept design for the project before Bahrain Bay signs the purchase agreement, so both parties know what the joint commitments are. That stops a less reputable developer from changing its mind or misrepresenting to the public. The third thing that ensures its credibility is that we don't allow any speculative investments.

A developer cannot start selling its end product until it has ownership of the land, paid for in full, transferred title and completed design development. That kind of conservative safeguard approach is what gives everybody a level playing field and the highest possible standards of commitment to the project.

Bio

Bob Vincent has more than 25 years experience in major development projects throughout the world. Prior to his current role, Vincent was strategic advisor to Macquarie Bank Property Investment Banking, director of Development Urban Pacific (development division of Macquarie Bank), director of Development Prudential Finance Holdings (UK) and vice president of Tutor Saliba Properties (US).

He has also filled a number of senior advisory roles for government agencies and legislators. Vincent holds a BSc in environmental science, MA in urban planning and post graduate diplomas in finance and construction law.