Bob Vincent, CEO of Bahrain Bay

Bob Vincent:
Throughout history there is evidence of significant impacts on economies, whether they be demographic trends, resource based, political or even cultural. All of these elements are part of the combination affecting the booming economies in the Middle East, and property is a key ingredient in the mix affecting the region's economic development. Property is one of the most positive and dominant growth sectors through the MENA region. "Current investment in property related industries, including finance and infrastructure, reflect an aggressive period of innovation and growth. It is without doubt one of the unique cycles of opportunity in the modern era".

United World: Can you assess the role that real estate plays in modernizing the image for Bahrain?

Bob Vincent:
First of all, new real estate development is reflecting subtle but significant ongoing cultural changes in the Middle East. These changes are endorsing new forms of development and changes in day to day living; both in terms of lifestyle and business. This generates its own level of excitement and innovation in new urban design and outcomes. The second role property is having is through the utilization of the increasing amount of liquidity in the economies of the Middle East. Much of that liquidity in the past was spent creating icons in property markets in the other parts of the world. There has been a conscious decision and a commitment by the economies in the Gulf, including Bahrain, to repatriate their wealth and commit to their own cultural and social development through property. The third role that I think also needs to be recognized is that both local and offshore businesses are recognizing the enormous growth opportunities in the property sector. These opportunities are being promoted and endorsed by Government and agencies such as the Bahrain Economic Development Board, as a way of reinforcing to the international markets, that Bahrain is continuing down the path of growth and modernization.

There is also an ongoing change in how property is viewed as an asset class in a local context. For example, people who in the past would not normally invest in property within in the local market are learning the importance of long term investments in property. They are understanding more about the speculative side of business, such as ways to grow wealth by investing in property. These changes in personal wealth are flowing through the broader economy.

Finally, architectural statements are emerging, that are enhancing the image of Bahrain as an economy that is prepared to express itself on the world stage. These iconic elements are easily recognized and understood by local and international investors and help maintain Bahrain's place in the competitive market.

United World: Do you agree with the opinion that supply creates demand when it comes to real estate in the GCC?

Bob Vincent: There is certainly a perception that the "Field of Dreams" mentality is more prevalent at the moment in property development in the Middle East than in traditional Western economies. The normal property cycle is driven by demand and supply responding to bottom up pressures such as first home buyers, growth in business, manufacturing, or government stimulus. Those aspects are also relevant in the Middle East; but what tends to steal the headlines are the aggressive and sometimes egotistic promotions for developments that seem unrelated to the traditional elements of demand.

However there is also a recognition among analysts that there is an unresolved and somewhat unknown market depth driven by a large previously unexposed demographic in the GCC. The ability to create these enormous investments in property certainly demonstrates capability and willingness to take on risk. Whether or not it will be the case in the future, it remains to be seen. But what should also be recognized is that the sophisticated investors in the property market are very professional and no longer act in isolation of market conditions. In the end, supply will have to reflect the demand.

United World: Bahrain Bay is going to encompass living, leisure, shopping, and business elements. Do you believe these self sufficient communities are the future of the real estate developments worldwide?

Bob Vincent:
Demographers have projected that by 2020, 70% of the world population will be living within 100 km of the ocean. This trend has been strongly emerging as the world has become heavily urbanized but is not a new phenomenon. Many ancient cities, like Manama, the capital of Bahrain, were established around fishing and trading ports. But now, there is increasing pressure in all cities to be able to provide physical and social urban infrastructure that allows time poor residents to take advantage of the diversity of lifestyle that can be provided in more dense and fully integrated mixed use development.

Tourism, travel and business are increasingly becoming destination driven. There are less opportunities for the general population to experience extended holidays or periods without working income; at least until retirement. The implications of this are that greater demand is emerging for unique experiences in close proximity to each other…the one stop experience. This is further reinforced by cheaper travel to more destinations that is allowing more diversity of places and economies in which to invest or visit. The outcome is a continuation of all of the competition between new and old places of attraction; preferred business centres, cultural and historic locations; sporting and holiday destinations. That competition may be creating new forms of urban development, but I don't believe the competition is ever going to go away; and what is the trend today will become the norm for a period until the competition to attract investment creates new outcomes. In the Middle East, just like anywhere else, people are expecting diversity, authenticity and quality. You see that in projects like Bahrain Bay, for example, which is responding to cultural expectations by building unique and beautiful settings for prayer and community gatherings, mixed with spectacular individual homes and high-rise living, 5 star hotels and commercial headquarters.

The self sufficiency issue is becoming increasing important in a world that has recognized the increasing threat to environmental, economic and cultural sustainability caused by global warming and depletion of finite resources.

As a developer of urban communities, If you aim to entice people out of an existing cultural neighborhoods and their traditional ways of living with family and community elements, you have to give them all of the benefits. If you provide customers with something better, consumers start to realize that they can demand something and expect a supply. So the quality of the developments that are emerging now, like Bahrain Bay, is a recognition of the markets demand and the right to sophisticated urban settings. They will only endorse you as a project if you provide a board spectrum of opportunity.

United World: How will Bahrain Bay help raising the international profile of the Bahrain?

Bob Vincent: Bahrain Bay is a true mixed urban development. It is not just a destination or a commercial development, but a full mixture of new diversity integrated with and responding to the traditions of the nearby old city.
That in itself is not new and the urban design rationale for the project has existed long before the New Urbanist planners coined their terminology and principles. The project has been designed in such a way that it recognizes things like scale and aesthetics, integration of the uses with time in travel at a pedestrian level, and intimacy in terms of spaces. It also recognizes that we are a part of the old city of Manama and we see ourselves as being part of the city and its economic development.

A specific agenda of the marketing and management of the project has been to deliberately engage with sophisticated developers outside the region before giving up too many of the opportunities for investment to the local developers. We implemented this strategy because we wanted to continue to raise the profile of Bahrain as a place to do business and as a gateway to other investment opportunities within the Middle East. This is cornerstone of our sustainability agenda. Of course the reciprocal benefit is that Bahrain, including the shareholders in Bahrain Bay, will form a closer relationship with these foreign investor parties and perhaps expand within their home economies and regions as well.

Bahrain Bay has been very successful with this agenda. We have attracted Capitaland, one of Asia's largest developers who will be developing a $700 million development within the project. We have also attracted developers from India, France and the USA. Sub-regional developers from Kuwait, Saudi Arabia, United Emirates and of course Bahrain have also committed and are progressing their design development process.

The project also recognizes that Bahrain is engaged in a new period of economic expansion and international identity. To realize the full potential of that opportunity Bahrain needs to build on its current advantages in the market place as well as pursue new options. The financial services and other booming sectors in the economy of Bahrain need to continue to evolve and provide class A, environmentally sustainable office buildings for example. This is an agenda and within the mix of product within Bahrain Bay. The new development also need to evolve in terms of technology, infrastructure, energy efficiency, management and operation costs, diversity of retail choices and living conditions in the apartments and homes. All of that is part of the new wave of economic development in Bahrain, particularly within Manama. Bahrain Bay is setting higher standards and benchmarks at the heart of Manama. We have recognized our role and responsibility in leading the way with these initiatives and we want to ensure that we reinforce and not compromise that responsibility.

United World: Could you give us some insights into the different phases of the project and dates of completion?

Bob Vincent: The project will go through a series of key phases. The first was the reclamation process which began in May 2006, and was completed in November 2007. In that phase we reclaimed about 450,000m2 and also created the inner bay and canals that connect the two principle islands. The land reclamation process is now being followed by the bulk earth works, and physical earth works program when we will construct all the bridges, the roads, the sewer, the water, the power, and the district cooling plants. All of that will be constructed in next 18 to 24 months. That will take us through to the end of 2009.

The 3rd party developers including our principle shareholder Arcapita Bank, have topped out their corporate headquarters. The Four Seasons hotel has completed their piling and are about to commence their subterranean works. Capita Land have started their physical piling for their construction and there are at least 3 other developers who have completed their conceptual designs of the buildings and will begin testing and piling programs in the next few months.

The total building time frame of the 3rd party sites plus public ground would take us through till 2012. The public domain elements such as the water fronts, boulevards, landscaping, the parks and the roads, will be completed by the end of 2009, first part of 2010.

United World: Is there still possibility for more developers to join in the project?

Bob Vincent: Absolutely. Approximately 60% of the project has been sold, however there are some very exciting unique sites which we have been withholding until we find the right partner developer who is committed to and understands the quality of the development opportunity.

Complex strategies like overseas investment always involve a huge risk and particularly in places with a totally different culture. It is like an American investor investing in China or Japan in the 80s, or an Australian investors trying to invest in South East Asia. They are fraught with difficulties and it is no different here in the Middle East. Bahrain has its own investment criteria, partnering structures and government relationships and anybody coming from a foreign country has to be aware of them. However, this is aided by the transparency of the way business is done here which is aimed to provide comfort in making economic decisions.

According to our philosophy, Bahrain Bay tries to assist people in decision making. We manage the process for them. For example, we act as the technical interface office between 3rd party developers and the government. We are like a quasi governmental agency and ensure the documentation reflects what the government has already asked us to produce in accordance with the master plan. We present this to the government to demonstrate that we are performing according to our objectives and delivering our promises. As long as we maintain that transparency and commitment, they endorse and assist us with the approval process. That takes out some of the risk in terms of getting the building constructed and getting contractors on board. It also gives the marketing teams some comfort in terms of going to the market and promising something that they know they are going to sell. So our role is not just a master plan developer, but also a commitment to the re-development of Manama as a partner of the government. The government Central Planning Unit has been particularly innovative in introducing this approach and has been a great support to the project. Together we are demonstrating our commitment to the legacy of the Kingdom of Bahrain.

We recognize that we are in a competitive market both within Bahrain and the rest of the Gulf. We believe there is an equal opportunity for all, but we have to demonstrate our differences as well. Bahrain Bay has purposefully invested considerable resources in designing the master plan and defining a vision that will attract global investors looking not just at Bahrain but at the region as a whole. We have to be in a position where, if international investors want to come to Bahrain, we can offer them something different and better than our competitors. We try to do this on a commercial level, cultural level, and community level. We have the recognition of the best practices in environmental construction and development; because outside of Bahrain we also have to compete with investment opportunities elsewhere in the world.

United World: How will the construction of the Four Seasons hotel raise the benchmark for the luxury tourism offer in Bahrain?

Bob Vincent: One of the principal reasons for the success of Bahrain Bay is the credibility and commitment of our shareholders. Arcapita Bank our principal shareholder for example, is one of the most highly regarded private investment houses in the Middle east and has completed more than $22 billion of transactions around the world. Four seasons is one of the leading hotel operators in the world, both in terms of quality and success. Capita Land is one of the largest mixed use developers in Asia. These shareholders and partner developers are recognized in terms of quality, diversification, new products and innovation. It is important to have those brands as part of your projects as it will help attract a certain quality of investment.

We would like to demonstrate that investors of different capacities can spend their money on this project and not be bashful or shy about it. Brands like Four Seasons and Capitaland together with the cross section mix of a variety of prestigious waterfront high rise residential apartments, marinas, water based activities, and serviced apartments, act as a statement of where the market is today. We could not build it and sell it unless the people wanted it. Four Seasons reflects an image of quality anywhere in the world, so we are very grateful to have them as part of our project.

United World: Could you expand on one of your foundations which you call Social Equities?

Bob Vincent: Today, there are plenty of successful developers in the world and it is a pretty aggressive form of business which if implemented correctly reaps great returns. But, there are often cases where development is at the cost of everything else. What has become equally important particularly over the last 10 years, has been the power of the community to make a statement of its choice. It is mainly reflected in the rights of the people to enjoy the rights of amenity, ownership to public ground, to participate on a daily basis in public forums and to break down the wall of closed societies. So a social equity goal in our project is our way of trying to further those causes. We understand that this is going to be a major challenge, but we believe it is an important initiative and should be recognized.

United World: In terms of community concepts - the pillars of the project - how do you expect the public to react?

Bob Vincent: Different communities have different traits. In Australia, we have the Aboriginal community who likes to sit around camp fires and tell stories of their past. The Muslim communities spend many hours in mosques and majlis reading their religious doctrines and speaking amongst their friends. Despite some attempts to narrow the impression of them as a community, they continue to emerge as astute professionals and friendly people, wanting to express themselves in more vibrant ways, such as reaching out to new media, entertainment, popular dressing, new food, music, etc.

We are only one precinct in the city of Manama. Only 100 acres. A 45 hectare parcel of the city. In the same way you have boroughs of New York, be it Little Italy or Harlem, where neighborhoods have formed; we are one neighborhood of Manama. These neighborhoods have great pride in their community and their community events programs reflects this. We are trying to encourage an awareness of community.

The awareness program hopefully will be seen subconsciously, rather than formally, as a cross section of choice in cultural events programs. We need to find things that people are genuinely interested in. We have to find things that they are prepared to participate in themselves.

United World: How many people will be living in Bahrain Bay?

Bob Vincent: Once it is completed, the community of Bahrain Bay will include a population of between 25,000 and 35,000 people.

United World: Residential projects developed on reclaimed land are facing different environmental and geographical challenges. How do you tackle these issues at Bahrain Bay?

Bob Vincent: There are both, geographical and environmental challenges. The physical geography of the island is quite a low sand based island in shallow seas. The currents around the island are not necessarily all that strong and do not experience a strong wave action and physical tidal fluxes as in other parts of the world. That does not mean that Bahrain is not a sensitive environment.

We have ensured that there is a consistent flow of current within and around the island. We have also ensured the remnant marine habitats are productive and protected. There have also been existing marine habitats which have been removed as a part of a dredging program, but they have already been impacted by previous developments.

We have ensured that any of the breeding environments that survive in the flow of currents have been properly enhanced. The fisheries and breeding area can be properly fed from water on tidal bases twice a day. That is not to say that land reclamation is something that should be endorsed and should not be perceived as the only way of the future developments in these countries.

But Bahrain is not the only country that has undertaken land reclamation. Half of Holland has been reclaimed over many years and there are other parts of the world where reclamation is a normal practice. Our responsibility as a developer is to try manage it appropriately and with due consideration for the environment.

United World: How will future residents be able to finance acquired properties in Bahrain Bay

Bob Vincent: The important innovation and development of freehold title as part of the Bahrain Bay project is a significant aspect.

This again is part of the emerging initiatives of the property industry in Bahrain. It gives people a better understanding of the opportunities for investment in developments of different scale. All of this confidence is important if an economy is going to grow. Investment in the Middle East is no longer dominated by government contribution and ownership. Development is supported by private entrepreneurs and enterprises at all levels.

United World: How has the sales process been going so far?

Bob Vincent: We have been marketing the project for about 12 months. We have been successful in selling approximately 60% of the project and over the next 12-24 months we will see the remaining parcels being sold. That success has been built around willingness to take advice from key stakeholders within the project, including our shareholders and government, about what they would like to see as the final outcome and following their advice and delivering their expectation. It has also been enhanced through our own initiatives and such as spending the time and effort to go offshore and exhibit the opportunity of Bahrain Bay.

We have a detailed exhibition program and have participated internationally in Europe, Asia and also within the Gulf region. By bringing an awareness campaign to other parties we have been able to enhance the sale and marketing difference.

United World: And how do you go about the branding?

Bob Vincent: People want to see firm commitment and demonstration of hard dollars and Bahrain Bay has made that commitment. By the time we open the project, we will complete the sales and our land investment, and we would have invested between $250-300 million to make this project a success. This would generate $2.5 billion of economic development for the Kingdom. We want to share that success and we want Bahrain to be recognized as an opportunity for good investment with best practices.

United World: What opportunities exist for American investors? Do you have any preferences regarding the type of investors you would like to attract?

Bob Vincent: There are opportunities for American investors across the board. The US has a very sophisticated level of experience in property development in all forms. It is fair to say that they have demonstrated ongoing initiatives in planning and design and bringing new products, financing structures and commercial relationships to the market. There is no doubt that everyone has an eye on what innovation is introduced by the American market. So that innovation and that expertise have enormous opportunities in the Middle East, in particular in Bahrain. The Bahraini people are well traveled, well versed with international markets, and they like the innovative products.

The expertise in terms of engineering on construction knowledge, the resources in terms of project management and financial structuring, the ability to put together joint venture parties and reach out in putting together teams to make things happen - all these skills sets are well embedded in American business practice within property and would profit by investing their time and resources in Bahrain. Bahrain sits in a unique position in the Gulf directly related to Saudi Arabia, the biggest and probably most exciting market in the Middle East. Also, on the other side is Qatar, one of the fastest growing economies in the world. It is important to recognize that Bahrain is very highly respected by its neighbors. The American investors who have seen growth of exponential scale in the Middle East would do well to recognize that maturity within Bahrain's market. It has been well tested and is credible and transparent.

United World: How do you feel about participating in changing the face of a country?

Bob Vincent: I am very proud to have the opportunity to contribute. Australians have the reputation of being willing to take on new challenges and I always look forward to new challenges. In accepting a challenge you also accept the responsibility of contributing something back. The Bahraini people have been extremely kind in inviting me into their community, so at a personal level, I look forward to sharing our relationship. Business inititiatives, shared visions, cultural difference, sharing time and places with people of different choice and beliefs, is a part of life. Contributing to the legacy of a country is a very exciting and rewarding experience.

United World: Mr. Vincent, thank you very much for your comments.