NO PAIN, NO GAIN AT RIFFA VIEWS

RIFFA VIEWS - the prestigious residential signature estates development - is the latest major project in the kingdom to be stung by the cement crisis that has rocked the foundations of Bahrain's multi-million dinar growth and investment plans.

Senior management hoped the first residents would have been celebrating settling into their luxury homes by now but instead have had to delay handing over the keys to buyers for at least six months.

Some purchasers have been forced to extend rental agreements on their existing homes on the island instead of moving to Riffa Views whilst others have to start paying off mortgage loans without receiving an expected rental income from the property they invested in.

The cement crisis has already led to project delays across the kingdom including the $6 billion (BD2.26 billion) Durrat Al Bahrain development where home-owners due to move into new luxury villas in April were told they would have to wait until next month. The developer blamed the delay on a shortage of building materials, which it said was affecting the entire region.

In a completely open and honest interview, Richard Browning, Riffa Views Signature Estates chief executive officer, spoke exclusively to GulfWeekly's Asma Salman about the seriousness of the cement crisis which has been crippling the whole of Bahrain's construction industry, his determination to deliver the lifestyle and quality promised and his confidence that buying into the Bahrain dream will deliver a stunning and financially rewarding investment.

He said: 'There is going to be a bit of pain, there is pain on the contractors, pain on us and pain on the investors. But we are trying to minimise that pain for the investor.'

MAJOR media coverage of the first families moving into Riffa Views should have filled the press cutting books owned by the management of Riffa Views Signatures Estates in recent weeks.

Instead of front pages and centre spreads of smiling faces and presentations of keys being handed over, there has been an unusual silence from the high-profile development's publicity machine.

The cause is clear. Bahrain may have escaped the credit crunch that has hit the world's leading economies, but it has been stung by a cement crisis, the severity of which has shocked even the most astute developer in a region booming from oil wealth and consumer confidence.

Bahrain's construction industry has been hit by export restrictions imposed by Saudi Arabia. It has a weekly quota ceiling of 25,000 tonnes which industry insiders say is half of what Bahrain needs. A logjam of trucks on the causeway has added to the dilemma and led to a series of frustrating delivery delays of essential materials.

As a result, instead of celebrating the arrival of new residents in their immaculate new villas and townhouses, Riffa Views management has had to concentrate the mind on making the best of a dire situation and dealing head-on with the frustrations the delay of handing over the first properties has caused.

I met Richard Browning in a former Riffa Views show home being used as a temporary office and currently on the market for half-a-million dinars after its owner emigrated to China.

Other home owners were scheduled to move into their luxury villas on the $800 million (BD300 million) development this summer but the project, which is 90 per cent sold, has been delayed for at least six months.

'To date we have met all of our main infrastructure deadlines including electricity, sewage treatment, domestic and irrigation water and the first phase of the Riffa Views International School,' the chief executive officer revealed.

'But the villa contracts have been adversely affected by the current cement crisis due to which the overall completion of the project has slipped from July 2009 to the end of 2009 and early 2010 subject to the material shortage correcting itself in a couple of months.

'The cement crisis has been recorded in the media since May and although it is not a newsworthy item now it is still serious and is affecting us on a daily basis.'

On a positive note, however, the first completion on the Riffa Views development is happening this week as school staff move into their homes adjacent to the school, ironically added to the original plan as a buffer zone to any potential noise generated during school time.

Riffa Views will also be handing out keys to some private home owners at the end of this month.

Mr Browning says he and his team have been trying to make personal contact with investors in recent weeks to explain the present predicament. 'Our investors have a lot of questions and we want to make sure that we address particular questions specific to owners.

'We don't have a global message for all our home owners because everyone's case and contract is unique. All we want to say is that we have been hit by the crisis and it has affected an awful lot of people - but what it has also done is put the cost of construction and development significantly higher and that, in turn, has put the value of property up.

'The property which has already been purchased is going to show larger returns. Good quality property that was likely to show gains of 10 to 15 per cent will by next year most likely show 20 to 30 per cent.

'There are also some investors who are not concerned about the completion date because they know that their return on the property is going to be great.'

Despite the cement crisis, work has been continuing in the areas that has not required construction materials such as infrastructure projects and the estates' surrounding amenities.

'What our contractors and project managers have done is to re-programme our project because there were areas that we could work on that would be completed on time. We've addressed that critical path to minimise the delays.

'The essence of success for us is achieving the end product ... which is a 'brand and lifestyle' and not those progressive handovers.

'We have not sold villas but a complete lifestyle which is why the payments relate to the construction as a whole and, although the villas have been delayed, the remainder of the development has continued to progress,' he said.

Riffa Views has established itself as a world-renowned brand and has always maintained an aggressive communication with the media and the general public.

It was recently featured as an outstanding investment opportunity in the UK's biggest-selling newspaper, the Sun, in the wake of Britain's financial doldrums.

It has projected itself as the premier residential development on the island and part of the kingdom's community by supporting and sponsoring numerous high-profile charity and sporting events.

'Riffa Views has always been out there putting a positive story to the media regarding the benefits of this project to Bahrain,' explained Mr Browning.

'We have always been positive that we will achieve our aims and ambitions along the way.

'We have always promoted our milestones like water and electricity and have certainly met them when other developments on the island have fallen short. Everyone thought that the cement crises was short-lived and was standing back to see what would happen and we are guilty of that as well.

'We really thought that we would be handing over the villas in September and were advising home owners accordingly. But then we found that we had a problem on our hands that we didn't have an answer to and I don't like telling people the problems without providing a solution.

'The cement crisis caused an unknown problem, the extent of which had not been estimated by any of our contractors.

'When you are getting only 25 per cent of your total material demand on a daily basis it makes it very difficult to plan a project to completion.

'So we had to very carefully restructure the project during the months of July, August and September to get us in a position to go out and tell people that there is a delay. Now we have a rescheduled target date.

'We will not rush and give our buyers something that we are not proud of and will not compromise on the lifestyle and quality that we promised to our investors,' stated Mr Browning emphatically.

Riffa Views signature estates comprises of three integrated yet diverse estates - the Oasis, the Park and the Lagoons with approximately 1,000 two, three, four and five bedroom villas built in luxurious settings. It boasts an 18-hole PGA golf course designed by international golfing legend Colin Montgomerie which will host an international golfing event on November 13-15.

'A project of this size and complexity anywhere in the world is normally built in phases but we decided to build it from the ground up in one go with progressive handovers. This cuts the construction period and gives maturity to a project quicker - rather than a phased construction - as it gives access to all the facilities at one time which is beneficial for everyone.

'The construction companies are in a risky business and we entered into a fixed price contract with our contractors.

'In effect, everyone has been hurt by the delays - contractors, developers and individual investors. But the individual investor has been hurt for the interim period only by not moving into or renting his property which is a major inconvenience but in the long-term he is going to have a more valuable property and a better return on his investment.

'Despite all that is happening, there is one winner and that's the home owner!'