Bahrain’s construction sector could be devastated with the loss of more than 3,500 jobs because contractors have not been paid by a real estate developer.
Major international and local contractors are struggling to recover large sums of money owed to them by Riffa Views.
The major four lead contractors who have been working on the project since 2006, building luxury housing units together with associated infrastructure, are still owed in excess of BD20 million ($53 million) even three years after they have been certified as being owed the money.
The contractors say they have been informed by Riffa Views that there are no funds available to settle their accounts and that the main financing bank has refused to support the project any further.
This leaves Riffa Views unable to complete the project and the contractors facing the prospect of suspending operations.
‘Due to the huge amounts owed to us by Riffa Views, our companies are facing a real imminent threat of being unable to continue our operations in Bahrain which would result in over 3500 job losses, including those of around 300 Bahrainis,’ said a spokesman for the contractors.
‘The further impact on over 65 subcontractors and suppliers who remain unpaid for their services on the project is unthinkable,’ he added.
Around 250 villas and townhouses remain unsold on the project, largely in the Park sector, for which work was suspended due to lack of funds.
Whilst the contractors continue to lobby for support, there appears to be little forthcoming.
‘The negative impact on the real estate market, forced redundancies, maintenance of the existing Riffa Views estate and credit ratings should Riffa Views not meet its financial obligations, will, in the opinion of the contractors, have a widespread and long-lasting damaging effect on Bahrain’s economy and the real estate sector,’ the spokesman added.
The main financing bank for the project, Arcapita Bank, filed for Chapter 11 bankruptcy protection in the US in March. The move came after it failed to restructure a $1.1 billion debt due for repayment on March 28.
The bank had been working on a rescheduling of the debt for some weeks.
While it is believed the principal lenders were happy with the plans, they were prevented from going ahead by some hedge funds who had bought into the debt