Property Development in Bahrain - Licences and Escrow Accounts

Analysis

In an attempt to restore investor confidence in the real estate sector, the Kingdom of Bahrain has recently introduced a raft of measures designed to regulate its property development industry. Law No. 28 of 2014 on real estate developments (the “Law”), issued in August last year, set out the overall framework of this new regulatory regime. The Law includes provision for setting up an authority to regulate property development in Bahrain. An executive regulation (the “Regulation”) issued under the Law in May this year sets out the functions of the new regulator. The Regulation operates at two levels: it regulates both the developer and each project undertaken by that developer, and this article will discuss the application of the Regulation to them.

Developer's Licence

Any developer wishing to undertake property development in the Kingdom must submit an application to the Ministry of Works, Municipalities Affairs and Urban Planning (the “Ministry”) in the prescribed form. Licenses will only be issued to entities which:

• are competent to undertake property development

• are of good reputation

• have not been convicted of any crime involving “moral turpitude”