An Odd Problem for a Desert Kingdom

Bahrain is short of sand. And the result, says Mark Wallace, is less construction and soaring property prices.
Financial Times, weekend section, January 24/25, 2004

With a population of less than 700,000 and a total area of only 706 sq km, the kingdom of Bahrain in the Arabian Gulf has a hard enough time mustering the resources it needs to expand its infrastructure. But over the past few months, its task has been made even harder by an unusual obstacle that has risen in its path: a shortage of sand in the desert island nation.

With property prices rising and a number of ambitious developments already in the works, the shortage of sand – a key ingredient of concrete – is hitting Bahrain hard, driving up construction costs threefold, by some reports. And with renewed investor interest in the region in the wake of the Iraq war and a return of liquidity to the Gulf, the timing could not be worse for a country intent on capitalizing on its reputation for financial services and its recent steps toward political reform.

To anyone who has visited Bahrain, the notion of a sand shortage may seem slightly ridiculous. One encyclopedia describes the 33 islands that make up Bahrain’s archipelago as “level expanses of sand and rock”.

Drive no more than a few minutes beyond the suburbs of Manama, the capital city, and you are suddenly traveling through a pale topography of dust clouds and two-lane highways strewn with grit. The flat white landscape blends seamlessly into the flat white sky, and the major tourist attraction is the Tree of Life, a lone acacia tree, a century old or more, standing valiantly on a small rise surrounded by nothing but obdurate white desert. A few camels can be seen grazing in the distance, but what they might find of sustenance here is a mystery.

Camels, though, are not known for their discernment. Bahrain is not lacking in the uncountable grains of disintegrated rock that fill deserts all over the world. The problem is its quality. For more than 20 years, Bahrain has been short of the particular kind of sand that is needed to make construction-grade concrete, and has had to import its supply – some 6,000 to 8,000 tonnes a day – from Saudi Arabia.

Camels may be satisfied with Bahraini sand, but Bahrain’s contractors are not.

Bahrain’s current “sand crisis”, as Manama’s local newspaper terms it, first began as early as July of 2003, when Saudi Arabia cut off its sand supply without warning or explanation. Even the Bahraini government was not given a reason for the suspension of deliveries, which came by the truckload across the 25km King Fahd causeway that links Bahrain to the Saudi mainland.

Businessmen and government officials in Manama have put forth various explanations to fill the Saudis’ silence. Concern for the environment could be one reason deliveries were stopped, though if this were the case it is unlikely that the Saudis, who pay particular attention to their image abroad, would not have advertised it.

Saudi Arabia’s sand and aggregate export sector operates largely informally, and another explanation that has been floated is that deliveries have been halted while Riyadh puts firmer regulations in place. Saudi Arabia has reportedly sought to expand its own cement-production industry in recent months, a move that may have contributed to the Arabian kingdom’s unwillingness to part with what has become a valuable resource. There is also speculation that Riyadh is hoarding its concrete-production capacity to take advantage of reconstruction contracts that may be coming on to the market in Iraq.

Whatever the reason, the cut-off of supply has affected Bahrain’s property market, which was already moving up, contributing to higher construction costs and higher property estate prices. According to Neil D’Silva, managing director of Norwich Property Consultants in Manama, construction prices now range from $25 to $50 a square foot, including labor costs. Local house prices have doubled in some towns, with prices averaging around $40 a square foot but topping $100 a square foot in prime locations. The property market has soared in the last year, outpacing the stock market, which rose almost 30 per cent in 2003.

Not all of the rise is due to a shortage of sand. Looser residence and ownership restrictions have made property in Bahrain more attractive, especially for expats working just across the causeway in Saudi Arabia who prefer to sleep and socialize in the calmer atmosphere of Bahrain.

Many of Bahrain’s current projects are luxury-living developments that carry a high price tag. At the new Al Marsa Floating City and Residential Marina, prices have risen 20 per cent since sales started in April 2003. The 3m sq m development occupies the man-made Amwaj Islands off Muharraq Island, where Bahrain’s international airport and shipping port are located.

Other projects in the Amwaj Islands include 211 luxury apartments in the seven Mina Towers buildings, where one-bedroom flats go for $70,000 and up, and the 120 two-storey townhouses of the nearby Mirage Beachfront development, which sell for $200,000 and up.

Another luxury project currently under construction is the $1.2 billion Durrat Al-Bahrain residential resort at the south-east end of Bahrain, where seven newly created islands will house up to 16,000 residents.

A newly built 18-hole golf course will also offer its own residential compound, and a marina will host more than 350 yachts. Construction is scheduled for completion in 2006.

Construction on these and other projects has been slowed by the sand shortage, but has not ground completely to a halt. A shortage of sand in the desert, of course, is like a shortage of water in the sea. But for Bahrain, the two problems are not unconnected. The country has been able to replace some of its Arabian peninsular sand supply with sand dredged from the sea floor. But its high chlorine and salt content makes sea sand harder to work with. The government’s recent efforts to expand roadworks in Manama have been able to take advantage of dredged sand, but these supplies are very expensive to obtain and process, especially since it takes three cubic meters of fresh water – itself in short supply on the 40km-long island – to cure one cubic meter of dredged sand.

The government is exploring alternative sources of sand, including importing it from Iran, but a solution has yet to be found. “We are talking with our brothers in Saudi Arabia, and maybe we can sort this problem as soon as possible,” Bahrain’s minister of commerce, Ali Bin Saleh Al-Saleh, said in a recent interview. Until then, he laughed, “We don’t have sand, though we have deserts all around us.”