Property buyers who invested millions in stalled residential projects in Bahrain could benefit from new legislation by next year.

Deputy Prime Minister Shaikh Khalid bin Abdulla Al Khalifa said a new real estate development law, which has been approved by the National Assembly, would resolve issues facing those who had put money into projects that were never completed, said a report in the Gulf Daily News (GDN), our sister publication.

He was speaking to the GDN on the sidelines of the Bahrain Property Development Association Exhibition (BaPDEX 2014), which opened yesterday at City Centre Bahrain.

"We have identified four pending projects that we know are inactive," said Shaikh Khalid, under whose patronage the show is taking place.

"The issues faced by investors in these projects will be resolved by 2015 when the new law will come into effect."

The new law was approved by the Cabinet last month and is expected to come into force in February.

It seeks to protect the interests of developers and buyers and is now awaiting ratification by His Majesty King Hamad.

"Real estate development is a vital pillar of the economy and new projects are a good sign," said Shaikh Khalid.

The law aims to prevent a repeat of the Marina West fiasco, which saw hundreds of private buyers invest millions in a proposed property development that was never finished.

One industry expert said real estate developers would be given a deadline to settle disputes over unfinished projects, but the government would intervene if they failed to do so.

He said this could involve legal action against the developer to either complete the project or pay back investors.

Under the law, anyone embarking on a new project must submit complete plans, including a start and completion date, designs and artists' impressions - as well as a value estimate for the scheme calculated by an engineering firm and ratified by the Engineering Practices Regulatory Committee.

In addition, they must deposit 20 per cent of the project's value with the Municipalities and Urban Planning Affairs Ministry, have a bank account in the project's name and sign an agreement to waive 5pc of the deposit in the event of future compensation appeals.

It also bans developers from selling properties "off-plan" without government permission.

It will force developers to open escrow accounts for each project they are involved in and deposit all of the project's funding, including loans from banks, up front.

Developers of existing projects that have stalled will also be obliged to comply with the law within six months of it being enacted.

"This will boost investor confidence and improve the reputation of the country affected by stalled projects," said Bahrain-based investment company Inovest executive director Mohammed Abdul Khaliq.

"It will organise the market and secure investors." - TradeArabia News Service