Costs of a new BD800 million development in Manama have shot up by 25 per cent in four months to BD1 billion ($2.65 billion) due to a rise in construction costs, it was revealed.

The Gulf Daily News, our sister publication, had reported earlier this week that soaring demand for building materials had delayed the handover of the first houses at Durrat Al Bahrain to owners.

That demand is driving up prices, meaning the price of turning the Central Market area into a business, residential, shopping and leisure city-within-a-city have shot up by BD200 million since January.

The Central Market project is now expected to cost BD1 billion, as opposed to the BD800 million figure announced at the start of the year, according to the Manama Municipal Council.

The current feasibility study, prepared last year, will now be scrapped due to changes in expenses, said council chairman Majeed Millad Al Jazeeri.

'We can't tender a project for BD800 million and expect profits according to that, because this means that we will lose large amounts in revenues,' he said.

He said that the council and the Manama Muni-cipality would have to start a new study that outlines costs and profits, according to recent market prices.

However, Al Jazeeri said the project would not face any setbacks or delays since work was not scheduled to begin this year.

The new study is expected to be completed by the end of this year and the tender will be floated early next year.

The project will include a new BD120 million central market, which will be renamed the Capital Trade Centre. This will comprise four 28-storey office and shopping towers, with the new central market taking up the basement and ground floors.

Floors one to six will include car parking and a massive shopping mall, while the remaining 20 floors in each tower will house offices.

The main development will also include four other massive skyscrapers, housing offices and apartments, swimming pools, multi-purpose halls, gyms and other facilities.

There will also be a five-star hotel and Green Plaza heritage village and park, plus an international bus station, which will 'link Bahrain with the world' through land routes via Saudi Arabia.

The whole development will be financed entirely by private investors.

'The designs will not see changes, because there is no problem with them,' said Al Jazeeri.

'The only thing expected to change is how much investors will have to pay and how much we can get out of the project, as we expect the project to cost BD1 billion.'

'We haven't decided yet if the project would be tendered as a whole or divided into separate investments.

'But it seems that it will go to one investor, which will make our calculations easier and allow us to start work faster.

'The council has been approached already by a number of investors from Bahrain and abroad and we hope that they will show the same interest when we tender the project.'

The municipality will own 28 per cent of the Capital Trade Centre, since it owns the land.

Meanwhile, the council has given the initial go ahead yesterday to Al Khaleej Development Company (Tameer) to begin work on a 67-storey multi-tower building in Seef District.

Council technical committee chairman Abdulmajeed Al Sebea'a said that the tower would be the largest in the country, but had no further details. The largest building in the country currently is the Bahrain Financial Harbour, with 53-storeys.-TradeArabia News Service