Bahrain Office MarketView

Email | Print

Comment

Recommend this story (*)

[-]Text[+]

General Overview
 
·         Government of Bahrain pushing “Business Friendly Bahrain” campaign globally and initiative allied to streamlining of admin procedures has succeeded in raising Bahrain’s ranking to 18^th in World Bank – IFC’s “Ease of Doing Business Index” – 2^nd in GCC
 
·         Result: office space remains relatively strong with number of multinational companies continuing to choose Bahrain as their Middle East operations base.
 
·         Decision also driving by spiralling cost of office space & staff in other regional centres such as Dubai, Doha…
 
·         Recent years, Class A office market appears to have separated into preferred locations with strong demand and rising rental rates competing with those that are less favoured, mainly due to parking & access.
 
·         Class A space in Seef District is preferred location whilst CBD (Diplomatic Area) is suffering due to heavy congestion and insufficient parking.
·         CBD remains strong though as apartments are converted to office use.
 
·         Despite stability, investor appetite dried up with numerous build & sell projects put on hold / cancelled
·         For example: AYA Tower (Hoora), West End Tower (Seef), Signal One Tower (Amwaj Island) and Times Square Tower (CBD) all launched in Q2 2008 have either been suspended or cancelled sales and construction programs in Q1 2009.
·         However, the strength of the office rental market has led to residential apartment projects being converted to office space, such as La Bella Tower in Mahooz.
 
 
 
Office Market Review
 
Supply
 
·         In aggregated terms, there seems to be in an excess supply in the Class A office market, but the market is skewed, as some areas are over-supplied and some are under-supplied
·         This is further affected by the Bahrain Financial Harbour development, which represents around 20% of the entire Class A office market.
·         Excluding this, all other business districts in Bahrain appear to be under-supplied with quality space.
 
Shortage
 
·         Demand through 2009 will be driven by a location specific shortage of quality office space.
·         Especially in the emerging business district of Seef, home to a growing number of multinational companies.
·         However, demand and supply pressures for high quality office space are likely to ease, with projects in the supply pipeline being release onto the market in 2009 – 2010.
 
Investment
 
·         Investment yields have shifted from around 5% to asking rates of 10% plus in just 6 months
·         Despite these attractive rates, transaction activity remains at a virtual standstill with potential buyers waiting for the market to “bottom out”.
·         A number of funds and private investors with money to spend are known to be monitoring the commercial market closely, but the right deals have yet to emerge.
 
 
Commercial Registrations
 
·         The total number of Commercial Registrations rose by 31% in the period between 2004 and end 2008, but actually dropped between 2006 and 2008.
 
·         This was largely due to a Government crackdown on Commercial Registrations that were dormant and subsequently cancelled.
·         During the same period (2004 – 2008) the working population increased by 65% and by the end of 2008, the working population was 45.3% of the total population.
 
The table below illustrates the growth in commercial licences between 2004 and 2008.

Email | Print

RECOMMEND THIS STORY

Your Vote 1 2 3 4 5

Average Rating

Add your own comment: