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Further gains witnessed in retail sector and progressing mixed use developments demonstrate market confidence
  • CBD office rentals remains stable in Q4 2014
  • Residential market has seen little change in the last quarter with marginal increase of 2% in prime locations
  • Hospitality industry witnesses a surge of new projects in 2014
  • Uptick in light industrial enquiries, with a number of major deals set to be signed imminently

Manama, 1st March 2015 – The retail sector has generally outperformed other asset classes during 2014, with a rising number of new centres being delivered and launched, according to the Q4 2014 Bahrain MarketView by global property consulting firm CBRE. There has also been a growing trend for provision of community retail shopping complexes, which provide convenience and services to residential areas.  

“Despite Bahrain being a small market geographically, demographics and traffic congestion has led to a need for local retail, as well as food and beverage options. This shift has spurred the progress of new developments at Muharraq, Isa Town and Riffa,” said Steve Mayes, Director, Middle East Research, CBRE Bahrain.   

According to the report, the opening of Seef Mall Muharraq, in early 2015, has enjoyed significant success to date with a high percentage of the mall pre let. Rental rates for retail space in the community or local neighbourhood mall segment are currently between BD12–14/per/m2/month.
Office Market

True international standard Grade A commercial office space is limited to a small number of key landmark developments in the Kingdom. These properties are currently dictating the benchmark for office rents.  Despite the prevailing oversupply situation across the wider market, there has been no notable change in the average quoted rates during the past quarter, stated the CBRE report.

Continued steady growth in demand, however, has been witnessed for smaller, fitted office units, which provide turnkey solutions for risk adverse local and international occupiers seeking cost effective options.

“Some enterprising landlords of newer towers in the more local Grade A category are adapting to the prevailing market conditions in an attempt to meet the demands of various occupier types within their buildings.  This ever more popular approach provides a variety of options through sub sectioning buildings, with floors dedicated to smaller fitted units sub 150 m2 and larger shell and core spaces for those businesses seeking such accommodation built to their own requirements,” added Mayes.

Although headline rents remain largely unchanged across the board, the upper end of the market is set to see further prime office stock delivered in 2015.  In the coming year United Tower will be completed in Bahrain Bay, as well as ABG Tower providing just under 20,000m2 of prime office space, fifty percent of which will be occupied by Al Baraka Bank.  

Residential Market

According to the report, the residential market has seen little change in the last quarter of 2014.  Despite a reported slowdown in enquiries from prospective tenants in the rental sector, rates have remained stable with some marginal rental increases witnessed in popular expatriate locations in the North West of the island and residential areas surrounding the CBD

The popularity of Juffair and Amwaj Islands prevails and this is reflected by new developments entering the market in Amwaj Islands.  Reef Island continues to strengthen with over 90% occupancy by end users on the island in the apartment towers.  

“There is evidence of class leading apartment buildings increasing rental rates by around 3%. Reef Island and the Seef District continue to benefit from their close proximity to offices, destination shopping malls and entertainment centres. Further phases of development at Reef Island are also nearing completion, including Marina Reef (expected in 2015) and the remaining towers of Dar Al Salam Port, a Bin Faqeeh development.  It is expected that these buildings will face little challenge in attracting tenants,” further commented Mayes.

The drive in the past 18 months to provide and improve local community services and retail offerings to residents is also encouraging tenants to consider locations which suffered from the aftermath of the political unrest of 2011, including Sar and Janabiya.  

“The effects of the political tensions have eased considerably and families have been drawn back to these locations.  Western expatriate families in particular, are attracted by the convenience of residing in the vicinity of the most popular schools, and the King Fahad Causeway to Saudi Arabia. The overall reputation of the north west of the island as a residential location of choice, has improved and rental rates for villas and compounds have stabilised,” added Mayes.

An improvement in the residential sales market is reflected in the launch of new freehold apartment developments at Dilmunia, which will soon be followed by the launch Essence of Dilmunia and The Treasure.

“The positive sentiment in the market is echoed by the continued demand for established projects such as Amwaj Island, Reef Island and Riffa Views.  Sales prices remain stable in Amwaj Islands and occupancy levels high in the most popular developments, including the Al Marsa Floating City and Tala Island gated communities,” stated Mayes.

Hospitality Sector

According to the report, in 2014, development in the hospitality industry has seen a surge of new projects entering the market, including the Swiss-Belhotel and Ramee Grand Hotel and Spa in Seef.   The Four Seasons and Wyndham Grand Hotel at Bahrain Bay, will also soon be added to the growing five star offering along with the ART Rotana at Amwaj Islands, a beach front development opening in early 2015.  

Commenting on the hospitality sector, Mayes, added, “It is reported that construction will start in the coming year on a 215 room Fairmont branded hotel, near the Bahrain International Circuit, funded by a joint venture between Bahrain Mumtalakat Holding Company and FRHI Hotels and Resorts. The development is set for completion in 2018.”

“In the mid-market segment, the continued success of The Holiday Inn Express in Hoora has been followed by a competitive offering from the Ibis, which is now open in Sanabis, as the flagship location in the Kingdom for this popular international value hotel chain.”

Light warehousing/industrial

According to the CBRE report, there has been an uptick in light industrial enquiries, with a number of major deals set to be signed imminently, demonstrating renewed buoyancy in this sector.  Bahrain International Investment Park (BIIP) and Bahrain Investment Wharf (BIW) both located in Hidd, continue to experience high demand for leasing of industrial and warehouse units from international occupiers, bringing significant investment into the Kingdom.

Posted by : GoDubai PR Dept, -
Viewed 14933 times
PR Category : Real Estate & Retail
Posted on : Sunday, March 1, 2015  1:47:00 PM UAE local time (GMT+4)
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