- No significant change in office sector rental rates across all grades, with new supply in the pipeline
- Residential rental rates remain stable quarter on quarter
- International specification industrial production facilities remain in strong demand along with serviced warehousing developments
Manama, 12 July 2015 – The retail sector continues to witness development both in the destination and community mall segments, according to the Q2 2015 Bahrain MarketView by global property consulting firm CBRE. Following hot on the heels of established and newly completed centers, new neighbourhood retail and food and beverage offerings are now being added to the pipeline. Galleria in Zinj, a Dadabhai project offering over 42,000 sq.m of gross leasable area, is set for completion in Q4 2015, closely followed in 2016 by the $6.5 million Wadi Al Sail project in Riffa, which has announced its collaboration with Cineco to provide a six screen cinema complex. This is in line with Seef Mall Muharraq’s strategy to bring additional services to the local community, typically offered only by destination malls in the capital. In the city, Maalem Holding’s The Courtyard located in Seef District is also due to open in Q3 2015 offering three floors of dining and retail space, noted the CBRE MarketView. Steve Mayes, Director, Middle East Research, CBRE Bahrain, said, “The trend appears set to continue, on the back of the drive for improved local community services. First Bahrain have appointed Key Consultants as contractors to lead their $30 million planned development in Janabiya, which will also offer a courtyard style retail and food and beverage experience to customers over three floors with 48,000 sq.ft of leasable space.” Hospitality Market
According to the CBRE report, the second quarter of 2015 has seen the busiest time of the year for the hospitality sector, with the Bahrain Formula 1 Gulf Air Grand Prix taking place in April and hotels reporting 90-100 percent occupancy over the period across all classes.
“However, with Ramadan commencing in mid-June this year, the usual challenges of the Holy Month have come early for the industry, with projections of circa 40 to 60 percent average occupancy for the month, which is an improvement on previous years according to spokespeople for the hotels sector,” commented Mayes. “Despite reported challenges in achieving optimum occupancy levels, the momentum of new proposed developments shows no sign of abating. The Four Seasons at Bahrain Bay and ART Rotana at Amwaj Islands have already launched earlier this year. Rotana: Downtown is also due for completion this year at Bab Al Bahrain, in the heart of Manama,” further added Mayes. According to the report, a management agreement for the Marriott chain, to operate a hotel development at the master planned Water Garden City, due for completion in 2015, was also announced which will be situated in close proximity to 180 room One and Only Royal Mirage, on the shore line. “Reportedly Emaar Hospitality Group are also soon to introduce The Address and Vida brands to Bahrain, in association with Eagle Hills. While the Holiday Inn Express budget hotel chain was followed this year by Ibis at Sanabis, it appears that the five star brands are leading development in this sector,” stated Mayes. Office Market
According to the CBRE report, the commercial office market remains stagnated, with limited movement quarter on quarter. While Grade A international class office developers endeavour to protect market perception by staying firm on headline rentals, new occupier take up has been limited. Established, market leading office developments that differentiate themselves with quality facilities, such as Al Moayyed Tower and WTC, are achieving comparatively high occupancies. “Newer stock and office developments that have failed to carve out a niche, in less popular locations, are struggling to attract occupiers. While Seef District continues to be popular, the Diplomatic Area is not a choice location for many businesses, due to access and parking issues, along with central Manama,” commented Mayes. International Grade A quoted rents continue to sit at BD7 – 8 per sq.m and in Seef District across Grade A and B BD5.5 – 7 per sq.m achieved. Residential Market
According to the report, there has been little change quarter on quarter, in the residential rental market, in terms of rental rates and demand. Despite some increased vacancy in the north west of the island for popular expatriate residential compound areas, due to some annual employment contracts coming to a close and the end of the school year, occupancy levels in this area, along with Juffair, Seef District, Reef Island and Amwaj Islands remain strong. “New apartment towers, opening in Amwaj Islands, have witnessed strong take up levels and established areas of the development including Al Marsa Floating City and Tala Island remain popular, further boosted by improved facilities and entertainment offerings being introduced, such as the ART Rotana hotel. Reef Island has potentially surpassed Amwaj Islands in terms of environment and convenience and is the location of choice for business executives and young professional expatriates who are looking for waterfront lifestyle, access to the CBD and main shopping destinations,” commented Mayes. Hospitality Sector
A surge of new projects entering the hospitality market both in the luxury and mid-range segments are providing a boost to Bahrain’s economy. Although the average occupancy reported for hotels, particularly in the five star bracket is modest, the development in this area shows no sign of slowing. “This year, The Four Seasons at the heart of Bahrain Bay and the ART Rotana at the Amwaj Islands have both opened their doors in the Kingdom, in time for the Formula One race season. Ibis Hotel Sanabis, the first of its kind budget mid-range hotel chain to open in Bahrain has also entered the scene taking advantage of the limited offerings in Bahrain for reasonable, affordable accommodation that meets international standards,” stated Mayes. Light warehousing/industrial
According to the report, demand for high specification industrial and storage facilities is driving development in this sector. Purpose built facilities, which provide better provisioned units and services which add value to occupiers operations and reduce capital expenditure are raising the bar for this sector. Investment Gateway-Bahrain by Manara Developments; a master planned project located in Hidd will offer light industrial, commercial showroom and low rise office buildings with ground floor retail with opportunity for non-Bahraini entities to purchase and encouraging FDI to the Kingdom. The project is set for completion in early 2016 and a majority of the plots offered for sale are reportedly already sold. Mazaya Holdings announced the completion of Mazaya Logistics Project at Bahrain Investment Wharf in Hidd, with a plot area of 27,605 sq.m; a multi purpose facility with flexible offering to suit various business requirements from 250 sq.m to 15,250 sq.m modular units.
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