Keywords : Real Estate, commercial real estate, real estate report
The commercial real estate industry in Bahrain continues to suffer the fallout from the global financial crisis and unrest that swept through the country in early 2011. It has been one of the slowest Gulf Cooperation Council (GCC) economies to recover from the crisis and the protests mean that economic growth is likely to be slow for 2011 and 2012. In the real estate segment this has translated into falling rents and an endemic oversu...
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- Publication date: March 2012
- Report price: $ 1 088
The commercial real estate industry in Bahrain continues to suffer the fallout from the global financial
crisis and unrest that swept through the country in early 2011. It has been one of the slowest Gulf
Cooperation Council (GCC) economies to recover from the crisis and the protests mean that economic
growth is likely to be slow for 2011 and 2012. In the real estate segment this has translated into falling rents
and an endemic oversupply of rental space.
In spite of these challenges, elevated oil prices and higher oil production are likely to help build an
economic recovery over the coming years, though it will be slow in coming. Indeed, there is some irony
in the fact that the very same unrest that is causing so much damage to the wider economy in the MENA
region is also responsible for the rise in oil prices that is going to fuel economic growth. Since oil
represents 80% of Bahrain’s export income, Gross Domestic Product growth is extremely sensitive to movements in the price
of oil. Hence, while we are projecting Gross Domestic Product growth of just 0.9% for 2011 and 1.3% in 2012, we expect
rising oil production will almost singlehandedly lift growth to an average of 7.0% for the 2013-2015
period.
While we expect growth to rebound slightly 2012, we stress that the economy's medium-term outlook
remains contingent upon a lasting solution being found to the current political crisis. Unfortunately, we
maintain our relatively guarded outlook on the prospect of the government and opposition coming to
some form of agreement in the near term. As a result, political risks will remain elevated for the
foreseeable future.
Some of the key opportunities in the real estate industry are:
.. A general view that rents will stabilise and at least move sideways, if not improve slightly,
during 2012.
.. An increase in oil revenues may flow through to the wider economy and help to lift domestic
demand out of the doldrums.
.. Government stimulus programmes and most notably the commitment to invest US Dollar 3.2bn in the
construction of 30,000 new residential units by 2016.
.. An earlier than expected and/or a more comprehensive than expected settlement of the political
crisis would return confidence to the commercial real estate industry . Four Seasons’ decision to
press ahead with a multi-billion dollar hotel project is a positive sign of confidence in Bahrain’s
potential.
The key risks for the real estate industry include the contraction of tourist inflows. Tourism arrivals
contracted by more than 25% in Q111 compared to a year earlier, though there are signs that tourism
levels are set to pick up again as cruise ships in particular have starting returning to the country.
Furthermore, Bahrain’s position as a financial centre has been, perhaps irreparably, damaged. It was
already facing competition from Dubai, Doha and Abu Dhabi. There are reports that some businesses
have already moved from Bahrain to those other cities. The consequence has been a decrease in demand
for space in both the financial services and tourism segments, even as new developments bring additional
space online. High vacancy rates and a lack of growth in the domestic economy mean that the oversupply
of commercial space will only be absorbed slowly. In the meantime, it is a tenants’ industry .
It is difficult to be optimistic about the short-term prospects for Bahrain’s commercial real estate industry .
The longer-term outcome will depend on Bahrain achieving a level of economic growth outside the
export-oriented oil segment .
Real Estate Industry in Bahrain
Executive Summary .. 5
Industry SWOT Analysis . 7
Bahrain Real Estate And Construction Industry Environment and Risk Analysis .. 7
Bahrain Political Environment and Risk Analysis . 8
Bahrain Economic Environment and Risk Analysis .. 9
Bahrain Business Environment SWOT . 9
Real Estate Industry Overview 10
Market Analysis – Office .. 11
Rents and Yields 11
Data : Historic Office Rents, from 2010 to 2011 (US$ per m2/month) .. 11
Data : Net Office Yields, from 2010 to 2012 .. 11
Data : Terms Of Office Rental Contract/Lease, Mid 2011 .. 12
Supply and Demand 12
Market Projection Scenario . 12
Data : Projection Office Rents, 2012 (US$ per m2/month) . 12
Data : Projection Net Office Yields, from 2008 to 2016 .. 12
Market Analysis – Retail .. 13
Rents and Yields 13
Data : Historic Retail Rents, from 2010 to 2011 (US$ per m2/month) .. 13
Data : Net Retail Yields, from 2010 to 2012 .. 13
Data : Terms of Retail Rental Contract/Lease, Mid 2011 14
Supply and Demand 14
Market Projection Scenario . 14
Data : Projection Retail Rents, 2012 (US$ per m2/month) . 14
Data : Projection Net Retail Yields, from 2008 to 2016 .. 15
Market Analysis – Industrial .. 16
Rents and Yields 16
Data : Historic Industrial Rents, from 2010 to 2011 (US$ per m2/month) .. 16
Data : Net Industrial Yields, from 2010 to 2012 .. 16
Data : Terms of Industrial Rental Contract/Lease, Mid 2011 17
Supply and Demand 17
Market Projection Scenario . 17
Data : Projection Industrial Rents, 2012 (US$ per m2/month) . 17
Data : Projection Net Industrial Yields, from 2008 to 2016 .. 17
Construction Market Outlook 18
Data : Bahrain Construction And Infrastructure Market Data And Projections from 2007 to 2016 .. 18
Data : Bahrain Construction And Infrastructure Market Long-Term Projections from 2012 to 2021 19
Construction And Infrastructure Projection Scenario .. 20
Macroeconomic Data . 23
Data : Bahrain - Economic Activity, from 2011 to 2016 .. 24
Environment Overview . 25
Real Estate/Construction Business Environment Ratings 25
Data : Middle East And Africa – Business Environment Ratings . 25
Bahrain’s Business Environment . 25
Data : BMI Business And Operation Risk Ratings .. 25
Institutions .. 26
Data : BMI Legal Framework Rating 27
Infrastructure . 28
Data : Labour Force Quality . 30
Market Orientation . 30
Data : Middle East & Africa - Annual FDI Inflows, from 2008 to 2010 .. 31
Data : Trade And Investment Ratings 33
Data : Top Export Destinations, from 2001 to 2009 (US$mn) .. 34
Operational Risk .. 35
Competition Overview 36
Company Profiles . 38
Abdulla Ahmed Nass Group (AANG) 38
Ahmed Mansoor Al-A’ali (AMA) . 40
Seef Properties BSC 41
Tas’heelat Real Estate .. 42
BMI Methodology . 44
How We Generate Our Market Projections . 44
Construction Market 45
Bank Lending . 46
Real Estate/Construction Business Environment Rating .. 46
Data : Weighting Of Indicators 47
Sources . 49
Real Estate in Bahrain
- $ 250
- Industry data
- February 2013
Yearly, From 2001 To 2016
By Business Monitor International
Source: BMI
- Industries : Real Estate
- Countries : Bahrain
- $ 250
- Industry data
- February 2013
Yearly, From 2001 To 2016
By Business Monitor International
Source: BMI
- Industries : Real Estate
- Countries : Bahrain
- $ 250
- Industry data
- February 2013
Yearly, From 2001 To 2016
By Business Monitor International
Source: BMI
- Industries : Real Estate
- Countries : Bahrain
- $ 250
- Industry data
- February 2013
Yearly, From 2001 To 2016
By Business Monitor International
Source: BMI
- Industries : Real Estate
- Countries : Bahrain
- $ 250
- Industry data
- February 2013
Yearly, From 2001 To 2016
By Business Monitor International
Source: BMI
- Industries : Real Estate
- Countries : Bahrain
- Publication date: March 2012
- Report price: $ 1 088
