Bahrain’s property sector remained stable in the first quarter despite the wider economic challenges,
thanks to the residential apartment appetite which saw increased development activity in Juffair, Seef and master planned projects around the kingdom, said a report.
The kingdom is looking towards the non-hydrocarbon sector to drive growth, as economic uncertainty on an international and regional level continues, with decreased oil prices and concerns over surplus supply, according to the global property consulting firm CBRE as part of its Q1 2016 Bahrain MarketView.
Its non-oil sector, which is driving sustained economic growth projected to remain at 2.9 per cent in 2016 (Bahrain’s Economic Development Board), it stated.
James Lynn, the director of research and consultancy, CBRE Bahrain, said: “This growth has been dominated by construction, private education, healthcare and tourism, and while real estate transactions have dropped by six percent quarter-on-quarter , development activity and project planning has gained pace, particularly in the residential, retail and hospitality sub-sectors.”
Following the slow-down that resulted from the wake of the economic crises and subsequent political unrest that affected activity over the past decade, development activity is cautiously increasing with investor interest predominantly in local and GCC markets.
According to CBRE, the first quarter has witnessed the launch of notable new freehold apartment developments at Dilmunia, Diyar Al Muharraq and Durrat Al Bahrain.
At Durrat Marina – Layan, a Bin Faqeeh Group project is breaking ground on a unique residential project with a private water park.
The majority of investors in freehold property to date at Durrat Marina have been local and GCC nationals and it is anticipated that sales for Layan will draw mostly from this market, said the report.
The residential rental market saw little change in the past quarter, as rates remained stable, overall, with Juffair, Amwaj Islands and Seef District the most popular amongst western expatriates seeking accommodation for lease, it stated.
Reef Island maintains its popularity amongst young professional expatriates, sustaining 90 per cent occupancy across the apartment towers, with this location and Seef District benefitting from their close proximity to offices, destination shopping malls and entertainment centres.
On the retail market, CBRE said Bahrain has witnessed several significant shopping development openings and new project announcements, with the provision of neighbourhood shopping centres and food and beverage solutions having merged as a major trend.
Community retail developments are becoming more comprehensive, providing family entertainment, such as large scale children’s play centres and cinema screens – a prime example being Seef Mall Muharraq, it added.
Galleria in Zinj, a Dadabai project offering over 42,000 sq m of GLA (gross leasable area) and anchored by Lulu Hypermarket, has opened along with the $40-million Bahrain Defence Force initiative, Wadi Al Sail in Riffa area of the kingdom.
Al Mercado in ‘new’ Janabiya, with a leasable area of 5,000 sq m and anchored by Al Osra supermarket, is also on track to open this September, said the CBRE in its report.
In the destination mall arena, soon to be added to the options for shoppers in the capital is the upcoming The Avenues on the Manama Corniche at Bahrain Bay, which is expected to open in early 2017.
The development will reportedly provide 38,000 sq m of total leasable retail space and an impressive range of facilities, including outdoor children’s play areas and arcades, a running track and gym sets, waterfront dining, a traditional style souk, an indoor market, cinema screens and a public park, it added.
Heather Longden, the associate director, CBRE Bahrain, said: “The Avenues demonstrates that as the relatively small Bahrain market grows in sophistication, competing retail developments are diversifying and providing a greater level of leisure and entertainment facilities to meet customer demands.”
On the office market, CBRE said the demand for office space in Bahrain is currently moderate, while space requirements for government sectors and financial centres have decreased.
Reluctance by some landlords to reduce rental rates and provide more flexible lease terms has also led to poor occupancy levels in many properties, although attitudes are changing, stated the expert.
The combined Grade A and Grade B and subprime office stock is currently estimated to measure 1.45 million sq m and as of the first quarter, quoting rents for high quality space are averaging BD7 ($18.4) per sq m per month, although prospective tenants are in a strong negotiating position to obtain lower rates in the current market.
According to CBRE, leading Grade A landmark properties, including Bahrain Financial Harbour and World Trade Centre are offering attractive packages for occupiers with large space requirements, seeking a cost effective solution and best in class facilities.
Developers and landlords of commercial office towers who are able to diversify their offering and provide services, as well as workspace solutions that strive to meet the needs of the modern business, are likely to continue to be more successful in terms of attracting new tenants and maintaining existing ones, it stated.
James Lynn, the director, pointed out that landlords were increasingly open to providing solutions and greater flexibility to reach and maintain occupancy targets, with flexible terms, shorter leases, extended rent free periods and fitted office space to reduce occupiers capital expenditure, acting as a major draw for current and new tenants.
“Many building owners are also moving with the tide and providing a wider variety of space options, ranging from 1-6 person serviced offices, sub 150 square metre fitted, to the larger traditional full floors in both shell and core and fitted condition,” he stated.
On the hospitality market, CBRE said it continues to see growth particularly in the 5-star and luxury segment, with the likes of Rotana Downtown now completed and Wyndham Grand at Bahrain Bay set to open in the second half.
A boost for the Diyar Al Muharraq Development has been the launch of Al Marassi, with Emaar Hospitality Group reportedly set to build five new hotels within the project, which is scheduled for completion in 2018, said the property expert.
While there has been less focus on the mid-market and budget categories, Ibis in Sanabis, a popular mid-market brand, opened to strong demand from business travellers in 2015.
This was followed by the 140-room Ramada City Centre, which opened in the first half, opposite City Centre mall, said the report.
It has also been recently reported that Accor Group has inked a management agreement with Action Hotels to operate an Ibis Styles economy hotel in Diplomatic Area, from its scheduled opening date in the fourth quarter this year, it added.-TradeArabia News Service