Bahrain property market has a positive outlook, says cluttons
National uncertainty clearly has taken a toll on the Kingdom’s marketplace, but Bahrain is now entering a period of relative calm and the Bahrain Central Bank has made a positive growth projection of 4% in 2013, explains the report. The planned US$1 billion GCC aid will also contribute towards the nation’s social and infrastructure development programme.
Indeed, during Q2 and Q3 2013, the residential lettings market is expected to experience a surge in supply, as several major residential developments will be brought to market, including the government’s housing programme. It is estimated that over 6,000 government-built homes will be completed by the end of Q3 2013, helping to relieve some of the pressure off the waiting list which, according to Cluttons’ research, has received almost 54,000 requests.
“Despite perceptions that the sharp upturn in residential supply may place downward pressure on prevailing rents, analysis suggests that rents will remain stable,” continues Cluttons. “This is due to there being sufficient domestic demand to absorb the new residential units, coming predominantly from the US Navy, which continues to relocate personnel to the island. Tenant demands are centered on the quality of finishing, with a preference for furnished properties and with modern amenities topping the wish lists. There is a heightened level of interest in Amwaj Islands, with Zawia 3, the Address Villas and Amwaj Waves all expected to be completed towards the end of the year. “
The commercial property sector has seen a “significantly better start” to 2012 as well, with occupier enquiries increasing after low activity in the fourth quarter of 2012. Last year, a combination of improved economic outlook, coupled with a slowdown in the number of new occupiers in the market helped minimise rental increases, whilst fostering an environment for the expansion of existing businesses.
Landlords remain under pressure to remain flexible on the lengths of rent-free and fit-out periods given the oversupply in the office market, therefore Cluttons is not anticipating any significant upturn in office rental rates in the medium to long-term. The Economic Development Board of Bahrain (EDB) is in talks with neighbouring Saudi Arabia, in an effort to foster increasing cross border investment, while creating opportunities for Bahrain-based firms to diversify its revenue streams. However, post Arab Spring, the UAE and Qatar continue to attract the lion’s share of new companies entering the region.
A stabilisation in national tensions is likely to translate into a slow, but steady upturn in the number of GCC tourist arrivals, which will help lift demand for retail space over the course of the year. Bahrain City Centre remains the primary hub of retail activity, but with limited vacancy, retailers are turning their attention to smaller retail malls.
“New supply is expected to come to market during the summer, which will help satisfy some of the demand, with the second phase of First Bahrain’s Maajal development at Bahrain Investment Wharf expected to be completed by mid-2013,” adds Harry Goodson Wickes, Head of Country Bahrain.