Bahrain Real Estate Report Q4 2010
Business Monitor International, October 2010, Pages: 64
Key Insights on the Real Estate Sector Of Bahrain
Bahrain’s commercial real estate sector remains depressed. Rental rates fell sharply in 2009 and – except in the retail sub-sector – have continued to drop this year. Yields have moved in a somewhat erratic fashion, but are now (much) higher than they were in 2008. When the authors interviewed them in mid-2010, our in-country sources indicated that rents are likely to move sideways in 2011.
There are several problems. Economic growth has slumped – in the wake of the global financial crisis and the problems of Dubai World – and is not likely to accelerate anytime soon. Another constraint to growth is the widespread perception that Bahrain has been overbuilt. The geography of Bahrain is such that commercial tenants have the opportunity to relocate to new premises between the three cities for which the authors have gathered data – Manama, Muharraq and Riffa. The glut of commercial property hangs over the entire country, and is not confined to one place or sub-sector.
Most fundamentally, the movement in yields over the last two years suggests that the attitude of investors has changed. Prior to 2007-2008, there were some protagonists, at least, who expected that commercial real estate in Bahrain could deliver meaningful capital gains. Now, Bahrain commercial real estate is priced by market protagonists as if it were a high risk asset class from which most of the returns will come as income. There is no reason why this should change anytime soon. The authors expect that yields will remain elevated, but will slip gradually over the next four years.
Key Features of This Report
This is the latest edition of a new series of industry reports that seeks to identify the key dynamics of the real estate sectors of 44 countries around the world, some of which are developed and some of which are, in every sense, emerging markets. The questions that the report seeks to answer for each country remain as follows: what are the main issues that will matter to actors in and around real estate development in the country concerned, both over the long and the short term? What are the main constraints that they face? What are the key insights that one garners when one compares the real estate sector of the country concerned with its peers in other countries?
In Q3 the authors introduced a very substantial new improvement to the reports. They incorporated data and qualitative observations provided by commercial real estate agents operating in the countries surveyed. As a result the authors gained a much clearer picture of the balance between demand and supply in each of three main sub-sectors – office, retail and industrial. They also introduced a new approach to the forecasting of rental yields, which is discussed in the methodology sector of this report.
In Q4, the authors have incorporated a lot of new data in relation to rents and yields in 2010. They gained this data by way of a new round of interviews with their in-country sources in mid-2010. In some cases, the latest information from their sources has caused them to make significant revisions to their forecasts for 2011-2014. They asked their sources to indicate what growth in rents is likely for 2011. They explain their answers in the Industry Forecast Scenario.
Executive Summary
SWOT Analysis
Bahrain Real Estate And Construction Industry SWOT
Bahrain Political SWOT
Bahrain Economic SWOT
Bahrain Business Environment SWOT
Regional Real Estate Overview
Table: Middle East And Africa’s Office Markets At A Glance – Rents, 2009-2011 (US$ per square metre per month)
Table: Middle East And Africa’s Retail Markets At A Glance – Rents, 2009-2011 (US$ per square metre per month)
Table: Middle East And Africa’s Industrial Markets At A Glance – Rents, 2009-2011 (US$ per square metre per month)
Real Estate Market Overview
Table: Bahrain’s Real Estate Market – Rentals, 2008 And 2009 (m²/month, US$)
Table: Bahrain’s Real Estate Market – Net Yield, 2008 And 2009 (%)
Table: Bahrain’s Real Estate Market – Terms Of Contract/Lease
Table: Bahrain’s Real Estate Markets – Available Space (m²) and Vacant Space (%)
Forecast Scenarios
Real Estate Outlook
Table: Bahrain Real Estate Markets – Rentals in m²/month (BHD)
Table: Bahrain’s Real Estate Market – Net Yield, 2008-14 (%)
Construction And Infrastructure Outlook
Table: Bahrain’s Construction And Industry Data And Forecasts, 2008-2014
Macroeconomic Outlook
Table: Bahrain - Economic Activity
Business Environment
Real Estate/Construction Business Environment Rating
Table: Middle East And Africa Business Environment Ratings
Bahrain’s RECBER
Middle East Project Finance Ratings
Table: Design And Construction Rating
Table: Commissioning And Operating Rating
Table: Overall Project Finance Rating
Bahrain’s Business Environment
Table: BMI Business And Operational Risk Ratings
Table: BMI Legal Framework Ratings
Table: Foreign Direct Investment Inflows Into The Middle East And Africa, 2006-2008
Table: BMI Trade Ratings
Table: Bahrain’s Top Export Destinations, 2001-2008 (US$mn)
Company Monitor
Abdulla Ahmed Nass Group
Ahmed Mansoor Al-A’ali (AMA)
Seef Properties BSC
Tas’heelat Real Estate
Methodology
How We Generate Our Industry Forecasts
Construction Industry
Bank Lending
Real Estate/Construction Business Environment Rating
Table: Weighting Of Indicators
Project Finance Ratings Indicators
Table: Design And Construction Phase
Table: Commissioning And Operating Phase – Commercial Construction
Table: Commissioning And Operating Phase – Energy And Utilities
Table: Commissioning And Operating Phase – Transport
Sources
- Abdulla Ahmed Nass Group
- Ahmed Mansoor Al-A’ali
- Seef Properties BSC
- Tas’heelat Real Estate
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