Building Bahrain

This local demand has been matched with an increasingly friendly environment for foreign investors, with relaxed foreign ownership regulations in certain areas of the country and strong economic growth in markets which typically invest in Bahrain, such as Saudi Arabia.

The residential market

The region's appetite for ‘mega-projects' remains strong, and Bahrain's share of this can be seen in more than 60,000 residential units currently planned or under construction.

These are split across Amwaj Islands, Durrat al Bahrain, Reef Islands and Marina West. However, many of these residential units are targeted towards the high-end which has resulted in a shortage of housing for low income groups.

"The availability of low-cost housing is an issue across the entire Gulf region. Our research in Bahrain has shown only a few developments are set to provide these kinds of residential units, and we think this will be a significant issue in the short to medium term."

"Despite this specific issue, our conclusions are that the Bahrain residential market still offers considerable opportunity for GCC and international investors, particularly those who are looking to own a high-end property at a significant discount to prices currently being seen in, for example, the UAE," says Robin Williamson, Managing Director of DTZ Middle East Operations.

Commercial market

The market for commercial space in Bahrain also continues to grow, with some major projects being released during the last twelve months. This includes the Trust Building, the Bahrain World Trade Center and Bahrain Financial Harbour.

In addition, more than half a million sq m of office space is set to come online by 2011 - an increase which will double the 500,000 sq m of current office space in the country.

Research suggests that the market will, however, avoid a glut caused by this huge increase in supply as developers will phase production to meet demand.

In the short term, there is likely to be an increase in commercial office rents, due to a lack of units in appropriate sizes.

There is great demand for relatively small units of between 200 and 450 sqm in size, which is not currently being met.

Retail market

Bahrain's retail market has grown enormously over the last decade, with more than 18 shopping malls now on the island, including the 73,000 sq m Seef Mall.

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