By Soren Billing
New CB Richard Ellis report also says residential sector was 'static' in Q3, little change in prices.
Office rents in Bahrain have declined by around 20 percent this year, CB Richard Ellis (CBRE) said on Monday.
The fall steepened during the summer months and Ramadan, and enquiries have declined significantly between the third and the first quarter, the real estate consultancy said.
“Banks are typically contracting rather than expanding and their spatial requirements are therefore diminished at least in the short term,” the company said in a report.
The high number of luxury apartments entering the market in and around the Seef area has caused rental rates to weaken, prompting some landlords to convert mid-quality apartments to office space, despite inefficient layouts and a lack of parking.
The country’s zoning laws need to be overhauled or whole areas could become “one dimensional” in use, leading to greater need for car transportation on the island, CBRE cautioned.
The third quarter was a “fairly static” quarter in the residential sector, with little movement prices, rental rates or transaction activity, it said.
A significant delivery pipeline of apartments could weigh on the market unless more jobs are created in the Kingdom. But not all of it may actually enter the market upon completion.
“In Dubai for example, many thousands of units remained unoccupied after completion and this may be the case in Bahrain, particularly with the luxury apartments soon to be completed in Juffair and the north coast of Bahrain,” CBRE said.
If that happens, a large proportion of new apartments may never actually enter the supply chain, and a housing shortage could quickly revive the sales market if the cost of mortgages comes down, it said.
The Bahraini government has pledged to build 14,000 low cost housing units by the end of 2010. Out of those, 4,000 are scheduled to be delivered by the end of this year.