Demand from Saudi-based companies for rental properties in neighbouring Bahrain has fallen during the third quarter of 2015 due to the impact of cheap oil, CBRE has said in a new report.
The report said tenants working within the non-hydrocarbon sector in Bahrain appear to be covering this shortfall.
It said that although residential rents have remained stable across the popular expatriate areas, there has been an increase in demand particularly for housing in the northwestern areas of the country, including Sar, Budaiya and Jasra, with many compounds achieving full occupancy, said the Q3 2015 Bahrain MarketView.
“Perhaps predictably, there has been a decrease in the level of Saudi Arabian oil-related companies securing executive staff accommodation. However, tenants working within the non-hydrocarbon sector appear to be covering this shortfall up to this point,” said Steve Mayes, director, Middle East Research, CBRE Bahrain.
Reef Island, located in the heart of Manama providing predominantly apartment accommodation continues to attract city workers, with the average occupancy in the region of 95 percent, the report added.
It said on average, Juffair rental rates have not seen a significant increase across different residential classes, however, there remains a strong demand for this area, supported by the American Naval Base housing requirements.
According to the CBRE report, development in the retail sector continues to pick up pace, with the provision of neighbourhood shopping centres and food & beverage solutions emerging as major trends.
Mayes said: “Developments range from smaller complexes, anchored by supermarkets, which also offer retail space for services and convenience stores to larger developments that provide a fully comprehensive mall experience to customers, such as Seef Mall Muharraq, which also houses a cinema. The deviation from the established mindset of retail being purely Manama oriented, has firmly taken hold and opened up opportunities for developers and investors.”
The commercial office market is yet to see the same level of recovery as has been registered in other sectors following the economic and political challenges of recent years, CBRE said.
The current needs of occupiers tend to be geared towards smaller units (sub 200 sq m), fitted space and cost effective turnkey solutions with flexibility in lease terms. Incentives, such as additional parking, are also being sought in what remains a tenant’s market.
Mayes said there is still some call for larger traditional offices in a shell and core condition. However, this is limited and mainly led by government organisations and established international firms with an existing presence in the kingdom.
The Ministry of Industry and Commerce recently announced the signing of an agreement with Bahrain Financial Harbour to lease around 9,000 sqm to consolidate their operations. The Ministry is set to occupy the space in 2016.
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