Financial institutions approached by Dubai and Qatar during unrest in Bahrain to move their operations have remained committed to the kingdom, according to a report by CB Richard Ellis, the global property services firm.

The fundamentals borne out of more than 430 institutions, strong track record, well-regarded regulatory environment and the presence of the largest market in the Middle East just across the causeway in Saudi Arabia remain key to the financial sector remaining in Bahrain, the report stated.

'Local reports record that four institutions left Bahrain in 2011, although it seems two of them had long-planned a move away and the others were merely functions from within banks that are still in Bahrain, that have moved to Singapore.'

'Nevertheless, plans to expand or invest in Bahrain have been affected by the events of the first half of 2011 and the recovery in investment and business development forecast to take place through 2011 has been subdued.'

'This translates into a reduction in demand for office space, and the requests for new space are once again typically for smaller units of 100 to 150 square metres for serviced offices,' the report said.

'Some businesses struggling as a result of the global and local economic environment are rationalising their requirements, cutting staff and making cost savings by moving into less expensive, less prestigious accommodation.'

'On the upside, the vigorous development programme taking place to exploit Bahrain's oil and gas resources has generated several requirements for substantially-sized head office properties for international oil companies.'

'The general sluggishness in demand is being met by a significant increase in quality office supply, with absorption of new space likely to be a problem for at least a couple of years,' the report said.

'There is likely to be some repositioning in the market, some clearance of bottom end properties ripe for redevelopment and refurbishment programmes,' it added.

On residential property, the report said prices appear to be levelling out as landlords have reached a point where, in some cases, they would rather leave the properties empty or undertake refurbishment rather than reduce the rent further.-TradeArabia News Service