The commercial property market in Bahrain had a fairly flat performance in the second quarter of the year due to the large supply of property along with a weak demand, said a report.

In addition, cautious tenants and landlords as well as the forthcoming summer months are also likely to negatively impact rental values in this market, said the report by real estate specialists Cluttons.

"As the real estate market in Bahrain is now a tenant's market, to let out current stock successfully landlords must look carefully into occupier demands," said Cluttons head of strategic consultancy Stephan Burch.

"The market is clearly becoming dominated by two types of tenants. They are small occupiers who are looking for around 100 sq m of fitted out space and occupiers who are looking for 200 to 300 sq m.

"With the latter requirement, due to their bargaining position, tenants will be able to negotiate rent free periods or contributions to fit-out costs," he said.

"Differentiating factors such as flexible floor plates, good parking provisions and ease of access and egress remain paramount to all new commercial developments."

"For quick occupancies, large floor plates will need to be carefully sub-divided and fitted out to a good specification rather than waiting for larger companies to occupy entire floor plates," he added.

Like other real estate properties the retail market too has suffered greatly because of the unrest in the country, reduction in tourist spending coupled with reluctance on the part of retailers to progress with expansion plans the report said.

"As supply continues to come online, the main challenges facing landlords remain attracting and retaining tenants," it said.

"To this end landlords have been forced to offer increased incentives to existing and potential tenants. As a result of the continued oversupply in the market coupled with poor trading conditions, landlords have been forced to offer incentives to both existing tenants and potential tenants in order to let their properties.”

"This reflects the growing awareness of landlords regarding the benefits of a fully let property with a lower rental income than a development with low occupancy," the report added. – TradeArabia News Service