The real estate sector in Bahrain showed resilience during the third quarter as the demand for leased residential accommodation remained buoyant across the country, said a report.

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 Saar, Budaiya and Jasra, with many compounds achieving full occupancy, stated property consulting firm CBRE in its 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,” commented Steve Mayes, the director, Middle East Research, CBRE Bahrain.

Reef Island, located in the heart of Manama, providing predominantly apartment accommodation continues to attract city workers, seeking a secure waterfront lifestyle with ease of access to the CBD (central business district) and entertainment facilities. The average occupancy across Reef Island rental properties is in the region of 95 per cent.  

Due to open in late 2016, Reef Island Resort will provide luxury villa accommodation and facilities catering to both the short and long-term markets.

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, the report stated.

Following the success of the first Fontana Towers, Kooheji contractors are in the final stages of construction for Fontana Gardens which has been reportedly been fully sold on a freehold basis. Work has also started on Fontana Suites, which has also been met with a positive response from buyers.

Bahrain Bay announced its latest project: Water Bay, during Cityscape 2015. Bin Faqeeh Real Estate Investment Company has purchased three plots of land for development of a mixed-use, predominantly residential complex in Bahrain Bay, which will be the first residential offering within the master-planned project.

Water Bay will offer three 10-storey residences with approximately 600 luxury apartments and ground floor retail.  Completion is expected in 2017, stated the report.

On the retail market, CBRE said development in this sector continues to pick up pace, with the provision of neighbourhood shopping centres and food and beverage solutions emerging as major trends.

Despite Bahrain being a small country in size and population, the community retail developments appear to be answering a need and have grown in popularity, it stated.   

"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," remarked Mayes.

"The deviation from the established mindset of retail being purely Manama oriented, has firmly taken hold and opened up opportunities for developers and investors," he added.

The latest major announcement comes from First Bahrain, which commenced construction of the much-anticipated ‘Al Mercado’ at Janabiya with just under 5,000 sq m GLA (gross leasable area). The project is due for completion in 2016 and will serve the ‘new’ Janabiya area.  

Galleria in Zinj, a Dadabhai project offering over 42,000 sq m of GLA, is set for completion in 2015, closely followed in 2016 by the $6.5-million Wadi Al Sail project in Riffa. The Courtyard food and beverage development is also now completed in Seef District and is reportedly 25 per cent pre-let.

On the commercial office market, CBRE said it is yet to see the same level of recovery that has been registered in other sectors following the economic and political challenges of recent years.

The current needs of occupiers tends 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, it stated in the report.

“Average rentals for leading Grade-A developments remains stable, typically quoted at between BD7-9 per sq m. It remains unclear how much impact upcoming properties will have on the market, including the two new office properties soon to open in Bahrain Bay adding close to 40,000 sq m to the prime stock by the first quarter of 2016," observed Mayes.
 
"The main demand source throughout 2015 has been existing occupiers looking to consolidate or upgrade accommodation," he added.

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, said CBRE in its statement.  

The Ministry of Industry and Commerce recently announced the signing of an agreement with Bahrain Financial Harbour to lease around 9,000 sq m to consolidate their operations. The Ministry is set to occupy the space in 2016.  

This is a relocation from existing offices, which demonstrates the trend amongst both the private and public sectors in taking advantage of ample international Grade-A supply at affordable rents.

“Landlords who are flexible in their approach and diversify their offerings to meet tenants requirements, as well as providing attractive parking solutions and on-site facilities, are able to gain greater traction and achieve more favourable occupancy levels,” added Mayes.

On the hospitality sector, CBRE said the luxury segment continues to see growth. An influx of 4 and 5-star hotels has been announced during 2015.

There are currently 108 hotels operating in Bahrain and this figure is set to rise, with Rotana Downtown due to complete this year, along with Wyndham Grand at Bahrain Bay in early 2016. Amongst others, the Marriott Residence Inn at Water Garden City is also expected this year, it stated.

Emaar Hospitality Group will reportedly build five new hotels in the Kingdom: The Address Marassi Al Bahrain and The Address Residences Marassi Al Bahrain, Vida Hotels and Resorts along with Vida Marassi Al Bahrain and Vida Residences Marassi Al Bahrain, in association with Eagle Hills.

All five projects are scheduled for completion in 2018, said the report by CBRE.

“At this time, there is less development focus on the mid-market and budget categories, although Holiday Inn Express in Hoora, as an example, is reportedly running at above average occupancy,” remarked Mayes.  

“While the surge in development in the hospitality sector is encouraging for the Kingdom’s future, there remain question marks over whether demand will be able to absorb the increase in stock. However, information released by the tourism authorities paints a positive picture with rising visitor numbers,” he added.-TradeArabia News Service