The residential market in Bahrain remained stagnant for the second consecutive quarter in Q1 with the rental rates remaining equal to the levels achieved during the previous quarter, said a report.

During the first quarter, the residential market in Bahrain showcased a rather flat performance in the rental sector, and a declining trend in the sales sector, according to the consulting house PKF.

The average rental rates remained stable in Q1 compared to the previous quarter, and declined by 4.4 per cent.

Traditionally, the most popular areas include Juffair, Amwaj Islands and Seef District, stated the report.

Reef Island obtains a high demand among expatriates and achieves 90 per cent occupancy across its apartment towers.

These destinations feature an advantageous location in terms of proximity to offices, shopping malls and leisure and social facilities.

According to a third party industry report, average monthly apartment rents in Bahrain during Q1 stood at BD744 ($1,957).

According to PKF, various factors such as, subdued economic conditions, a declining household income and the pipeline of upcoming properties are expected to put pressure on rental rates in Bahrain's residential market until the end of 2016.

This is already evident as the number of inquiries for the villa product have declined as a result of cost reductions and downsizing practices adopted by large companies, it stated.

New projects that were launched in Q1 include the 250-unit Marassi Residences, which will be developed by UAE-based Eagle Hills and Bahrain's Diyar Al Muharraq, and is estimated to enter the market in 2018.

In addition, the 120-unit Vision Tower broke ground and is estimated to be completed by the end of 2017. Another noteworthy project is Amas, a mixed-use development located on reclaimed land in the north of Bahrain, it stated.

The eastern part of the development (Islands 13 and 14) will feature 2,000 affordable housing units. In February, the contract manager and site supervision consultant were appointed by the Ministry of Housing.

Furthermore, an additional 1,200 units will be built in the northern part of the country by 2018. Currently, Al Ramli Housing Project site is being prepared for construction, said the report.

A considerable number of projects are underway in Juffair and are anticipated to be delivered by 2017.
These include Juffair Heights (376 units) and Orchid Plaza (305 units), it added.

On the retail sector, PKF said the kingdom's retail mall GLA equated to 600,000 sq m. According to third party reports, average rental rates were recorded at BD12 per sq m and remained stable q-o-q.

The first quarter saw the opening of the Galleria Mall in Zinj, developed by the Dadabai Group. The mall which is anchored by Lulu Hypermarket, Lulu Groups’s 6th outlet in Bahrain, accounts for a total GLA of 42,000 sq m.

Key malls set to open in Bahrain include the Avenues Mall owned by the Kuwait-based Mabanee Group, and the Marassi Galleria, a joint venture between Diyar Al Muharraq and Eagle Hills.

Bahrain perceived as being a key market for travellers from Saudi Arabia, draws a lot of attention from regional and international retailers.

Weekend travellers from Saudi Arabia use the King Fahd Causeway, totaling close to 10 million vehicles every year.

Movie theatres and other entertainment factors are considered among the key reasons for trips by Saudi families or Saudi Arabia-based expats to Bahrain.

According to King Fahd Causeway General Organization (KFCGO), plans are underway to increase the current capacity of 17 lanes to 45 lanes which is set to reduce the current congestion into Bahrain in the medium to long term.

This new development, once close to completion will further increase interest from new retailers into the market. Additionally, there has been a 25 per cent increase in the “crossing” fee imposed from the beginning of the year.

On the office sector, PKF said Bahrain market remained stable during the first quarter, compared to the previous quarter, with no major supply additions coupled with a steady level of demand.

Monthly rental rates across Grade A office space averaged at BD7 ($18.4) per sq m, with locations such as the Bahrain Financial Harbour and World Trade Centre achieving the strongest rental rates.

On an annual basis, average rental rates achieved during Q1 were lower than rents reported for the same period last year, as demand from the government and hydrocarbon sectors declined amid subdued economic conditions.

As companies continued to implement cost reforms to offset the impacts from the economic slowdown, some companies looked to re-locate to areas based on cost saving, while others planned to capitalise on the lower than norm rental rates in more favorable locations, which cater to top-class facilities and attractive terms, stated the PKF report.

The latter is a trend that is likely to persist in the short-term. Therefore landlords and developers that provide developments featuring top-class services and facilities with attractive terms are likely to reap the benefits and sustain existing occupiers while attracting new ones, it added.-TradeArabia News Service