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Lifeline for Bahrain firms

Manama, December 6, 2011

Eight companies near the old GCC (Pearl) Roundabout, which were threatened with eviction last year if they didn't agree to rent hikes of up to 13-fold, have been thrown a lifeline.

They could still face a minimal rent increase, but massive disruption to business in the area since February means it could be much less than originally planned.

The Gulf Daily News, our sister newspaper, reported in April last year that the businesses had reached the end of their 15-year lease agreements, which were fixed at bargain basement prices.

They rent from the Manama Municipality, but the Manama Municipal Council threatened to kick them out unless they agreed to rent hikes that would bring them in line with current market rates.

However, the companies refused to back down and negotiations were taking place until February - when they collapsed due to the unrest.

The Manama Municipal Council is now considering giving the companies west of the Manama Central Market a new temporary deal to allow them to continue operating in the area.

However, a new rates study will first be compiled by brokers.

"We can't in these circumstances force those (original) rates because business near the former Pearl Roundabout area is completely affected," said council vice-chairman Mohammed Mansoor.

"It will be very difficult to get those eight businesses out because there is not much interest from other companies to move there.

"This is why we have decided to give them (existing businesses) temporary deals with a regular increase of 10pc, as stated in the now-expired contracts, until brokers present the council with a new rate plan for the area.

"It is clear that the 13-fold increase will not be carried out in the upcoming years and any increase to contracts will be minimal and gradual, considering business in the whole area - including the Manama Central Market - is down."

Under the original plan, the council would have increased revenues from those properties alone from BD70,000 ($186,170) to BD480,000 ($1,276,593) a year.

Al Muntazah Market would have seen its rent rise from BD1,316 ($3,499.99) a month to BD10,980 ($29,202).

The owner of Super Laundry would have had to pay BD8,295 ($22,061) a month, rather the current BD607 ($1,614), and BD1,050 ($2,792) instead of BD350 ($931) for his nearby Super Car Wash.

Al Jasr Construction Company would have also been affected after being told that rent would have been increased to BD1,670 ($4,441) a month from the current BD350 ($931).

Brite Laundry would have had to pay BD9,040 ($24,042) rather than BD1,416 ($3766) a month and the owner of another car wash was ordered to pay BD627 ($1,667) a month, up from BD187 ($497).

Meanwhile, a businessman was told his rent would have gone up from BD473 ($1,258) to BD5,145 ($13,683) a month and another faced an increase from BD300 ($798) to BD2,500 ($6,649) a month.

Mansoor, who is also the council's financial, administrative and legislative committee chairman, said the council was now trying to reach an amicable solution with businesses whose lease had expired.

"No-one wants to lose, us or the businessmen, and we have to reach something reasonable if our business relationship is to continue without any party being harmed," he said.

"We are looking to finalise new temporary contracts within the upcoming three months.”

"Plans for the new study may take up to two years considering the changing nature of the area and, unless things there stabilise, the council can't get an answer on rates or introduce new ones."

Municipal councillors last month demanded answers about the future of a traffic junction that was once the site of the roundabout.

Now known as the Al Farooq Junction, the location has been cordoned off by security forces since protesters were evicted from the old roundabout in mid-March.

The council has called for talks with the government to discuss the long-term plan for the area.

Since the old roundabout was demolished there have been attempts by some protesters to reach the site, sparking concerns that anti-government forces could seek to occupy the location again - causing even further disruption to the area.

The GDN reported in October that a rescue plan was launched to help revive dying businesses in the area of the junction, which became a focal point for anti-government protests in February and March.

The council announced plans to come to the aid of those affected after complaints from malls, shopping centres and other outlets that the area had turned into a "ghost town".

Councillors pledged to help fund marketing campaigns for those affected once the situation returned to normal.

They have also instructed businesses to continue running promotional offers until the end of the year to boost trade. – TradeArabia News Service




Tags: Bahrain | business | Manama | rent | Hike | Eviction |

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