Bahrain to review rents of businesses
Manama, March 26, 2012
Plans are underway to renegotiate the rent of more than 900 businesses in Bahrain that have suffered major losses due to the credit crunch and unrest, said a top official.
The Manama Municipality had planned to rip up old contracts and replace them with new rates more in line with existing market values.
It would have meant rises of up to 13-fold for some companies and based on calculations from its biggest 399 contracts, municipality revenue would have more than doubled from BD109,058 ($289,259) to BD230,500 ($611.365) a month.
But due to the unstable situation since last year's unrest councillors have decided to revise their plans.
Three real estate agencies will now be assigned to provide a number of options for the Manama Municipal Council, with some contracts reportedly dating back to the early 90s.
'In 2010, when Granta Real Estate was asked to provide a study on contracts and replacements, they presented the municipality with the real market value of what those contracts should have been at that time,' said council vice-chairman Mohammed Mansoor.
'Those rates didn't become effective because of the financial crisis that resurfaced and the political unrest that swept the Arab world, among them Bahrain, which has meant a lot of real estate values and property rates have sharply dropped.
'There are two options; either we realise that investment is a joint partnership between the municipality and businessmen or its us trying to take as much revenue as possible from them, disregarding the unstable market situation.
'Enforcing high increases amounting to as much as 13-fold on the 903 contracts is a huge mistake, while having businessmen who make good profits pay peanuts is also wrong. There has to be a halfway measure.'
Mansoor said that the municipality's joint investment committee, of which he is the vice-chairman, has decided to scrap the old rates because they were inapplicable.
'There are no new rates and the municipality is just going to introduce a 10 per cent increase on the contracts as stated, considering that no increase has been implemented for years, despite it being on an annual basis,' he said.
'Three real estate companies will be hired to give us three different studies on how to approach the municipality's properties, besides providing direction on the best utilisation of assets and future plans.
'Just to make one thing clear, the municipality doesn't have any empty real estate or properties, as all are occupied by investment projects - we are just looking for fair deals.'
Mansoor said the municipality had already helped 12 outlets near the Manama Central Market by blocking a proposed increase in their monthly total from BD34,085 to BD60,681.
'The same applies to the Marina Mall, which was supposed to see its monthly rent increased from BD35,700 to BD80,000, but a deal for BD40,000 will soon be signed,' he said.
'Raises for shops in the Lulu Shopping Complex, which should have brought a revenue of BD60,681 rather than the current BD34,085, have been also suspended.' – TradeArabia News Service