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Bahrain office market ‘continues to see weak demand’

MANAMA, April 23, 2019

Bahrain’s commercial office market continues to be dominated by weak occupier demand coupled with oversupply, a legacy of the 2001 to 2007 construction boom, said global property consultancy Knight Frank in a new report.

This supply-demand imbalance has endured since 2010 when the full effects of the global economic downturn hit Bahrain, it added in the report titled “Bahrain Market Review 2019”.

Over recent years Manama’s office market has become favoured towards tenants. As a result of the more tepid economic backdrop we have seen subdued demand, with rents across all market segments seeing significant declines. In 2018 rents remain relatively stable, the report said.

Bahrain’s hospitality sector has traditionally attracted regional GCC visitation, particularly from Saudi Arabia via the King Fahd Causeway. As a result of Bahrain’s overnight stay sources, its hospitality market has historically had challenges in relation to driving occupancy rates.

“Looking ahead we may begin to see international visitation from outside the region increase as the country’s national airline expands its network alongside Bahrain International Airport’s expansion,” the report said.

On the back of reforms, easing of regulations, continued investment in large scale projects and higher oil prices, GDP growth is expected strengthen to 2.8 per cent and employment is expected to expand by 2.5 per cent in 2019, Knight Frank noted in the report.

Taimur Khan, research manager commented: “Demand for commercial office space continues to be limited and largely centred on small, fitted out units as tenants look to avoid cap expenditure. This trend has been prevalent for the past seven years and looks set to remain in the short to medium term.”

“Vacancy rates across the market continue to hover around the 40% mark with best in class schemes commanding better occupancy levels. Conversely, older buildings with inefficient floorplates and poor parking arrangements look set to suffer from lower occupancy levels and higher falls in rental rate.

“As a result of these market conditions and the lower cost of doing business in Bahrain when compared to other regional financial centres, the Kingdom is well placed to take advantage of new entrants to the market that are seeking access to the GCC,” Khan added. – TradeArabia News Service


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