BMI View : The country's economic dependence on the hydrocarbon sector has created challenges for Bahrain's commercial real estate sector, considering the precipitous drop in commodity prices. However, we expect rental rates to remain fairly stable for 2016 across each of the sub-sectors we cover, as demand for retail and office space rises.
Bahrain is a small island nation with a population of just over 1mn. The Gulf state is regarded as one of the most prosperous Middle Eastern countries, with an increasingly affluent population, a successful financial sector and improved economic diversity as a result of governmental structural reforms. However, the hydrocarbons industry remains important to the economy, with most of that sector in Bahrain now involved in refining and other areas, as Bahrain now produces only about 48,000 barrels per day. Bahrain thus faces the challenge of how to maintain growth in the face of lower oil prices, and real GDP growth fell from 4.5% in 2014 to 2.9% in 2015 as a result of falling oil prices.
Although we believe that the country will further diversify economically, potentially creating more demand for logistics and distribution centres, in the short term the trend among tenants and potential investors is to mitigate risk by downsizing current developments or acquiring smaller units.
Demand is growing for small-scale space in the Muharraq and Riffa office markets; conversely Manama is seeing a number of new high quality projects. However, growing vacancy rates plague the market, leading to landlords offering improved terms in order to keep tenants. In conjunction with the large available supply, we forecast little growth in office rental rates in 2016.
The outlook for the retail sub-sector is broadly positive, on the back of the population's growing affluence, with rising wages and higher spending forecast, and the growing tourism revenues. However, oil price volatility and a rise in inflation could dampen consumer confidence.
Reforms aimed at diversifying the economy away from oil are likely to benefit the industrial real estate sector, with infrastructure improvements paving the way for future developments in strategic locations. The broader longer-term outlook is therefore much more positive than for the other two sub-sectors.
The investment market in Bahrain is dominated by local and regional players. The lacklustre performance of the real estate sector in general over the past few years has kept yields stable. BMI forecasts show little change in the net yield profile through to 2019, and the rise in interest rates should narrow the yield gap.
The Bahrain Real Estate Report features BMI Research's market assessment and independent forecasts of major construction projects in the residential and commercial markets, plus rental prices and yields in major cities. The report critically analyses the prospects for real estate within the broader economic and financial context - both domestic and global - via our econometrically-modelled and clearly explained banking and economic forecasts and follows this through to evaluate the implications for REITs.
BMI's Bahrain Real Estate Report provides industry professionals and strategists, sector analysts, business investors, trade associations and regulatory bodies with independent forecasts and competitive intelligence on the real estate industry in Bahrain.
- Benchmark BMI's independent real estate industry forecasts for Bahrain to test other views - a key input for successful budgeting and strategic business planning in the Bahraini real estate market.
- Target business opportunities and risks in Bahrain through our reviews of latest industry trends, regulatory changes and major deals, projects and investments.
- Assess the activities, strategy and market position of your competitors, partners and clients via our company profiles (inc. SWOTs, KPIs and latest activity).
BMI Industry View
Summary of BMI’s key industry forecasts, views and trend analysis covering real estate and construction, regulatory changes, major investments and projects and significant national and multinational company developments.
Industry SWOT Analysis
Analysis of the major Strengths, Weaknesses, Opportunities and Threats within the real estate sector and within the broader political, financial, economic and business environment.
Industry Forecasts Outlook
Historic data series (2010-2013) and forecasts to end-2019 for the domestic real estate industry and for the local and global finance industry.
- Real Estate: Office, retail and industrial real estate yields for all major cities (%); short term forecasts on minimum and maximum real estate rental prices by sub-sector (USD per square metre and local currency per square metre).
- Construction: Industry value (USDbn); contribution to GDP (%); employment (‘000); real growth (%).
- economy: Economic growth (%); nominal GDP (USDbn); unemployment (%); interest rates (%); exchange rate (against USD).
BMI’s Real Estate Risk Reward Index
BMI’s Risk Reward Indices provide investors (real estate vendors, construction companies and financial investors) looking for opportunities in the region with a clear country comparative assessment of a market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points to provide an indices of highest to lowest appeal to investors, with each position explained.
Overview of the real estate sector, including analysis of existing/planned real estate developments and emerging industry trends in the office, industrial and commercial sectors
Features detailed city-level data and analysis on rental prices, yields, contract terms and real estate availability with separate chapters covering the office, retail and industrial sub-sectors.
Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape to generate Company SWOT analyses. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.
*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.