BMI View : Flow of investment into strategic infrastructure projects and a drive from the non-hydrocarbons sector has managed to keep growth buoyant in Bahrain, in the face of a challenging global economy. We believe this will support demand for commercial real estate over 2017, and maintain stable rental rates across the board.
Bahrain has been struggling in the low oil price environment and social unrest in recent years, leading to lower growth and a downgrade to 'junk' status from prominent credit agencies, which has seen foreign investors remain wary of the economic situation. As a result, real GDP growth is expected to contract by 0.1% to 2.8% over 2017, stemming from internal issues. Looking ahead, governmental reforms aimed at reducing debt, alongside greater spending into key infrastructure, should boost economic performance by 2018, with real growth forecasted to reach 3.1%.
Good performances in the non-hydrocarbon sectors have driven the economy in recent periods. The office sub-sector has benefitted as a result, with domestic companies actively seeking space in the market. Manama will continue to hold investor focus for 2017, with an appetite for Class A property within the key financial district, while Muharraq and Riffa will be supported by smaller enterprises, as rates here are more appealing for these tenants, compared to the higher rates found in the capital.
Demand has remained low for retail units through 2016, and the introduction of new developments is expected to promote a higher vacancy rate in the mid-term, causing rentals to come under downward pressure. Landlords are increasingly offer incentives to secure tenants, with economic issues weighing on demand. However, the recent OPEC agreement to curb oil production has seen hydrocarbon prices rise, which will bode well for the retail sector as the economy receives a boost and the local consumer gains confidence in the market. We therefore remain optimistic of the sub-sector, on the back of more positive market fundamentals, which should maintain stable rental trend across the board over 2017.
Global market volatility and low foreign investor confidence has led to lower demand for Bahrain goods, impacting industrial real estate demand. Yet, the recent spur in oil prices, and governmental plans to spend on infrastructure, should see demand levels rise again, with investors focusing on quality units in good locations. The broader industrial property market will continue to be undermined by low developer activity, although improvements in the external sector should help to keep rentals in check.
A rise in oil prices, and further growth in the non-hydrocarbon sectors, will support greater economic activity over 2017, and should see the commercial real estate sector benefit from stronger investor sentiment. Local and regional players will remain a key source of demand, as foreign companies remain cautious of the economic situation.
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.