Cluttons in Bahrain: office and industrial market showing moderate signs of recovery
- Bahrain: Tuesday, October 09 - 2012 at 11:26
- PRESS RELEASE
Cluttons, the real estate specialist which has enjoyed a dedicated Middle Eastern presence since 1976, announces its Q3 market report for Bahrain's office and industrial market 2012.
Cluttons has noted a significant increase in activity in the office sector during Q3 2012 due to a combination of competitive rates, generous rent-free periods and fit-outs paid for by the landlord providing enough incentive to convince tenants to start committing to long term leases again. Al Nakheel Tower in Seef has already reached 40% occupancy just three months after completion and Unisono Tower in Sanabis has reached 90% occupancy, with 30% of the building being let in the last three months.
However, the outlook is not entirely positive as supply of office stock continues to increase. The Diplomatic Area has seen a dramatic increase in the amount of available space over the last six months and this trend is set to continue. New demand in this area is very poor due to ongoing issues of parking and access. Bahrain Financial Harbour is also likely to see falling occupancy rates as a lot of the original five-year leases come to an end and many companies move to the Seef District. Many of the businesses currently located there signed their leases at the height of the market and now need to downgrade their premises.
Cluttons is seeing a trend in the marketplace for major banks and insurance companies leasing out surplus space within their buildings. This is, however, proving challenging as many of these offices are larger than average requirements and more expensive than those offered in new buildings.
The industrial sector is showing positive upward movement, with enquiry levels increasing and rents stabilising. While the market has experienced a long period where occupier and operator interest has been at historically low levels, a number of recent announcements from landlords and developers have given rise to some optimism for the future. Most notably, massive infrastructure investment in the Salman Industrial City at Hidd (comprising Sheikh Khalifa Bin Salman Port, Bahrain Investment Warf, Bahrain Logistics Zone and Bahrain International Investment Park) has resulted in this new area leading improvements.
Bahrain Investment Wharf (BIW) reported 100% occupancy in April 2012, with the last plots achieving BD11 per square metre, slightly down on the BD14 per square metre offered at launch. First Bahrain has started on site with the construction of Phase 2 of the Majaal scheme to provide a further 13,000 square metre of warehousing units available to lease: Phase 1 achieved full occupancy in late 2011, with final rental levels achieving BD3.5 to 4.5 per square metre per month. Bahrain International Investment Park (BIIP) occupies 2.5 million square metres of land and is also showing strong market demand; The Baytik Industrial Oasis located within the park is reporting an identified interest that would result in 60% occupancy at the current time. Earlier this year BFG took an 18,000 square metre standard warehousing unit within the Oasis.
Encouragingly, the recently released 2012/2013 Global Free Zones of the Future report by Foreign Direct Investment Magazine ranked Bahrain International Investment Park 15th, Khalifa Bin Salman Port 16th, Bahrain International Airport 19th, and Bahrain Logistics Zone 30th of the 15 free zones and special economic zones assessed worldwide.
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