The economic indicators look somewhat bleak for Bahrain, but the worst is likely to be over now, and 2010 will bring a revival of sorts. However, the economy will not be growing at the rate that it did in the boom times for some years. We have left our forecasts for real GDP growth unchanged, and continue to expect a small contraction (of 0.1%) in 2009, followed by a sluggish recovery to 1.3% in 2010. We do not see Bahrain returning to its previous rates of growth over the coming years. Its oil and gas sector will not see any major increases in output until 2014, and the liquidity, global risk appetite and investor sentiment that have driven growth over recent years will not be returning for some time. That said, the growth rates of 1-2% we are projecting for 2010-2013 are sustainable, and Bahrain may yet have pleasant surprises up its sleeves. A number of populist concerns will keep the government from pursuing a purely pro-investment agenda, but stability will remain in place, with very little to threaten the overall political structure. Being relatively democratic, and being the only Gulf Co-operation Council (GCC) government to charge a form of income tax, the Bahraini government will continue to be well viewed by populist voters. As such, we would expect the government to continue to pander to the demands of opposition MPs, particularly in moments of economic weakness. It will also prioritise social stability in its policymaking, with employment, housing and benefits like education and healthcare key priorities. Although the higher echelons of Bahraini policymakers seem keen to diversify the economy, and recognise the importance of foreign investment and private sector development, market reforms will remain a low priority. Q309 results show that the pain in Bahrain's banking sector (which along with the investment company sector accounts for 75% of market capitalisation on the Bahrain Stock Exchange) is still very much ongoing. However, we note that some of the rebalancing that needs to happen is underway, which is an encouraging sign for 2010. Government support for the real estate development is high in Bahrain ' there is a real effort under way to reduce the state's dependence on oil. The Ministry of Works sees the need for infrastructure to keep pace with the property development, and has drawn up a long-term plan with a completion date in 2021. There is also hope that this support will encourage investment in the industry. However, some public infrastructure projects have been delayed ' and a few put on hold ' as the ministry looks for private investment to fund the work. The commercial market is still looking overpopulated and the transitioning environment means it is still hard to tell what counts as 'premium' space. The most popular area is in Seef (reclaimed from the sea less than 20 years ago) but some properties used commercially should not be popular ' including converted residential apartment developments with poorly organised spaces and inadequate parking. Increasing rents have caused changes in use, and close to half of all quality apartment properties are now leased for office use, causing access problems. Residential demand is expected to be more buoyant, with the government announcing plans for 43,000 new homes by 2014. According to CBRE, private sector developers claim 80,000 new housing units will be required by 2020. This assessment appears to be backed up by the low levels of project cancellation that there were during the current downturn. Consequently, we are cautiously optimistic that the residential market will remain flat in H110, with potential to pick up in H210.

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Bahrain Real Estate Report Q1 2010
Published on January 2010
Report Summary
The economic indicators look somewhat bleak for Bahrain, but the worst is likely to be over now, and 2010 will bring a revival of sorts.
However, the economy will not be growing at the rate that it did in the boom times for some years. We have left our forecasts for real
GDP growth unchanged, and continue to expect a small contraction (of 0.1%) in 2009, followed by a sluggish recovery to 1.3% in
2010. We do not see Bahrain returning to its previous rates of growth over the coming years. Its oil and gas sector will not see any
major increases in output until 2014, and the liquidity, global risk appetite and investor sentiment that have driven growth over recent
years will not be returning for some time. That said, the growth rates of 1-2% we are projecting for 2010-2013 are sustainable, and
Bahrain may yet have pleasant surprises up its sleeves.
A number of populist concerns will keep the government from pursuing a purely pro-investment agenda, but stability will remain in
place, with very little to threaten the overall political structure. Being relatively democratic, and being the only Gulf Co-operation
Council (GCC) government to charge a form of income tax, the Bahraini government will continue to be well viewed by populist
voters. As such, we would expect the government to continue to pander to the demands of opposition MPs, particularly in moments of
economic weakness. It will also prioritise social stability in its policymaking, with employment, housing and benefits like education and
healthcare key priorities. Although the higher echelons of Bahraini policymakers seem keen to diversify the economy, and recognise
the importance of foreign investment and private sector development, market reforms will remain a low priority. Q309 results show
that the pain in Bahrain's banking sector (which along with the investment company sector accounts for 75% of market capitalisation
on the Bahrain Stock Exchange) is still very much ongoing. However, we note that some of the rebalancing that needs to happen is
underway, which is an encouraging sign for 2010.
Government support for the real estate development is high in Bahrain ' there is a real effort under way to reduce the state's
dependence on oil. The Ministry of Works sees the need for infrastructure to keep pace with the property development, and has
drawn up a long-term plan with a completion date in 2021. There is also hope that this support will encourage investment in the
industry. However, some public infrastructure projects have been delayed ' and a few put on hold ' as the ministry looks for private
investment to fund the work.
The commercial market is still looking overpopulated and the transitioning environment means it is still hard to tell what counts as
'premium' space. The most popular area is in Seef (reclaimed from the sea less than 20 years ago) but some properties used
commercially should not be popular ' including converted residential apartment developments with poorly organised spaces and
inadequate parking. Increasing rents have caused changes in use, and close to half of all quality apartment properties are now leased
for office use, causing access problems.
Residential demand is expected to be more buoyant, with the government announcing plans for 43,000 new homes by 2014.
According to CBRE, private sector developers claim 80,000 new housing units will be required by 2020. This assessment appears to
be backed up by the low levels of project cancellation that there were during the current downturn.
Consequently, we are cautiously optimistic that the residential market will remain flat in H110, with potential to pick up in H210.
Table of Content
Executive Summary .....5
Key Features Of this Report 7
SWOT Analysis 8
Bahrain Real Estate Report Q1 2010 Page 1/5

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Bahrain Real Estate And Construction Industry SWOT ..... 8
Bahrain Economic SWOT .9
Bahrain Business Environment SWOT ... 9
Real Estate Market Overview ............10
Residential ....... 10
Office ....... 11
Key Projects ...12
Construction Overview ... 12
New And Ongoing Projects .......... 12
Table: Bahrain ' Major Infrastructure Projects . 13
Real Estate Investment Trusts ..........14
Table: FTSE EPRA/NAREIT Global Real Estate Indices Total Returns (%, US dollar terms) .... 14
Table: US REITs ' Total Returns (%, US dollar terms) ... 15
Industry Finance Outlook ..20
Global Outlook 20
Domestic Financing ........ 24
Table: Latest Key Indicators At November 2008 24
Monetary Policy Outlook 24
Industry Forecast Scenario 27
Table: Middle East And South Africa ' Housing Prices At A Glance (% Change y-o-y) ............. 27
Table: Office Rents In The Middle East And South Africa, CBRE ........... 28
Table: Office Rents In The Middle East And South Africa, Other Research ......... 28
Table: Current And Forecast Office Rents, 2008-2014 (US$ Per Square Metre Per Month) ...... 29
Construction .... 30
Table: Bahrain ' Construction Industry Data, 2006-2013 ...... 30
Macroeconomic Outlook . 32
Bahrain - Economic Activity ........ 34
Real Estate/Construction Business Environment Rating ..35
Table: Middle East And Africa Real Estate/Construction Business Environment Ratings ........... 35
Real Estate/Construction Business Environment Ratings 36
Bahrain's RECBER ......... 36
Middle East Project Finance Ratings .. 38
Table: Design And Construction Rating ............. 40
Table: Commissioning And Operating Rating .... 41
Table: Overall Project Finance Rating 42
Middle East And Africa Business Environment ... 43
Bahrain's Business Environment . 46
Introduction ..... 46
Table: BMI Business And Operational Risk Ratings ........ 47
Latest Developments ....... 47
Institutions ....... 49
Table: BMI Legal Framework Ratings 49
Infrastructure ... 51
Table: Labour Force Quality ....... 54
Market Orientation ......... 54
Table: Middle East And Africa Annual FDI Inflows ........ 56
Table: BMI Trade Ratings ........... 58
Table: Top Export Destinations ... 59
Operational Risk ............. 60
Company Monitor .......61
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Abdulla Ahmed Nass Group ......... 61
Ahmed Mansoor Al-A'ali (AMA) . 62
Tas'heelat Real Estate ..... 63
Seef Properties BSC ........ 64
BMI Forecast Modelling .....65
How We Generate Our Industry Forecasts ......... 65
Construction Industry ..... 66
Bank Lending ... 66
Real Estate/Construction Business Environment Rating .. 66
Table: Weighting Of Indicators ... 67
Project Finance Ratings Indicators ..... 70
Table: Design And Construction Phase .............. 70
Table: Commissioning And Operating Phase ' Commercial Construction .......... 71
Table: Commissioning And Operating Phase ' Energy And Utilities ...... 72
Table: Commissioning And Operating Phase ' Transport ....... 73
Sources .... 74
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