Key Insights On The Real Estate Sector Of Bahrain Bahrain's commercial real estate sector remains depressed. Rental rates fell sharply in 2009 and ' except in the retail sub-sector ' have continued to drop this year. Yields have moved in a somewhat erratic fashion, but are now (much) higher than they were in 2008. When we interviewed them in mid-2010, our in-country sources indicated that rents are likely to move sideways in 2011. There are several problems. Economic growth has slumped ' in the wake of the global financial crisis and the problems of Dubai World ' and is not likely to accelerate anytime soon. Another constraint to growth is the widespread perception that Bahrain has been overbuilt. The geography of Bahrain is such that commercial tenants have the opportunity to relocate to new premises between the three cities for which we have gathered data ' Manama, Muharraq and Riffa. The glut of commercial property hangs over the entire country, and is not confined to one place or sub-sector. Most fundamentally, the movement in yields over the last two years suggests that the attitude of investors has changed. Prior to 2007-2008, there were some protagonists, at least, who expected that commercial real estate in Bahrain could deliver meaningful capital gains. Now, Bahrain commercial real estate is priced by market protagonists as if it were a high risk asset class from which most of the returns will come as income. There is no reason why this should change anytime soon. We expect that yields will remain elevated, but will slip gradually over the next four years. Key Features Of This Report This is the latest edition of a new series of industry reports published by BMI that seeks to identify the key dynamics of the real estate sectors of 44 countries around the world, some of which are developed and some of which are, in every sense, emerging markets. The questions that we seek to answer for each country remain as follows: what are the main issues that will matter to actors in and around real estate development in the country concerned, both over the long and the short term' What are the main constraints that they face' What are the key insights that one garners when one compares the real estate sector of the country concerned with its peers in other countries' In Q3 we introduced a very substantial new improvement to the reports. We incorporated data and qualitative observations provided to us by commercial real estate agents operating in the countries we survey. As a result we gained a much clearer picture of the balance between demand and supply in each of three main sub-sectors ' office, retail and industrial. We also introduced a new approach to the forecasting of rental yields, which is discussed in the methodology sector of this report. In Q4, we have incorporated a lot of new data in relation to rents and yields in 2010. We gained this data by way of a new round of interviews with our in-country sources in mid-2010. In some cases, the latest information from our sources has caused us to make significant revisions to our forecasts for 2011-2014. We asked our sources to indicate what growth in rents is likely for 2011. We explain their answers in the Industry Forecast Scenario.

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Bahrain Real Estate Report Q4 2010
Published on October 2010
Report Summary
Key Insights On The Real Estate Sector Of Bahrain
Bahrain's commercial real estate sector remains depressed. Rental rates fell sharply in 2009 and ' except in the retail sub-sector '
have continued to drop this year. Yields have moved in a somewhat erratic fashion, but are now (much) higher than they were in
2008. When we interviewed them in mid-2010, our in-country sources indicated that rents are likely to move sideways in 2011.
There are several problems. Economic growth has slumped ' in the wake of the global financial crisis and the problems of Dubai
World ' and is not likely to accelerate anytime soon. Another constraint to growth is the widespread perception that Bahrain has been
overbuilt. The geography of Bahrain is such that commercial tenants have the opportunity to relocate to new premises between the
three cities for which we have gathered data ' Manama, Muharraq and Riffa. The glut of commercial property hangs over the entire
country, and is not confined to one place or sub-sector.
Most fundamentally, the movement in yields over the last two years suggests that the attitude of investors has changed. Prior to
2007-2008, there were some protagonists, at least, who expected that commercial real estate in Bahrain could deliver meaningful
capital gains. Now, Bahrain commercial real estate is priced by market protagonists as if it were a high risk asset class from which
most of the returns will come as income.
There is no reason why this should change anytime soon. We expect that yields will remain elevated, but will slip gradually over the
next four years.
Key Features Of This Report
This is the latest edition of a new series of industry reports published by BMI that seeks to identify the key dynamics of the real estate
sectors of 44 countries around the world, some of which are developed and some of which are, in every sense, emerging markets.
The questions that we seek to answer for each country remain as follows: what are the main issues that will matter to actors in and
around real estate development in the country concerned, both over the long and the short term' What are the main constraints that
they face' What are the key insights that one garners when one compares the real estate sector of the country concerned with its
peers in other countries'
In Q3 we introduced a very substantial new improvement to the reports. We incorporated data and qualitative observations provided
to us by commercial real estate agents operating in the countries we survey. As a result we gained a much clearer picture of the
balance between demand and supply in each of three main sub-sectors ' office, retail and industrial. We also introduced a new
approach to the forecasting of rental yields, which is discussed in the methodology sector of this report.
In Q4, we have incorporated a lot of new data in relation to rents and yields in 2010. We gained this data by way of a new round of
interviews with our in-country sources in mid-2010. In some cases, the latest information from our sources has caused us to make
significant revisions to our forecasts for 2011-2014. We asked our sources to indicate what growth in rents is likely for 2011. We
explain their answers in the Industry Forecast Scenario.
Table of Content
Executive Summary . 5
SWOT Analysis 7
Bahrain Real Estate And Construction Industry SWOT . 7
Bahrain Political SWOT 8
Bahrain Economic SWOT . 9
Bahrain Real Estate Report Q4 2010 Page 1/4

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Bahrain Business Environment SWOT . 10
Regional Real Estate Overview 11
Table: Middle East And Africa's Office Markets At A Glance ' Rents, 2009-2011 (US$ per square metre per month) .. 11
Table: Middle East And Africa's Retail Markets At A Glance ' Rents, 2009-2011 (US$ per square metre per month) 12
Table: Middle East And Africa's Industrial Markets At A Glance ' Rents, 2009-2011 (US$ per square metre per month) .. 14
Real Estate Market Overview 16
Table: Bahrain's Real Estate Market ' Rentals, 2008 And 2009 (m²/month, US$) . 17
Table: Bahrain's Real Estate Market ' Net Yield, 2008 And 2009 (%) 17
Table: Bahrain's Real Estate Market ' Terms Of Contract/Lease .. 18
Table: Bahrain's Real Estate Markets ' Available Space (m²) and Vacant Space (%) . 18
Forecast Scenarios 19
Real Estate Outlook .. 19
Table: Bahrain Real Estate Markets ' Rentals in m²/month (BHD) 21
Table: Bahrain's Real Estate Market ' Net Yield, 2008-14 (%) .. 22
Construction And Infrastructure Outlook .. 22
Table: Bahrain's Construction And Industry Data And Forecasts, 2008-2014. 23
Macroeconomic Outlook . 24
Table: Bahrain - Economic Activity .. 26
Business Environment 27
Real Estate/Construction Business Environment Rating . 27
Table: Middle East And Africa Business Environment Ratings 27
Bahrain's RECBER 28
Middle East Project Finance Ratings .. 29
Table: Design And Construction Rating . 30
Table: Commissioning And Operating Rating . 32
Table: Overall Project Finance Rating 34
Bahrain's Business Environment 35
Table: BMI Business And Operational Risk Ratings . 37
Table: BMI Legal Framework Ratings 38
Table: Foreign Direct Investment Inflows Into The Middle East And Africa, 2006-2008 43
Table: BMI Trade Ratings . 45
Table: Bahrain's Top Export Destinations, 2001-2008 (US$mn) 46
Company Monitor 48
Abdulla Ahmed Nass Group .. 48
Ahmed Mansoor Al-A'ali (AMA) 50
Seef Properties BSC .. 52
Tas'heelat Real Estate . 53
BMI Methodology 54
How We Generate Our Industry Forecasts 54
Construction Industry .. 55
Bank Lending 56
Real Estate/Construction Business Environment Rating . 56
Table: Weighting Of Indicators .. 57
Project Finance Ratings Indicators .. 59
Table: Design And Construction Phase .. 59
Table: Commissioning And Operating Phase ' Commercial Construction 60
Table: Commissioning And Operating Phase ' Energy And Utilities 61
Table: Commissioning And Operating Phase ' Transport . 63
Sources 64
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