Boston, MA -- (ReleaseWire) -- 06/02/2014 -- The Bahraini economy is expanding and the real estate sector is projected to remain stagnant. Instability affects the country and continues to scare off investors and tourists as a result we forecast rents to slightly increase and net yields to remain stable across all sectors.
The commercial real estate market is continuously been affected by the global financial crisis and political protests, a construction boom financed by the government. This translates into stagnant rents an endemic oversupply of rental space. Among the Gulf Cooperation Council (GCC), Bahrain has been one of the slowest to recover from the crisis an protests and the protests stemming from the Arab springs contribute to the fact that economic growth is likely to be slow.
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Bahrain GDP growth is still extremely dependant to the movement of the oil price as it contributes to 80% of Bahrain's export income. Consequently it is raises difficulty about being optimistic about the short-term prospects for Bahrain's commercial real estate market. The longer-term outcome will depend on Bahrain economic achievement outside the export-oriented oil sector.
Looking at different sectors, BMI finds similar stagnation in both rents and net yields across office, retail and industrial sectors. Though businesses continue to expand and seeking newer and largest units in Bahrain, the political uncertainty is slowing these transactions to a crawl. Moreover, vacancy rates and low rates persist, as there is a lack of new corporations wishing to enter the Kingdom. This negative dynamic may persist until Bahrain is considered stable enough by companies for them to settle in Bahrain.
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