Edited by George Haddad
In Bahrain, Office space is split into 3 categories: Class A, B & C. In Bahrain, as the market is undergoing a period of transition, it is difficult to define what constitutes Class A space and which areas should be considered ‘premium’ locations.
- Problem is main office space - Central Business District (CBD) is located in Diplomatic Area, but this is so unpopular with tenants that Class A space in this area is achieving lower rental rates than in buildings of a lower standard in Seef District.
- Some buildings in Seef are not even office buildings. Including residential apartment developments converted post completion and offering poorly organized spaces with wholly inadequate formal parking arrangements.
- Seef District is marginally qualified as a ‘business district’ – entire area was reclaimed from the sea less than 20 years ago and until recently considered a reasonably sustainable mixed-use environment.
Change of Use
- Increasing rents has caused a shift in uses and almost half of all quality apartment properties are now being leased for office use.
- This causes problems related to parking and access – and no effective long-term planning is likely to exacerbate problem.
Sustainable Development
- Government is considering a Light Rapid Transit system (costing several billion Dinars) when the solution to traffic problems can be resolved through a rigorously enforced planning system.
- If the built use of properties in Diplomatic Area were to be enforced, a high degree of sustainability could be achieved at a stroke.
- Parking and circulation would be quickly ameliorated as residents could walk to work, peak traffic periods would flow and evening activity would return to restaurants and coffee shops.
- A premium is being paid for Class B office space in accessible locations that offer formal and informal parking opportunities.
- For example, Class B buildings in Seef are achieving rental rates similar to World Trade Center on the corniche.
Occupancy Rates by Quality Category
- Almost half of all Class A office space is contained within two projects: Bahrain Financial Harbour and World Trade Center.
- These two projects entered the market in 2007/2008 and have not yet been fully absorbed.
- The projects are located in areas not considered easily accessible nor do they have generous parking allocations.
- If these two ‘international Class A’ projects are taken out of the aggregation of space calculations, the market is currently 92% occupied in the ‘Bahrain Class A’ category.
- Given that in a normal and stable market the occupancy rate should be somewhere between 85%-90%, Bahrain Class A market is effectively undersupplied at present while the International Class A market is oversupplied.
- However, there is likely to be significant growth in supply of quality space until end 2011 and during this period little likelihood of a significant increase in demand.
- Market may be facing period of consolidation and it would seem that those properties offering good parking ratios in easily accessible locations will fare best.
Management & Locational Variations
- Given the small size of the market and the varied quality of office buildings in Bahrain, rental rates are typically building-specific within the context of their location and subject to variations arising from the competence of the building management, parking, access, age, maintenance record and so on.
- In Dubai competent and professional building management is almost a given, but in Bahrain this is not yet the case.
- In terms of local ‘prime office’ space, broadly speaking the supply of office space in Seef District is the newest and this is reflected in the top end rental rates which are currently around BD11/m²/pm, compared to BD8/m²/pm in Diplomatic Area and BD8/m²/pm on Government Avenue.
Global Arab Network
This article is an extract from report (Property Insight from Bahrain ---Q2 2009 Office MarketView---) With Mike Williams, Senior Director – Research & Consultancy, CB Richard Ellis Middle East
In Bahrain, Office space is split into 3 categories: Class A, B & C. In Bahrain, as the market is undergoing a period of transition, it is difficult to define what constitutes Class A space and which areas should be considered ‘premium’ locations.
- Problem is main office space - Central Business District (CBD) is located in Diplomatic Area, but this is so unpopular with tenants that Class A space in this area is achieving lower rental rates than in buildings of a lower standard in Seef District.
- Some buildings in Seef are not even office buildings. Including residential apartment developments converted post completion and offering poorly organized spaces with wholly inadequate formal parking arrangements.
- Seef District is marginally qualified as a ‘business district’ – entire area was reclaimed from the sea less than 20 years ago and until recently considered a reasonably sustainable mixed-use environment.
Change of Use
- Increasing rents has caused a shift in uses and almost half of all quality apartment properties are now being leased for office use.
- This causes problems related to parking and access – and no effective long-term planning is likely to exacerbate problem.
Sustainable Development
- Government is considering a Light Rapid Transit system (costing several billion Dinars) when the solution to traffic problems can be resolved through a rigorously enforced planning system.
- If the built use of properties in Diplomatic Area were to be enforced, a high degree of sustainability could be achieved at a stroke.
- Parking and circulation would be quickly ameliorated as residents could walk to work, peak traffic periods would flow and evening activity would return to restaurants and coffee shops.
- A premium is being paid for Class B office space in accessible locations that offer formal and informal parking opportunities.
- For example, Class B buildings in Seef are achieving rental rates similar to World Trade Center on the corniche.
Occupancy Rates by Quality Category
- Almost half of all Class A office space is contained within two projects: Bahrain Financial Harbour and World Trade Center.
- These two projects entered the market in 2007/2008 and have not yet been fully absorbed.
- The projects are located in areas not considered easily accessible nor do they have generous parking allocations.
- If these two ‘international Class A’ projects are taken out of the aggregation of space calculations, the market is currently 92% occupied in the ‘Bahrain Class A’ category.
- Given that in a normal and stable market the occupancy rate should be somewhere between 85%-90%, Bahrain Class A market is effectively undersupplied at present while the International Class A market is oversupplied.
- However, there is likely to be significant growth in supply of quality space until end 2011 and during this period little likelihood of a significant increase in demand.
- Market may be facing period of consolidation and it would seem that those properties offering good parking ratios in easily accessible locations will fare best.
Management & Locational Variations
- Given the small size of the market and the varied quality of office buildings in Bahrain, rental rates are typically building-specific within the context of their location and subject to variations arising from the competence of the building management, parking, access, age, maintenance record and so on.
- In Dubai competent and professional building management is almost a given, but in Bahrain this is not yet the case.
- In terms of local ‘prime office’ space, broadly speaking the supply of office space in Seef District is the newest and this is reflected in the top end rental rates which are currently around BD11/m²/pm, compared to BD8/m²/pm in Diplomatic Area and BD8/m²/pm on Government Avenue.
Global Arab Network
This article is an extract from report (Property Insight from Bahrain ---Q2 2009 Office MarketView---) With Mike Williams, Senior Director – Research & Consultancy, CB Richard Ellis Middle East
