Manama – With Bahrain experiencing its fastest GDP growth rate in over a decade, real estate transaction volumes have improved in Q3 reaching a total of 5,482. This was underpinned by 2,431 recorded transactions in August, making it Bahrain’s second most successful month since 2018.
Looking at Bahrain’s office sector, the flight to quality has continued, with the Kingdom’s landmark and newer office buildings recording the highest occupancy rates of those tracked by CBRE in Q3 2022. Leading Grade A buildings are providing competitive rates and flexible solutions to attract tenants. In addition, we have witnessed occupier space requirements decreasing by an average of 11% in 2022 compared to 2019. Nevertheless, we have observed a rebound in occupier demand, with a 27% increase in the number of enquiries in Q3 2022 compared to Q3 2021.
In the residential sector, both quoted average apartment sales and rental rates witnessed only marginal changes from Q2 to Q3 2022, with sales rates increasing by 1.3% and rental rates falling by -1.6%. The biggest variation, at -5.9%, was seen in apartment rents in the Capital Governorate, with growing supply likely placing downward pressure on rental rates. In terms of villas, Q3 saw a slight decrease in average quoted sales rates at -0.3%. Conversely, quoted rental rates increased by 4.1%. This can mostly be attributed to increases in the Muharraq and Capital Governorates, with rates regulating after witnessing a slump in Q2.
Preferences on residence location have seen a shift over the past year. Heather Longden, Director - Advisory & Transactions, at CBRE in Bahrain comments: “A CBRE poll on consumer preferences found that 60% of people in Bahrain now prefer to live near work, compared to 40% preferring to live near leisure destinations. This contrasts with last year’s overwhelming majority of 80% of people preferring to live near lifestyle-related facilities. This shift appears to corresponds with organisational directives pushing for employees to return to the office, rather than working from home, as well as the traffic issues experienced across the country during rush hours.’’
Within the hospitality sector, data found that international arrivals, inbound tourism flows, and total overnight stays all sit higher than the same period in 2019, with inbound tourism receipts totalling 46% more than pre-pandemic figures. The pandemic also led to an increase in residents considering staycations. Our Bahrain poll found that 71% of respondents prefer affordable hotels when planning a staycation. In terms of Hospitality KPIs, STR data for the end of Q3 shows that hotel occupancy in Manama is up six percentage points compared to year end 2021, and three percentage points compared to Q2. Similarly, compared to 2021, RevPAR has increased by 37.1% and ADR by 22.0%, with the latter reaching the highest rate since 2016.
In the retail sector, we have observed a relatively even split between demand for larger destination malls offering more retail variety, and smaller community and neighbourhood retail that require shorter travel time. When considering convenience, however, we have also found that the majority of consumers in Bahrain prefer drive-thru over dine-in F&B options, at 60% and 40% respectively. This is demonstrated by the growing number of drive-thru units being constructed by investors and developers, and the continued expansion of fast food and coffee shop operators. In terms of footfall, data shows that retail and recreation visitation in September 2022 increased by 1.3% compared to its pre-Covid baseline. However, visitation for the whole of Q3 was -0.6% below the baseline, which can likely be attributed to a large portion of the Bahrain population travelling during the summer months.
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world’s largest commercial real estate services and investment firm (based on 2021 revenue). The company has more than 105,000 employees (excluding Turner & Townsend employees) serving clients in more than 100 countries. CBRE serves a diverse range of clients with an integrated suite of services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.