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MANAMA: Flexible office spaces have emerged as a key growth driver for Bahrain’s commercial real estate market underpinned by the rapid expansion in the start-up scene, shows a new report.
Real estate services provider Savills’ Bahrain Office, Co-Working Market Spotlight released yesterday says start-up companies in Bahrain have grown 46 per cent over the past three years due to “an incredible support network and ecosystem”.
This includes the Bahrain Fintech Bay, set up in 2018 as the leading fintech hub in Mena, whose chief executive Khalid Saad told the GDN earlier this month that public-private initiatives including a fintech sandbox, a cloud-first policy, prospective national e-KYC utility and regulations on crowdfunding, open banking and cryptocurrency have all fuelled the growth of entrepreneurs.
There are currently 119 start-ups within the growing Bahrain ecosystem, as well as 34 accelerators, incubators, co-working spaces, and government entities to support.
In addition to this, the $100 million Al Waha fund of funds has been set up to invest in technology start-ups.
Flexible office spaces including co-working, though still at a nascent stage in the region, is now considered a disruptor of the office real estate landscape.
As companies try to reduce their operational expenses and offer a better and collaborative working environment, the potential of flexible office spaces as a differentiator is immense, the report says.
“The key drivers to flexible and co-working spaces are the growing young and educated population, the strong entrepreneurial culture, the progressive and supportive government policies, and the relative low cost of operations compared to traditional office spaces. It also led to improved employee satisfaction when compared to the conventional office worker,” said Savills Bahrain associate director and head of professional services Hashim Kadhem.
However, he warns of potential risks and challenges when it comes to leasing and operating flexible space if “a one-size-fits-all approach” is used.
“Depending on business requirements, security and privacy may take precedence in certain business sectors which may not find flexible spaces as the ideal office format.
“However, we believe that the traditional office format will continue to be challenged and will evolve to provide a holistic working environment. Developers and landlords that identify and adapt to this trend will be able to reap long-term dividends,” added Mr Kadhem.
According to Savills, the office market in Bahrain has remained largely subdued over the past few years, reflecting the impact of economic slowdown.
Rental decline was seen in key office markets such as Bahrain Financial Harbour and Seef where the average rents dropped by 8pc year-on-year (YoY).
A sustained supply addition and less active occupier demand resulted in a tenant’s market, found the report.
This has prompted some existing landlords and developers to offer generous incentives to retain and attract existing and new tenants respectively.
Consequently, companies are ramping up efforts to accommodate employee needs, including a more flexible and collaborative work environment.
“The commercial office market in Bahrain remains characterised by a supply-demand imbalance. It is however showing positive signs of recovery with the rental rates sustaining in some area and rate of decline YoY subsiding in others.
“The majority of enquiry levels and transactions were for small and medium sized office space. In fact, there’s limited demand for large office plates except in the case of large-scale companies establishing their base in Bahrain. Hence, it became imperative for developers and landlords to look at global trends and adapt their local service offering,” said Mr Kadhem.avinash@gdn.com.bh
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