New market study, "Bahrain Real Estate Report 2016", has been published

The country's economic dependence on the hydrocarbon sector has created challenges for Bahrain's commercial real estate sector, considering the precipitous drop in commodity prices. However, we expect rental rates to remain fairly stable for 2016 across each of the sub-sectors we cover, as demand for retail and office space rises.

Bahrain is a small island nation with a population of just over 1mn. The Gulf state is regarded as one of the most prosperous Middle Eastern countries, with an increasingly affluent population, a successful financial sector and improved economic diversity as a result of governmental structural reforms. However, the hydrocarbons industry remains important to the economy, with most of that sector in Bahrain now involved in refining and other areas, as Bahrain now produces only about 48,000 barrels per day. Bahrain thus faces the challenge of how to maintain growth in the face of lower oil prices, and real GDP growth fell from 4.5% in 2014 to 2.9% in 2015 as a result of falling oil prices.

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Although we believe that the country will further diversify economically, potentially creating more demand for logistics and distribution centres, in the short term the trend among tenants and potential investors is to mitigate risk by downsizing current developments or acquiring smaller units.

Demand is growing for small-scale space in the Muharraq and Riffa office markets; conversely Manama is seeing a number of new high quality projects. However, growing vacancy rates plague the market, leading to landlords offering improved terms in order to keep tenants. In conjunction with the large available supply, we forecast little growth in office rental rates in 2016.

The outlook for the retail sub-sector is broadly positive, on the back of the population's growing affluence, with rising wages and higher spending forecast, and the growing tourism revenues. However, oil price volatility and a rise in inflation could dampen consumer confidence.

The Bahrain Real Estate Report features BMI Research's market assessment and independent forecasts of major construction projects in the residential and commercial markets, plus rental prices and yields in major cities. The report critically analyses the prospects for real estate within the broader economic and financial context - both domestic and global - via our econometrically-modelled and clearly explained banking and economic forecasts and follows this through to evaluate the implications for REITs.

BMI's Bahrain Real Estate Report provides industry professionals and strategists, sector analysts, business investors, trade associations and regulatory bodies with independent forecasts and competitive intelligence on the real estate industry in Bahrain.

Key Benefits

* Benchmark BMI's independent real estate industry forecasts for Bahrain

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