BAHRAIN البحرين RENTAL قطاع اإليجارات
Bahrain Rental قطاع االيجارات Market Review السكنية فى البحرين Q3 2009 الربع 3 2009
REAL ESTATE MARKET REPORTS تـقـاريـر �سوق الـعـقـارات ISSUE 9 اال�صدار 9 www.realcapita.com www.realcapita.com RENTAL BAHRAIN Previous Issues Liases Foras RealCAPITA Profiles Annex 3: DataSourcesandtheStructureofDatabase Annex 2: RentalEstablishmentsGrading Methodology Annex 1: Definitionsofthe Term UsedintheReport Annexes The UnorganisedSegment Threatens toUndermine The OrganisedSegmentSignificantly Rental Market Outlook Villa RentalsMayCorrectSignificantlyduetoNewSupplyinthePipeline Villas in “SS 2” & “SS 3” Are MostlySemi-Furnished Villa Rentalsin “SS 2” areStable “SS 2” alsoRunsonStaple Variety Products Occupancy RatioDeclinesin “SS 2” butRemains Above 90% Rentals Market DynamicsinOrganised Villas “SS 2” Muharraq (excluding Amwaj) – The HardestHitRentalMarket Southern Manama: Divergent Trends inDifferentMarket Segments Seef District: BigDropinOccupancy, ConcealedCorrectionin Average MonthlyRent Juffair: Considerable DropinOccupancy, MoretoComeintheFuture Central Manama: Occupancyand Average MonthlyRentDeclined Area Wise Analysis Demand Favours SmallerProducts Higher Grade PropertiesUndergo HigherDegreesofCorrection The MixofPropertyGrades Remainedthein “SS 1” Improved Performance OnlyintheShortStayCategory High PremiumforServicesFuellingMoreInterestinServiced Apartments Occupancy RatioDropsBelow90%in “SS 1” Moderate CorrectionBeginsinBahrain RentalMarket Rental Market Summary Rental Market Summary
CONTENTS
47 42 35 33 15 46 43 40 38 36 34 33 33 31 30 29 29 27 24 21 19 16 11 10 3 8 7 6 5 4 3 Rental Market Review Rental Market Review
RENTAL MARKET SUMMARY
1. A moderate correction has begun in Bahrain’s Rental 9. The Occupancy Ratio at Juffair fell from 92.3% in to The Occupancy Adj. Market. Occupancy is slipping and Monthly Rentals are 88.8% in Q3 2009. The Average Monthly Rent dropped Average Monthly getting squeezed. by around 1.3%; the combined effect of these two factors is a 5% correction in the Occupancy Adj. Average Rent declined by 3%. 2. While existing properties have been able to retain Monthly Rent. It is noteworthy that Juffair is the biggest customers, newly operated properties are facing very rental cluster in the country. challenging times as the incremental demand in the market is very low. 10. In addition to the wide coverage of organised Furnished apartments “SS 1”, we have carried out a sample-based 3. The Occupancy Ratio for organised Furnished coverage of the organised villas “SS 2” sub segment apartments “SS 1” – the biggest sub segment in the ( villa compounds) in Northern Bahrain. This includes Rental Market - dropped to 88.6% in Q3 2009 which is locations such as Budaiya, Barbar, Saar, Janabiya, Al a 2.3 percentage points drop compared to Q1 2009. Jasra and Hamala.
4. In the last three months, the Average Monthly Rent 11. We tracked 95 Operational Properties in villa compounds dropped as well from BD 6.02 per sq.m. to BD 5.99 in Q3 2009 with 1,852 villas. We registered 157 vacant per sq.m. – a decline of a mere 0.5%. The effect of villas, which gives an Occupancy Ratio of 91.5%. “SS this slight drop is amplified by the decline in Occupancy 2” is thus performing beyond expectations. There Ratio and as a result, the Occupancy Adj. Average were concerns in the market that the crisis will result Monthly Rent declined by 3%. into high vacancy for villa compounds but it has held up remarkably well. The primary reason for this is the 5. The most worrying number, however, is a jump of 26% in relatively limited supply of villa compounds in Bahrain. the number of Rental Apartments Under Construction. While not many new rental projects have started over 12. Our data shows that in the last three months, the the last six months, the increase in the supply pipeline Average Monthly Rent of various products in “SS 2” is primarily on account of many freehold residential have remained stable. developments converting to the Rental Market. 13. Despite some positive indicators, we note that a sizeable 6. The big jump in the rental supply pipeline has come at a share of the freehold supply is entering the Rental time when even the Operational Properties are facing a Market. Many developers have converted freehold drop in Occupancy Ratio. This may foretell a prolonged projects in search of the regular flow of rental income. correction period for the Rental Market over the coming In essence, more rental supply is competing for the quarters. same customers.
7. Off late, the Short Stay category has generated increased 14. All this is happening at a time when the employment interest in the market with several new operators trying base has stopped growing in Bahrain. Official to enter this segment. The continued strength of tourist employment figures show that, after growing at a rapid inflow from Saudi Arabia was the key motivation amidst pace till Q1 2009, the private sector employment base the nervousness in the market that the Long Stay market has come to a standstill over the last two quarters. does not provide attractive growth opportunities. 15. This will lead to further drop in Occupancy Ratios 8. For the Short Stay category, while the Occupancy Ratio across all areas, particularly in the Long Stay category, dropped from 90.3% to 85.5% in the last three months, which may result into 10-15% correction in rentals. We the Average Monthly Rent jumped by a whopping 14%. maintain a negative outlook on Bahrain Rental Market. The Occupancy Ratio for this category is less reliable as it changes on a day to day basis. But the increase in rental rate, if sustained, is surely a positive factor.
3 Rental Market Review
The newly Moderate Correction Begins in why the scale of correction in the Rental Market has been opened properties Bahrain Rental Market moderate so far. are facing very As the Residential Market regains some stabilisation, As discussed in our previous survey of the Rental Market (Q1 challenging times moderate correction is visible in the Rental Market. 2009), we have divided this market into 3 sub segments: Occupancy is slipping and Monthly Rentals are getting Sub Segment 1 “SS 1”: organised Furnished depressed. While the existing rental properties have been apartments; able to retain customers, newly opened properties are facing very challenging times as the incremental demand in the Sub Segment 2 “SS 2”: organised villas (mostly villa market is very low. compounds);
On the positive side, the Short Stay category has shown Sub Segment 3 “SS 3”: unorganised apartments and sizeable growth in Average Monthly Rent. Also the villa villas. rental market, surprisingly though, has maintained very good health with Occupancy Ratio of more than 90%. Details of these sub segments are provided in “Annex 1 – Despite such positives, there remains little doubt that the Structure of Bahrain Rental Market”. This report focuses overall rental Market is undergoing correction. mainly on “SS 1” and “SS 2”.
The Rental Market is entering a correction phase while Occupancy Ratio Drops Below 90% other segments are experiencing early signs of stabilisation. in “SS 1” To this extent, the Rental Market is lagging behind other real estate segments. But this is not surprising as the Rental The Occupancy Ratio in “SS 1” dropped below 90% Market is mainly driven by employment growth with natural in Q3 2009. Chart 1 shows that of the total Operational population growth providing some additional support. The Apartments, 88.6% are the occupied while 11.4% are employment base in Bahrain has not shown any decline vacant. in the crisis although it has now stopped growing. That is
4 RENTAL MARKET
In Q3 2009 we tracked 11,040 Operational Apartments, Chart 1: Operational Apartments in “SS 1” – 26% increase in Split by Occupied and Vacant Apartments (Sep-09) which is marginally more than the corresponding number Apartments under for in Q1 2009. Of these apartments,1,264 were vacant Construction is a very resulting in an Occupancy Ratio of 88.6%. This represents a worrying number. drop of 2.3 percentage points during the last six months. 11.4% Occupied The Average Monthly Rent dropped from BD 6.02 per Apartments sq.m. to BD 5.99 per sq.m. – a decline of just 0.5%. But after factoring the drop in Occupancy Ratio, the plunge in 88.6% vacant Occupancy Adj. Average Monthly Rent is 3%. This is the true Apartments extent of correction in the Rental Market.
The most worrying number, however, is the sharp jump in the number of Rental Apartments Under Construction that increased from 2,621 in Q1 2009 to 3,310 in Q3 2009 – a Table 1 shows that we tracked 345 Operational Properties in jump of more than 26%. While not many new rental projects “SS 1” in Q3 2009. We actually tracked a handful more than have started over the last six months, the increase in the this number but some properties were temporarily withdrawn supply pipeline is primarily on account of many freehold from the market on account of either maintenance work or residential developments converting to the Rental Market. the lease term expiries for the company that is leasing the The big jump in rental supply has come at a time when even property. These properties were not considered for any of the Operational Properties are struggling to maintain their the calculations. Occupancy Ratio. This may foretell a prolonged correction period for the Rental Market over the coming years.
Table 1: Dynamics of Organised Furnished Apartment “SS 1” (Mar 2009) % Change Mar-09 Sep-09 (Mar-09 – Sep-09) Operational Properties 343 345 0.6% Operational Apartments 11,015 11,040 0.2% Vacant Apartments 1,012 1,264 24.9% Occupancy Ratio 90.8% 88.6% -2.3% * Average Monthly Rent (BD / sq.m.) 6.02 5.99 -0.5% Occupancy Adj. Average Monthly Rent (BD / sq.m.) 5.47 5.30 -3.0% Rental Apartments Under Construction 2,621 3,310 26.3% * Simple difference of percentage points between the two periods.
Despite these negatives, the Rental Market continues to Market where sales have simply disappeared. On balance, remain the only stable source of cash flow for real estate the Rental Market in Bahrain is running reasonably well developers. The drop in Occupancy Ratio is moderate and amidst the crisis. nowhere as serious as dire conditions in the Residential
5 Rental Market Review
High Premium for Services Fuelling More Interest in Serviced Apartments
The two distinct categories of supply in “SS 1” are Chart 2 shows that of the total Operational Apartments in Serviced Apartments and Un-serviced Apartments with Q3 2009, 82.5% are Serviced Apartments and 17.5% are the differentiating factor being the housekeeping services Un-serviced Apartments. The share of Serviced Apartments for the former. While both varieties offer cleaning services was 79% in Q1 2009. There has been a shift of almost 3.5 for the common areas, operators of Services Apartments percentage points towards the Serviced category in the last charge a premium for providing periodic and on-demand six months. In terms of units, this means that almost 375 housekeeping services. apartments have been added to the Serviced category, which is a significant shift.
Chart 2: Breakdown of “SS 1” Supply into Serviced & Un-serviced Apartments (Sep-09)
17.5% Un-serviced Apartments
82.5% Serviced Apartments
Table 2 and Table 3 shows the key performance indicators Apartments rose from 89.1% in Q1 2009 to 93.5% in Q3 of the Serviced and Un-serviced categories. The Occupancy 2009. Despite this increase in Occupancy Ratio, the Average Ratio in Serviced Apartments fell from 91.2% in Q1 2009 Monthly Rent dropped marginally by 0.8%. The combined to 87.5% in Q3 2009. This drop took place with 1.1% effect in this category was a 4% increase in Occupancy Adj. correction in Average Monthly Rent. The combined effect was Average Monthly Rent. This may indicate that while the a 5% drop in Occupancy Adj. Average Monthly Rent. supply is shifting to the Serviced category, the demand may be going the other way. On the contrary, the Occupancy Ratio for Un-serviced
Table 2: Key Performance Indicators of Serviced Apartments (2009) % Change Mar-09 Sep-09 (Mar-09 – Sep-09) Occupancy Ratio 91.2% 87.5% -3.7% *
Average Monthly Rent (BD / sq.m.) 6.26 6.19 -1.1%
Occupancy Adj. Average Monthly Rent (BD / sq.m.) 5.70 5.42 -5.0%
* Simple difference of percentage points between the two periods.
6 RENTAL MARKET
The common notion Table 3: Key Performance Indicators of Un-serviced Apartments (2009) that “rents are % Change going up and will Mar-09 Sep-09 (Mar-09 – Sep-09) keep going up” is Occupancy Ratio 89.1% 93.5% 4.4% * obviously false and Average Monthly Rent (BD / sq.m.) 5.23 5.19 -0.8% it has no supporting Occupancy Adj. Average Monthly Rent (BD / sq.m.) 4.66 4.85 4.0% market evidence.
* Simple difference of percentage points between the two periods.
The key reason for the supply shift away from the Un-serviced Improved Performance Only in the category is the 20% premium in Average Monthly Rent for Short Stay Category Serviced Apartments. We still believe that this premium is somewhat overstated as the Serviced category includes all We have renamed some of the terms that we used in our last the Ultra Luxurious Grade properties that are mostly the survey of the Rental Market (Q1 2009) to bring the terms high priced 5 Star branded properties. These properties are in line with the internationally accepted practises. “Long completely missing from the Un-serviced category, which is Term Basis” has been renamed as “Long Stay”, which is an why the Average Monthly Rent of this category is low. accepted term in hospitality for customers staying over 30 days. Similarly, “Daily Basis” has been changed to “Short But even when these properties are excluded from the Stay”, which is used for customers staying for less than 30 calculation, the premium remains at 14% - still a very high days. The term “Mixed Basis” has been removed and that premium for providing extra housekeeping services. The category is now referred to as “Any Stay Duration”. Detailed continued presence of this premium encouraged more Un- definitions of these terms are given in “Annex 2 – Definitions serviced Apartments to shift to the Serviced category. of the Terms Used in this Report”.
We continue to believe that a 14% premium is not justifiable The breakdown of the total rental supply into the three and it should fall over time. So far the premium has not categories in Q3 2009 remained similar to what it was in declined much but because of this the demand appears to Q1 2009. The share of Short Stay category dropped from be shifting to the Un-serviced category. This is good enough 16.4% in Q1 2009 to 15.2% in Q3 2009. The share of Any indication that the premium is unsustainable and will most Stay category increased from 16.7% to 17.9% during the likely contract over the coming quarters. same period.
Chart 3: Breakdown of “SS 1” Supply by Customer Stay Duration (Sep-09)
15.2% Only Short Stay Customers
17.9% Any Stay Duration
66.9% Only Long Stay Customers
7 Rental Market Review
Tables 4, 5 and 6 show the key performance indicators for This change indicates that the Long Stay market remains the three categories. The Long Stay category has improved good with stable Occupancy and rentals. Over the last two the Occupancy Ratio by 1.3 percentage points and the quarters, just one new property has been added to this Average Monthly Rent by 0.7%. Combined, the Occupancy category and therefore the supply remained almost constant. Adj. Average Monthly Rent improved by 2% between over This explains why the Occupancy did not decline while rentals the last 2 quarters. remained at the same level.
Table 4: Key Performance Indicators for the Long Stay Category (2009) % Change Mar-09 Sep-09 (Mar-09 – Sep-09) Occupancy Ratio 92.0% 93.2% 1.3% *
Average Monthly Rent (BD / sq.m.) 5.75 5.79 0.7%
Occupancy Adj. Average Monthly Rent (BD / sq.m.) 5.29 5.40 2.0%
* Simple difference of percentage points between the two periods.
Off late, the Short Stay category attracted significant attention in the market with several new operators trying to enter this segment. The continued strength of tourist inflow from Saudi Arabia was the key attraction amidst the nervousness in the market that the Long Stay market does not provide growth opportunities.
Several new properties were added to this category while several others were closed by the Ministry of Culture and Information for violating certain regulations. As a result, the total supply of apartments in this category actually fell by almost 150 apartments in the last 2 quarters.
While the Occupancy Ratio dropped from 90.3% in Q1 2009 to 85.5% in Q3 2009, Average Monthly Rent was increased by a whopping 14%. The combined effect of this is a big 8.4% improvement in Occupancy Adj. Average Monthly Rent. The Occupancy Ratio for this category is less reliable as it changes on a day to day basis. But increase in rentals, if sustained, will surely be a positive factor.
This shows that amidst the overall correction in the Rental Market, this category remains a pocket of growth.
8 RENTAL MARKET
Table 5: Key Performance Indicators for the Short Stay Category (2009) % Change The Any Stay Mar-09 Sep-09 (Mar-09 – Sep-09) Duration category Occupancy Ratio 90.3% 85.5% -4.6% * has suffered the Average Monthly Rent (BD / sq.m.) 5.45 6.22 14.1% biggest correction.
Occupancy Adj. Average Monthly Rent (BD / sq.m.) 4.92 5.33 8.4%
* Simple difference of percentage points between the two periods.
The Any Stay Duration category has suffered the biggest This category includes almost all the internationally and correction. The Occupancy Ratio dropped by 6.7 percentage locally branded Serviced Apartments in Bahrain that are points and the Average Monthly Rent declined by 10%. high grade properties. These have suffered because of their Combined, the Occupancy Adj. Average Monthly Rent premium pricing. dropped by almost 17%. This is the only category among the three that has suffered a correction in terms of the combined effect.
Table 6: Key Performance Indicators for the Any Stay Duration Category (2009) % Change Mar-09 Sep-09 (Mar-09 – Sep-09) Occupancy Ratio 86.5% 79.8% -6.7% *
Average Monthly Rent (BD / sq.m.) 8.79 7.91 -10.0%
Occupancy Adj. Average Monthly Rent (BD / sq.m.) 7.6 6.31 -16.9%
* Simple difference of percentage points between the two periods.
The Mix of Property Grades Remained the in “SS 1”
In order to understand how different grades of Furnished 1. Ultra Luxurious Grade Apartments are fairing in the market, we developed a 2. A+ Grade grading system that classifies properties based on the 3. A Grade quality of furnishings and facilities. This system uses point 4. Standard Grade to segregate various property features into “Basic” and 5. Below Par Grade “Additional” amenities. Detailed definitions of these grades are available in “Annex Our model segregates the entire “SS 1” supply into the 3 - Rental Properties Grading Methodology” following five categories:
9 Rental Market Review
Almost one third of Chart 4 shows the breakdown of “SS 1” supply into various Chart 4: Grade Wise Breakdown of “SS 1” Apartments supply is grades. The Ultra Luxurious Grade accounts for 10.7% Supply (Sep-09) followed by 15.2% for the A+ Grade and 27.8% for the A of Standard Grade. 10.5% Grade. The largest category remained the Standard Grade, Below par Grade which accounts for 35.9% and Below Par Grade accounts for 10.7% 10.5% only. The mix of property grades has remained about Ultra Luxurious Grade the same since Q1 2009. 15.2% A+ Grade
27.8% A Grade
35.9% Standard Grade
Higher Grade Properties Undergo The A+ Grade and A Grade categories suffered similar drops in Higher Degrees of Correction Occupancy Ratio but the Average Monthly Rent in A+ Grade dropped by more than 7%, which lead to 9% correction in its Table 7 shows the key performance indicators of properties Occupancy Adj. Average Monthly Rent. It clearly appears that of various grades. The Ultra Luxurious Grade is the only the higher grade properties have undergone higher degrees category where the Occupancy Ratio has remained stable and of price correction than the lower grade properties. Average Monthly Rent has gone up. But one must be careful in reading this number as these are all the 5 Star branded apartments where corporate discounts are vastly different from the quoted rates (rack rates). Corporate customers are offered discounts in the range of 15-25% depending upon the market conditions. To that extent, the numbers for Ultra Luxurious Grade are somewhat inflated.
For all other categories, the Occupancy Ratios have fallen with the Below Par Grade suffering the steepest drop in Occupancy Ratio from 94.9% in Q1 2009 to 89.5% in Q3 2009.
The higher than normal correction in the Below Par Grade may appear surprising at the first glance given its spectacular Occupancy till Q1 2009. But the reason becomes clear as soon as one realises that the Average Monthly Rent increased by almost 4.3%. This is the grade that is the most sensitive to any price rise and that is exactly why the Occupancy Ratio has dipped.
10 RENTAL MARKET
Table 7: Key Performance Indicators of Various Grades of “SS 1” Supply (2009) % Change The higher grade Mar-09 Sep-09 (Mar-09 – Sep-09) properties have Ultra Luxurious Grade undergone higher correction than Occupancy Ratio 87.8% 87.9% 0.1% * the lower grade Average Monthly Rent (BD / sq.m.) 12.60 12.89 2.3% properties. Occupancy Adj. Average Monthly Rent (BD / sq.m.) 11.06 11.34 2.5% A+ Grade Occupancy Ratio 92.4% 90.6% -1.8% *
Average Monthly Rent (BD / sq.m.) 7.53 6.99 -7.2%
Occupancy Adj. Average Monthly Rent (BD / sq.m.) 6.96 6.33 -9.0% A Grade Occupancy Ratio 90.6% 89.3% -1.3% *
Average Monthly Rent (BD / sq.m.) 6.27 6.11 -2.6%
Occupancy Adj. Average Monthly Rent (BD / sq.m.) 5.68 5.46 -3.9% Standard Grade Occupancy Ratio 89.9% 87.0% -2.9% *
Average Monthly Rent (BD / sq.m.) 5.58 5.56 -0.4%
Occupancy Adj. Average Monthly Rent (BD / sq.m.) 5.02 4.84 -3.6% Below Par Grade Occupancy Ratio 94.9% 89.5% -5.4% *
Average Monthly Rent (BD / sq.m.) 4.67 4.87 4.3%
Occupancy Adj. Average Monthly Rent (BD / sq.m.) 4.43 4.36 -1.7%
* Simple difference of percentage points between the two periods.
Demand Favours Smaller Products account for 97.6% of the total Operational Apartments in “SS 1”. This was the exact mix back in Q1 2009. Table 8 shows the product wise break down of “SS 1”. The three basic products of 1 Bed, 2 Bed and 3 Bed apartments
11 RENTAL MARKET
Demand has Table 8: Breakdown of “SS 1” Supply by Product Categories (Sep-09) increased for smaller Apartments. Product Category Number of Operational % Share Apartments Studio 135 1.2%
1 Bed 2,175 19.7%
2 Bed 6,619 60.0%
3 Bed 1,981 17.9%
4 Bed 51 0.5%
2 Bed Duplex 8 0.1%
3 Bed Duplex 50 0.5%
Penthouse 21 0.2%
Total 11,040 100.0%
* Simple difference of percentage points between the two periods.
The occupancy levels for various products are shown in Chart The ongoing crisis is forcing consumers to trade down to 5. The Occupancy Ratio of studio apartments has gone up smaller size apartments. This has increased the demand for considerably from 77% in Q1 2009 to almost 92% in Q3 smaller apartments while their supply has remained limited, 2009. However, this sharp jump is misleading. At the time particularly that of studio apartments. This has pushed the of our last survey of the Rental Market (Q1 2009), a new rentals for studio and 1 Bed apartments higher. development with a significant number of studio apartments was just opened. The Occupancy Ratio of studios in Q1 2009 was thus understated.
While the Occupancy Ratio for 1 Bed remained same, the Occupancy Ratios of both 2 Bed and 3 Bed apartments have fallen considerably over the last six months. This trend is well supported by the feedback from market participants that while demand for smaller apartments has gone up, the demand for bigger apartments has fallen. Chart 5: Occupancy Levels of Various Product Categories in “SS 1”(Sep-09)
The same trend is visible in the rentals also where the Daily Tariff and Monthly Rent of studio and 1 Bed apartments have increased while those of 3 Bed and above have decreased substantially. The rentals for 2 Bed apartments have remained stable.
12 Rental Market Review
In our last survey of the Residential Market (Q2 2009) we We caution that the Monthly Rent of a studio apartment Studio Apartments noted that studio apartments are becoming an attractive at BD 612 is overstated on account of 5 Star branded are becoming an product category for property investors on account of properties, but when all such properties are removed from attractive product significant rental demand. Studio apartment in certain areas the calculations, the Monthly Rent is still in excess of BD 400. category for property such as Exhibition Road and Juffair can offer net rental yield This shows that the net rental yield on a studio apartment in excess of 8% based on an estimated monthly rent of BD can be in double digit territory. investors. 200-250. Table 6 shows that the Monthly Rental for studio is far higher.
Chart 5: Occupancy Levels of Various Product Categories in “SS 1”(Sep-09)
91.9% 92.0% 90.2% 89.5% 89.0% 88.0% 87.5%
81.0%
Studio 1 Bed 2 Bed 3 Bed 4 Bed 2 Bed Duplex 3 Bed Duplex Penthouse
Table 9: Price Trends in Various Product Categories in “SS 1” (2009) Mar-09 Sep-09 %Change in % Change in Daily Monthly Daily Monthly Daily Tariff Monthly Rent Tariff Rent Tariff Rent Studio 44 556 51 612 15.9% 10.1%
1 Bed 39 563 41 581 5.1% 3.2%
2 Bed 51 696 53 701 3.9% 0.7%
3 Bed 138 1014 128 986 -7.2% -2.8%
4 Bed - 1290 - 1190 0.0% -7.8%
2 Bed Duplex - 1100 - 1000 0.0% -9.1%
3 Bed Duplex - 1400 120 1366 0.0% -2.4%
Penthouse 175 1622 212 1799 21.1% 10.9%
* Simple difference of percentage points between the two periods.
13 AREA-WISE ANALYSIS RENTAL MARKET
AREA-WISE ANALYSIS
area is an affluent area of Bahrain and is home to some of the highest profile real estate projects in the Kingdom.
Juffair’s micro market is defined as the area to the east of the Fateh Mosque. This is one of the biggest supply pockets for freehold and rental products which are of medium quality compared to Central Manama. All other areas of Manama like Adliya, Um Al Hassam, Hoora, Exhibition Road and Mahooz are defined as Southern Manama and discussed separately.
Muharraq, including Busaiteen, is discussed as an area named Muharraq (Excluding Amwaj). Amwaj Islands is not discussed in this report as we haven’t tracked any “SS 1” supply in Amwaj so far.
Seef District includes Sanabis as the two locations are separated by a highway running between them. Also, the rapid development of Seef has elevated the profile of Sanabis with it at the same pace.
So far, we have discussed the “SS 1” for Bahrain as a whole. The area of Budaiya is defined broadly to include Saar, The following sections focus on the dynamics of the main Budaiya, Al Jasrah, Janabiya and Buguwa. All these locations areas in the Kingdom. There are six areas with available are part of the Northern Governorate and possess more than supply of “SS 1”: 80% of the supply of villa compounds “SS 2” of Bahrain. Saar and Budaiya are high-end locations with several large 1. Central Manama villa compounds. These properties attract a large number of 2. Juffair senior expatriate professionals working in Bahrain and in 3. Seef District the Eastern Province of Saudi Arabia due to proximity to the 4. Southern Manama King Fahad Causeway. These individuals routinely commute 5. Muharraq (excluding Amwaj) to Saudi Arabia via the causeway, while preferring the more 6. Hidd liberal lifestyle that Bahrain offers.
The classification of these areas is based on carefully Hidd has new supply of “SS 1” that is currently under weighted characteristics. In fact, since our last survey of construction and thus it is not yet discussed in this section. the Rental Market (Q1 2009), we have made a couple of When this supply becomes operational, it will also be taken changes in our area definitions to address the market more into consideration. efficiently. These changes will not have a material impact on the historical numbers and inferences. Additionally, a later section in the report also discusses the available supply of “SS 2”. We have tracked “SS 2” supply Manama is broken down into three parts – Central Manama, in Budaiya, which is also defined in this section. We haven’t Juffair and Southern Manama. Central Manama is the tracked any rental supply in the other areas of Bahrain. northern most part of Manama before Exhibition Road. This
15 1. Central Manama Rental Market Review
Central Manama: Occupancy and Average Monthly Rent Declined
Central Manama includes the Diplomatic Area and extends to Bab-Al-Bahrain and the locations on both sides of the King Faisal Highway such as Al Burhama, Gufool and Alnaeem. Currently the area includes a significant share of the operational commercial office space in Bahrain and is the centre of all economic activities. Diplomatic Area is the most concentrated Central Business District (CBD) in the Kingdom. The other prominent business centres - Bahrain Financial Harbour and Bahrain World Trade Centre – also fall within Central Manama. The Diplomatic area also has the majority of the existing 5 Star hotels; notable exceptions include the Ritz Carlton, Banyan Tree, and the Movenpick.
Most of the operational rental supply at Central Manama is located in old areas such as Al Burhama, Al Naeem, Gufool, As per Table 7 the Occupancy Ratio improved from 72.7% etc. Some projects are located in Diplomatic Area as well. in Q1 2009 to 82.7% in Q3 2009. However, the Occupancy This is in contrast to the freehold residential supply, which Ratio in Q1 2009 was understated on account of two newly is coming up on reclaimed land along the northern coast of launched developments. Excluding these, the Occupancy Manama in projects such as Bahrain Bay, Reef Island and Ratio was 91%. So the Occupancy Ratio has actually declined Bahrain Financial Harbor. In the future, rental supply may from 91% to 82%. It is also the reason we see a 4.4% drop also come up in these projects. in Average Monthly Rent. Central Manama Traffic congestion in Central Manama, particularly on This is supported by anecdotal evidences, which suggest has been King Faisal Highway in front of Bahrain Financial Harbour, that the overall weakness in the market has affected Central is increasingly resulting in rising inconveniences to daily significantly Manama quite significantly. affected by overall commuters. However, major infrastructure developments and expansions of the existing road network have been market weakness. approved to help relieve the pressure in the long-run on the aging roads system.
We have tracked 15 operational and 9 under construction rental developments at Central Manama.
Table 7 shows the comparison of Rental Market dynamics at Central Manama. While the numbers show improved performance over the last six months, the reality is exactly opposite.
16 RENTAL MARKET
Table 10: Dynamics of “SS 1” Supply at Central Manama (2009) % Change Mar-09 Sep-09 (Mar-09 – Sep-09) Operational Apartments 565 565 0.0%
Occupancy Ratio 72.7% 82.7% 10.0% *
Average Monthly Rent (BD / sq.m.) 7.58 7.25 -4.4%
Occupancy Adj. Monthly Rent (BD / sq.m.) 5.51 6.00 8.7%
Rental Apartments Under Construction 363 363 0.0%
* Simple difference of percentage points between the two periods.
Central Manama caters primarily to the Long Stay customers. There is no change in the grade wise distribution of supply Chart 6 shows that about half the rental supply is for Long as no new development has been added to the market in the Stay customers and the other half is mostly for Any Stay last six months. Duration. There has been some shift from the Long Stay market to Short Stay market over the last six months but we Chart 6: Central Manama “SS 1” reckon that this may be a temporary trend. Supply – Split by Customer Stay Duration (Sep-09)
47.4% Any Stay Duration
49.7% Long Stay Customers
2.8% Short Stay Customers
Chart 7: Central Manama “SS 1” Supply – Split by Grade (Sep-09)
51.5% Standard Grade
4.2% Below Par Grade
21.4% Ultra luxurious Grade
14.2% A+ Grade
8.7% A Grade
17 RENTAL MARKET
The outlook for Central Manama is weak. The areas of Al The consumer fact sheet shown in Table 11 reveals that there Burhama, Gufool and Naeem have several projects under has beena decline in Daily Tariffs and Average Monthly Rent construction which may be ready for operations in the next across all product categories. A studio apartment can now be six months. These locations are not suitable for Short Stay rented for BD 450 per month, which is BD 50 less than what customers and the incremental demand in the Long Stay it was six months ago.. These rentals may fall further in the segment is weak. Therefore, the Occupancy Ratio may decline coming quarters. further when new supply is added to the market.
Table 11: Central Manama – Consumer Fact Sheet (Sep-09) Daily Tariff (BD) Monthly Rent (BD) Studio 30 450
1 Bed 77 770
2 Bed 96 784
3 Bed 188 1,569
4 Bed - -
2 Bed Duplex - -
3 Bed Duplex - -
Penthouse - 1,200
* Simple difference of percentage points between the two periods.
18 2. Juffair Rental Market Review
Juffair: Considerable Drop in Projects shifting Occupancy, More to Come in the from Residential to Future Rental Market in
Although from an administrative point of view, Juffair Juffair is causing falls within the Manama district, we have defined it as a major difficulties. separate area in this report. Juffair has distinctively different market dynamics compared to the rest of Manama. Juffair is the Eastern part of the capital and is mostly a residential area. It is located near the US Navy 5th Fleet‘s Base and is a preferred area of residence for most expatriates from the US and Europe.
Juffair, by far, is the largest cluster of rental supply in Bahrain when it comes to “SS 1”. We have tracked 167 operational and 25 under construction rental developments here.
Table 12 indicates the Occupancy Ratio at Juffair fell from 92.3% to 88.8% in the last 2 quarters. This is a drop of 3.5 percentage point, which is quite considerable. The Average 3 projects, but these have added close to 700 apartments. All Monthly Rent dropped by around 1.3%; the combined three projects have been shifted from the Residential Market effect of these two is a 5% correction in the Occupancy Adj. to the Rental Market. Average Monthly Rent. When these projects are completed, the number of The biggest cause of concern is the quantum jump in the Operational Apartments will increase by almost 35%. We number of Rental Apartments Under Construction. These suspect that this will be too much for the market to absorb were around 1,281 in Q1 2009 and now they stand at 1,953. and it will affect the Occupancy Ratios of many developments While in terms of number of projects, it is an addition of only in this area.
Table 12: Dynamics of “SS 1” Supply at Juffair (2009) % Change Mar-09 Sep-09 (Mar-09 – Sep-09) Operational Apartments 5,750 5,684 -1.1% Occupancy Ratio 92.3% 88.8% -3.5% * Average Monthly Rent (BD / sq.m.) 5.96 5.88 -1.3% Occupancy Adj. Monthly Rent (BD / sq.m.) 5.50 5.22 -5.0% Rental Apartments Under Construction 1,281 1,953 52.5%
* Simple difference of percentage points between the two periods.
19 RENTAL MARKET
Over the last 2 quarters, the share of the Long Stay category whether such a move materialises in a meaningful market has increased underscoring the point that Juffair remains a size or not. preferred area for long-term renters (Chart 8). Despite this, we have noticed several hospitality operators looking for Chart 9 shows that the grade wise distribution of supply suitable developments for Short Stay customers, primarily for remains more or less the same as it was six months ago. families coming from Saudi Arabia. But it is yet to be seen
Chart 8: Juffair “SS 1” Supply – Split by Customer Stay Chart 9: Juffair “SS 1” Supply – Split by Grade (Sep-09) Duration (Sep-09)
34.6% 1.1% Standard Grade Short Stay Customers 3.6% Below Par Grade 18.0% Any Stay 9.6% Duration Ultra Luxurious Grade
17.5% 80.9% A+ Grade Long Stay Customers 34.7% A Grade
The outlook for Juffair remains very weak due to the notable (“SS 3”). This new supply will also compete for the same set number of Rental Apartments Under Construction. Once these of customers, which will further push the Occupancy Ratio apartments are ready for operation, they will face serious down. We suspect that the Long Stay segment at Juffair may difficulties in finding rental customers. We have discussed not see much growth in rentals for many years. this issue with several hospitality operators in Juffair and all of them agreed with our assessment. They remained very The consumer fact sheet in Table 13 doesn’t show much reluctant to sign up with any new development for leasing to drop in either Daily Tariffs or Monthly Rents. But this is just a Long Stay customers. matter of time before the underlying weakness in the market starts becoming visible in the numbers as well. To make matters worse, a good chunk of freehold residential supply is entering the Rental Market at an unorganised level
Table 13: Juffair – Consumer Fact Sheet (Sep-09) Daily Tariff (BD) Monthly Rent (BD) Studio - 500 1 Bed 42 595 2 Bed 52 707 3 Bed 96 899 4 Bed - 1200 2 Bed Duplex - - 3 Bed Duplex 120 1367 Penthouse 175 1337
* Simple difference of percentage points between the two periods.
20 3. Seef District Rental Market Review
Seef District: Big Drop in Occupancy, Seef District is the Concealed Correction in Average most expensive rental Monthly Rent area in Bahrain with the Average Monthly The Seef District is adjacent to Central Manama and also Rent reaching as high includes Sanabis. It is an established retail destination with 5 operational malls and an international exhibition centre. as BD 9.68 per sq.m. These malls include the very popular Seef Mall and the recently opened City Centre Mall. Seef is emerging as the next business district after the Diplomatic Area with the current marketable supply of more than 40 small to medium sized office buildings. The area also has a well developed road infrastructure with less traffic congestion than Central Manama and ample but loosely organised parking spaces.
Although the office space supply at Seef has grown manifolds, the problem lies in the absorption of this space. Seef houses many companies operating within the financial and business services sectors. These sectors have been hit particularly When this new development is excluded from the calculations, hard by the financial crisis. Many companies are cutting their the Occupancy Ratio drops by 3 percentage point and the headcounts and there is hardly a chance that they would Average Monthly Rent declines by 4%. Combined, these require more commercial space over the next 1-2 years. two make the Occupancy Adj. Average Monthly Rent drop by 7%. Despite these issues, Seef District remains the most expensive rental area in Bahrain. Many working professionals prefer living close to their work address and are prepared to pay a premium for this. We have tracked 18 operational and 5 under construction rental developments at Seef.
Table 14 shows that the Operational Apartments at Seef District increased while the Rental Apartments Under Construction dropped. This is because one development became operational in the last six months.
The data shows that while the Occupancy Ratio dropped by 5.5 percentage points, Average Monthly Rent increased by 1.2%. The disconnect between the two variables is mainly due to the Seef District housing a small rental cluster. The mere introduction of one additional development changes the dynamics completely. Therefore, the two data points of Q1 2009 and Q3 2009 are not directly comparable.
21 RENTAL MARKET
Table 14: Dynamics of “SS 1” Supply at Seef District (2009) % Change Mar-09 Sep-09 (Mar-09 – Sep-09) Operational Apartments 819 910 11.1% Occupancy Ratio 91.2% 85.7% -5.5% Average Monthly Rent (BD / sq.m.) 9.68 9.80 1.2% Occupancy Adj. Monthly Rent (BD / sq.m.) 8.83 8.40 -4.9% Rental Apartments Under Construction 308 217 -29.5%
* Simple difference of percentage points between the two periods.
Currently there are apartments for Short Stay customers which caters to Short Stay customers. Due to this, the share in Seef District. This was not the case six months ago. The of Ultra Luxurious Grade apartments has gone up from 39% newly opened development is a branded 5 Star property in Q1 2009 to 45% in Q3 2009.
Chart 10: Seef District “SS 1” Chart 11: Seef District “SS 1” Supply – Split by Customer Stay Duration (Sep-09) Supply – Split by Grade (Sep-09)
38.9% 36.9% Any Stay Duration A Grade 8.2% Standard Grade 51.1% Long Stay Customers 45.1% Ultra Luxurious Grade
10.0% 9.8% Short Stay Customers A+ Grade
The outlook for Seef District is also week. We have noticed This has not happened so far but many property owners are that many projects at Seef District were originally planned as actively considering it in the coming quarters. Such a move freehold residential or commercial developments. However, will put further pressure on the Occupancy Ratio and will in the absence of consumption of freehold residential lead to a bigger drop in the rentals. or commercial space, these may look to convert to the Rental Market.
22 Rental Market Review
Amidst this churn, we note that there is a limited chunk of The consumer fact sheet numbers shown in Table 15 are not The Outlook for supply of Ultra Luxurious Grade and A+ Grade Long Stay directly comparable to the numbers of Q1 2009 because the Area remains apartments at Seef District, which continues to do well. of the introduction of one high grade supply which pushed weak, with further Such exclusive products, when in limited supply, do not get up the average rental values. . The average rentals have corrections. affected by the market conditions easily. remained the same but when like to like comparison is done, we notice correction in several cases.
Table 15: Seef District – Consumer Fact Sheet (Sep-09) Daily Tariff (BD) Monthly Rent (BD) Studio 76 987 1 Bed 89 1012
2 Bed 130 1162 * Simple difference of percentage points between the two periods. 3 Bed 167 1500
4 Bed - -
2 Bed Duplex - -
3 Bed Duplex - -
Penthouse 249 3108
* Simple difference of percentage points between the two periods.
23 4. Southern Manama Rental Market Review
Southern Manama: Divergent Trends in Different Market Segments
Despite minor The area of Southern Manama includes locations such as corrections for Hoora, Exhibition Road, Adliya, Um Al Hassam and Mahooz. the Area overall, This area is treated independently of Central Manama and Juffair as it differs significantly in its real estate character. sub-categories hold major differences in In terms of freehold residential supply, Southern Manama performance. has a marginal share of the market with only a handful of developments. However, this area is the second largest cluster of rental supply in Bahrain. We have tracked 138 operational and 13 under construction rental developments.
Southern Manama is a perfect example where there is relatively calm surface but strong currents are at play deep within this marketplace.
Table 16 shows that the Occupancy Ratio at Southern by around 3% and for the Any Stay Duration category, the Manama, which includes Exhibition Road, Hoora, Adliya, rent dropped by almost 8%. Mahooz and Um Al Hassam, dropped by 1.2 percentage points and the Average Monthly Rent remained almost at We analysed the performance of the Short Stay category (for the same level. But there have been very significant changes the entire Kingdom) in a previous section titled “Improved within the various segments at Southern Manama. Performance in the Short Stay Category”. Southern Manama remains the biggest cluster of properties operating on Short When we analysed the supply of Short Stay properties in Stay basis and an improved performance in this area is the Southern Manama, we noted that compared to Q1 2009, the primary reason for the impressive showing of this category Average Monthly Rent increased by almost 10%. In the case on a country level. of Long Stay properties, the Average Monthly rent dropped
Table 16: Dynamics of “SS 1” Supply at Southern Manama (2009) % Change Mar-09 Sep-09 (Mar-09 – Sep-09) Operational Apartments 3.626 3.626 0.0% Occupancy Ratio 91.1% 89.9% -1.2%* Average Monthly Rent (BD / sq.m.) 5.48 5.52 0.7% Occupancy Adj. Monthly Rent (BD / sq.m.) 4.99 4.96 -0.6% Rental Apartments Under Construction 421 421 0.0%
* Simple difference of percentage points between the two periods.
24 RENTAL MARKET
About half the supply in this area is for Long Stay customers, This area mostly houses medium to lower grade properties which are mostly the developments in Adliya, Mahooz with more than 80% of supply falling in the bottom three and Um Al Hassam. Around 41% of the supply focuses on grades. Short Stay customers, which are the developments on Exhibition Road.
Chart 12: Southern Manama “SS 1” Chart 13: Southern Manama “SS 1” Supply – Split by Customer Stay Duration (Sep-09) Supply – Split by Grade (Sep-09)
24.8% 41.6% Below Par Grade Short Stay Customers 2.8% 9.1% Ultra luxurious Grade Any Stay Duration
13.4% A+ Grade 49.2% Long Stay Customers 18.5% A Grade 40.6% Standard Grade
25 RENTAL MARKET
Our previous assessment of this area back in Q1 2009 was The Long Stay category has undergone some correction in good, particularly for the Short Stay market as the crisis rentals and faces more correction with a handful of under seems to have not affected the tourist flow from Saudi construction projects getting ready for operation. Arabia and Kuwait. This has turned out to be correct but the increase in rentals in the Short Stay category surpassed our The consumer fact sheet in Table 17 shows that the Average expectations. From this point onwards, the chances of further Monthly Rents across most product categories have dropped growth in rentals in this category are less but it should over the last six months. continue to do well.
Table 17: Southern Manama – Consumer Fact Sheet (Sep-09) Daily Tariff (BD) Monthly Rent (BD) Studio 35 494
1 Bed 34 481
2 Bed 46 630
3 Bed 203 857
4 Bed - 1317
2 Bed Duplex - -
3 Bed Duplex - -
Penthouse - 967
* Simple difference of percentage points between the two periods.
The outlook for this area is bright as average rents remain attractively low.
26 5. Muharraq (Excluding Amwaj) Rental Market Review
Muharraq (excluding Amwaj) – The Muharraq, has Hardest Hit Rental Market witnessed the most serious correction Muharraq (excluding Amwaj) currently has a dominant local among all areas in population and in our definition includes Busaiteen. Bahrain. From a freehold market perspective, the significant area in Muharraq is currently Amwaj Islands. But from the Rental Market perspective, the only area with “SS 1” supply is Busaiteen, which is a small yet vibrant cluster.
We have tracked 7 operational and 4 under construction rental developments at Muharraq (excluding Amwaj).
This area has failed to meet all our expectations. In our previous survey of the Rental Market (Q1 2009), this area achieved the highest Occupancy Ratio among all other areas in Bahrain and we predicted that it should continue to do well. However this was not the case. 4.5%. Consequently, the Occupancy Adj. Average Monthly Over the last six months, the Occupancy Ratio dropped by 6.2 Rent dropped by close to 11% over the last 2 quarters – the percentage points and the Average Monthly Rent dropped by most serious correction among all areas in Bahrain.
Table 18: Dynamics of “SS 1” Supply at Muharraq (excluding Amwaj) (2009) % Change Mar-09 Sep-09 (Mar-09 – Sep-09) Operational Apartments 255 255 0.0% Occupancy Ratio 92.9% 86.7% -6.2%* Average Monthly Rent (BD / sq.m.) 5.83 5.57 -4.5% Occupancy Adj. Monthly Rent (BD / sq.m.) 5.42 4.83 -10.9% Rental Apartments Under Construction 158 158 0.0%
* Simple difference of percentage points between the two periods.
The area has no development that targets Short Stay customers. Also there is no Ultra Luxurious Grade supply. A customers, all developments are focusing on Long Stay whopping 62% of the supply falls into Standard Grade.
27 Rental Market Review
Busaiteen is fast Chart 14: Muharraq (excluding Amwaj) “SS 1” Chart 15: Muharraq (excluding Amwaj) “SS 1” emerging as a Supply – Split by Customer Stay Duration (Sep-09) Supply – Split by Grade (Sep-09) competitive rental 11.8% Below Par Grade cluster. 0.0% 10.2% Ultra luxurious Grade
15.7% A Grade
100.0% 62.4% Standard Grade
It seems that the lack of social infrastructure (supermarkets, malls, restaurants, etc) in Busaiteen has come to haunt this area where the market has undergone a very serious correction. We now see no reason to have positive outlook on this area and going by the current trend, when the new supply that is currently under construction becomes ready for operation, this area may face further problems.
The consumer fact sheet in Table 19 shows that almost all product categories have undergone around 3% to 7% correction.
Table 19: Muharraq (excluding Amwaj) – Consumer Fact Sheet (Sep-09) Daily Tariff (BD) Monthly Rent (BD) Studio - - 1 Bed - 462
2 Bed - 655
3 Bed - 700
4 Bed - 800
2 Bed Duplex - 1000
3 Bed Duplex - -
Penthouse - -
* Simple difference of percentage points between the two periods.
28 RENTAL MARKET
Rentals Market Dynamics in “SS 2” is relatively a simple segment compared to “SS 1” due Organised Villas “SS 2” to the following reasons:
In addition to our extensive coverage of “SS 1”, we have 1. There is no distinction of Serviced or Un-serviced carried out a sample-based survey of “SS 2” i.e. organised category in “SS 2” because housekeeping services villas (villa compounds) in Northern Bahrain. This includes are never provided by any of the villa compounds. The locations such as Budaiya, Barbar, Saar, Janabiya, Al Jasra and management agencies of these compounds take care of Hamala. As per our definition, all these locations fall under only the common area cleaning and maintenance. the area of Budaiya. For this sub segment, the first survey was carried out in Q2 2009, and the data was updated for 2. Unlike the apartments segment, no villa compounds are Q3 2009. offered on Short Stay basis and therefore there are no Daily Tariffs. Villas are offered only on Long Stay basis There are a handful of villa compounds in Southern Manama with the lease contracts of one year or more. (Adliya, Mahooz and Um Al Hassam) and Central Manama (Al Burhama, Naeem and Gufool). These compounds have So far we have not fully developed the grading system for villa not been covered in this round of survey and will be added compounds as the grading variables are completely different. in the future. Budaiya accounts for more than 80% of all the We are actively working on it and we hope to introduce a supply of villa compounds in Bahrain and thus our current detailed system in our next survey of the Rental Market. sample of “SS 2” covers a very large chunk of this market segment.
Occupancy Ratio Declines in “SS 2” villas, which gives an Occupancy Ratio of 91.5%. Although but Remains Above 90% still excellent, this is 2.4 percentage points lower that what it was three months ago. Table 20 reflects the current market conditions in “SS 2”. We tracked 95 Operational Properties amongst villa compounds in Q3 2009 with 1,852 villas. We registered 157 vacant
29 Rental Market Review
Villa Rentals have We must say that “SS 2” is performing beyond expectations. 1,852 villas in our sample, which possibly covers close to performed beyond There were serious concerns in the market that the crisis will 80% of the entire “SS 2”. result in high vacancy for villa compounds. Before having expectations due to access to the results of our servey, we were also apprehensive While several villa projects were released for sale in the limited supply. about this segment. But it has held up remarkably well and freehold residential category over the last 2-3 years, it still runs Occupancy above 90% at a time when we are appears not many villa compounds have been added in the probably reaching the height of the crisis. Rental Market. This supply bottleneck is the key reason for the good performance of “SS 2” this far. The primary reason for the remarkable Occupancy is the very limited supply of villa compounds in Bahrain. There are just
Table 20: Dynamics of Organised Villas Segment “SS 2” (2009) % Change Mar-09 Sep-09 (Mar-09 – Sep-09) Operational Properties 93 94 2.2% Operational Villas 1779 1852 4.1% Vacant Villas 109 157 44.0% Occupancy Ratio 93.9% 91.5% -2.4% Rental Villas Under Construction 289 216 -25.3%
* Simple difference of percentage points between the two periods.
“SS 2” also Runs on Staple Variety Table 21 shows that “3 Bed + Maid” and “4 Bed + Maid” Products varieties account for more than 80% of “SS 2” supply. The former is running an Occupancy Ratio close to 95%, the Much like the apartments, the villa compounds segment also latter is around 90%. The “5 Bed + Maid” products also runs on a few staple products. Table 21 lists the products runs close to 95% Occupancy. that are available in these compounds. The products are segregated as per the number of bedrooms in a villa. An The products with personal pools are interesting with the additional maid room is normally given with all the villas. “3 Bed + Maid + Personal Pool” variety running a low What is noteworthy is when a personal pool is added to a Occupancy, while the 4 Bed variety running almost 93% villa, it becomes a different product. The market regards it Occupancy. The Occupancy Ratio of the “3 Bed + Maid + as a premium product and as we show later, there is much Personal Pool” variety is somewhat understated as one villa difference in the Monthly Rentals. compound has recently finished the renovation of such villas and was not fully operational at the time of the survey.
30 RENTAL MARKET
Table 21: Breakdown of “SS 2” Supply by Product Categories (Sep-09) % Share in Total Occupancy Ratio 3 Bed + Maid 45.4% 94.5% 4 Bed + Maid 38.4% 89.9%
5 Bed + Maid 5.1% 94.7%
3 Bed + Maid + Personal Pool 5.2% 78.4%
4 Bed + Maid + Personal Pool 4.6% 92.9%
5 Bed + Maid + Personal Pool 1.2% 77.3%
6 Bed + Maid + Personal Pool 0.1% 0.0%
Total 100.0% 91.5%
* Simple difference of percentage points between the two periods.
Villa Rentals in “SS 2” are Stable remained stable with some correction seen in the “5 Bed + Maid + Personal Pool” variety. Unlike the apartments, the assessment of the built up areas of villas through visual inspection is nearly impossible. We What is very interesting to note is that by adding a personal noticed wide variations in villa sizes with the smaller villas pool to a “3 Bed + Maid” villa, property owners are able to at 350 sq.m. and some of the big villas at 1,000 sq.m. charge 22% higher Monthly Rent. Therefore this variety of Therefore, we have not calculated the Average Monthly Rent products offers much higher rental yields. The total number for “SS 2” in BD per sq.m. terms as it will most likely be of villas with independent pools across all product categories based on inaccurate data. is just 233 now but the trend is gaining mass momentum and we may see many more villas with independent pools Table 22 shows the comparison; between Q2 2009 and Q3 in the future. 2009, the Average Monthly Rent of various products have
31 RENTAL MARKET
Table 22: Price Trends in Various Product Categories in “SS 2” (2009) % Change (Jun - Jun-09 Sep-09 Sep) 3 Bed + Maid 1040 1044 0.4% 4 Bed + Maid 1424 1420 -0.3% 5 Bed + Maid 2012 2075 3.1% 3 Bed + Maid + Personal Pool 1278 1278 0.0% 4 Bed + Maid + Personal Pool 1873 1873 -2.1% 5 Bed + Maid + Personal Pool 2727 2544 -6.7% 6 Bed + Maid + Personal Pool 3500 3500 0.0%
* Simple difference of percentage points between the two periods.
It is very important to note that the Average Monthly is fully Furnished (standard furniture) and an inclusive lease Rents shown in Table 22 are for Semi-furnished villas and contract is offered. exclusive of municipality and electricity payments. Therefore, these rentals are not directly comparable with the rentals of The Average Monthly Rent of even the smallest variety villa apartments which are for fully Furnished units and include (3 Bed + Maid) is more than BD 1,000. There are just 7 municipality and electricity payment. compounds that offer villas below BD 1,000 of monthly rent. While more than 80% of the apartment Rental Market falls Some villa compounds offer inclusive contracts (i.e. below BD 1,000 monthly rent mark, almost 99% of the villa municipality and electricity charges are covered by the Rental Market is above this mark. landlord) and some others offer the option of renting a fully Furnished villa. But the overwhelming majority offers Overall, “SS 2” has maintained good health with marginal Semi-furnished and exclusive contract. Roughly speaking, correction so far. The limited supply of villa compounds is a the Average Monthly Rent goes up by about 35% if a villa key factor supporting the segment.
32 Rental Market Outlook Rental Market Review
Many freehold The Unorganised Segment Threatens segment of the Rental Market. More such freehold projects developments, to Undermine The Organised Segment will be handed over in 2010, which will impact the Occupancy of the entire “SS 1” segment. particularly those in Significantly the advanced stage Since our last survey back in Q1 2009, we have noticed that Similarly, once Riffa Views is fully handed over, this alone of construction, are a sizeable freehold residential supply ends up in the Rental may lead to an introduction of several hundred villas for rent, actively considering Market and competes for the same set of customers. This which will impact the Occupancy in “SS 2” considerably. releasing their new supply directly is drawing on the same consumer base All this is happening at a time when the employment base has current unsold of the organised segments (“SS 1” and “SS 2”). just stopped growing in Bahrain. Table 23 shows the official employment figures from the Labour Market Regulatory apartments to the Authority (LMRA). The data shows that, after growing at a Rental Market. Some prominent examples of this phenomenon are Abraj Al Lulu at Central Manama and Riffa Views at Southern rapid pace till Q1 2009, private sector employment has come Governorate. Abraj is currently being handed over to its to a standstill over the last two quarters. Lack of growth buyers and it has more than 1,000 apartments. Hundreds of in this sector means that the customer base for the Rental these apartments are being introduced in the Unorganised Market is not growing.
Table 23: Quarterly Employment Growth in Bahrain 2008 - 2009 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2008 2008 2008 2008 2009 2009 2009 Total Employment 511,899 530,195 552,108 578,307 596,225 599,017 600,143 Base in Bahrain
Public Sector 59,922 59,658 57,898 59,067 59,016 59,291 59,427
Private Sector 384,474 400,751 423,671 446,699 461,815 464,235 464,671
Domestic Workers 67,503 69,786 70,538 72,541 75,393 75,490 76,045
Six months ago, we had predicted that Bahrain may lose more than 30,000 jobs. This looks less likely now as the situation in all the major economies is improving, but clearly we are not looking at substantial growth in employment probably for another 3-4 quarters.
This will lead to further drop in Occupancy Ratios across all areas, particularly in the Long Stay category, which may result into about 10-15% correction in the rentals across all areas. We maintain a negative outlook on Bahrain Rental Market.
34 Annexes 37 Annexes
Annex 1: Structure of Bahrain Rental Market
Broadly, the Rental Market in Bahrain can be divided into three sub segments; these are shown in Chart 16. Of the three sub segments, two are in the organised sector and one is in the unorganised sector. They are as follows:
1. Sub Segment 1 (organised Furnished apartments). This covers buildings where all the apartments are offered on Long Stay or Short Stay. Usually there is formal property management in place that takes care of, at the very least, day-to- day maintenance of the common areas. These are some of the characteristics of this segment:
• It’s the second largest sub segment within the Rental Market with 343 operational buildings. Serviced Apartments and Un-serviced Apartments are included in “SS 1” whether rented to Short Stay customers or to Long Stay customers. For the definition of these terms and more, refer to Annex 2.
• All the buildings that we surveyed offer only Furnished units. There are no developments in “SS 1” that offer Unfurnished / Semi-furnished apartments.
• All the operational buildings are located in Central Manama, Juffair, Southern Manama, Seef District and Muharraq (Excluding Amwaj).
• Many of these buildings have Commercial Registration (CR) to be allowed to operate as a rental enterprise, particularly those offering units on Short Stay. In such cases, the employees are registered with LMRA. But are some still run as private properties with private employees.
2. Sub Segment 2 (organised villas). This covers villa compounds where, similar to “SS 1”, there is formal property management in place. The characteristics of this sub segment are:
• The villas can be Furnished, Semi-furnished or Unfurnished. There are also cases, where different villas in the same compound are offered with different levels of furnishings depending upon tenant requirements.
• Compared to Furnished apartments, villa compounds are more widely distributed across the Kingdom. But the biggest cluster is in Budaiya, which in our definition includes Saar, Janabiya, Sahla, Al Jasra, etc.
• Villas in this segment are offered exclusively on Long Stay basis. Some villa compounds carry Commercial Registrations.
36 Annexes
3. Sub Segment 3 (unorganised apartments and villas). It is the largest sub segment within the Rental Market. There is no property management in place and usually the property watchman takes care of security and common area maintenance. We have defined all the Unfurnished apartments and stand-alone villas (located outside compounds) as part of “SS 3”. The characteristics of this sub segment are:
• Different units in one building are owned by different owners who seek rental customers through real estate agents. Usually, these units are offered only on Long Stay basis.
• There is a fair supply of detached / semi detached villas and town houses across Bahrain owned by individual property investors who earn income by putting them on rent. These units are also offered on Long Stay basis.
• The furnishing status of units keeps changing depending upon tenant preferences.
• Most of these property owners do not have Commercial Registration.
In addition to these distinct sub segments, there are several properties whose characteristics overlap with the characteristics of multiple sub segments. All such properties are included in “SS 3”.
Chart 16: Bahrain Rental Market – Split by Main and Sub Segments
Rental Market
Organised Unorganised
Sub Segment 1 Sub Segment 2 Sub Segment 3 “SS 1” “SS 2” “SS 3” Organised Furnished Organised Villas Unorganised Apartments & Villas Apartments Furnished Villa Compounds Furnished Apartments Serviced Apartments Properties Semi Furnished / Semi Furnished/ Unfurnished Villa Unfurnished Apartments Rental Properties Compounds Stand-alone Villas
37 Annexes
Annex 2: Definitions of the Term Used in the Report
1. Additional Amenities – Refer to Annex 3 (Rental Properties Grading Methodology)
2. Any Stay Duration – Refers to those rental properties where units are offered to customers for Long Stay or Short Stay. Usually such properties allocate 75% of all units to Long Stay customers and 25% of the units to Short Stay customers.
3. Average Monthly Rent – It is the monthly rent as quoted by the property owners / managers. For every area or category, a simple average is taken for all the properties falling into that area or category. While for villas this number is straight forward calculated as rent (in BD) per month, for apartments it is also calculated as rent (in BD) per month per sq.m. It is not an observed figure but a derived figure. We segregate each rental apartment unit into small, medium and large (relative to the general sizes in their respective product categories). We then use the prevailing freehold market size (unit size) as proxy. The Average Monthly Rent is calculated as the quoted monthly rent divided by the rental unit size and taking a simple average. For this calculation, only the long term monthly rent values are used as the Daily Basis tariffs are subjected to high fluctuations depending upon the season and weekdays / weekends.
4. Basic Amenities - Refer to Annex 3 (Rental Properties Grading Methodology)
5. Customer Stay Duration – Generally, the rental properties can be classified on the basis of the stay duration offered to its customers. These are:
a. Long Stay – Where a property is offered only to Long Stay customers.
b. Short Stay – Where a property is offered only to Short Stay customers.
c. Any Stay Duration – Where a property is offered on both Long Stay as well as Short Stay.
6. Daily Tariff – The price of one day stay in a rental unit used by Short Stay customer.
7. Furnished – Those rental units that offer at least the following furnishings: hot plate / stove / cooking range, washer and dryer, kitchen crockery, ACs, TV, curtains, living room sofa set, bed(s) with mattresses, wardrobe(s), dining table set, lighting fixtures and security watchmen. No facilities / amenities such as swimming pool or gymnasium is considered essential to qualify a rental unit as Furnished.
8. Long Stay – In the hospitality industry, long stay is defined as any stay longer than 30 days. Usually, these types of contracts in Bahrain are yearly contracts where the lease payment is made every month. These contracts are generally binding on the lessee. To ensure compliance, in many cases the property owners take three months’ rent in advance and monthly payments from the lessee commence from the fourth month onwards. There are a few cases where the owner agrees on terms shorter than one year and also cases where owners charge on month-to-month basis. In such cases, the monthly rent is somewhat higher than the corresponding rent in a yearly contract. We have generally ignored these tariffs as such cases are not the norm.
9. Monthly Rental – Total monthly payment (in BD) asked by the property owner for a particular rental unit.
10. Occupancy Ratio – The ratio of the sum of all occupied properties (apartments or villas) to the Operational Properties (apartments or villas). Generally this ratio is shown in percentage terms, it indicates what proportion of operational rental units is occupied at a given point of time. Note that the Occupancy Ratio for any time period is not an average Occupancy Ratio achieved over the entire quarter. It is a point estimation of the Occupancy Ratio at the time of our survey.
11. Occupancy Adj. Average Monthly Rent – It is the Average Monthly Rent of a location / category / grade multiplied by the respective Occupancy Ratio. While the consumers pay Average Monthly Rent, the property owners receive only the Occupancy Adj. Average Monthly Rent as some of their rental units are vacant.
38 Annexes
12. Operational Apartments – The sum of all the apartments that are available for use. This includes all occupied and vacant apartments.
13. Operational Properties – The total count of all the functional rental buildings / villa compounds of varying sizes in “SS 1” and “SS 2”. These properties actively engage in renting units to Long Stay and Short Stay customers.
14. Rental Apartments Under Construction – It is the sum of all those apartments that are under construction and the developer intends to offer them for rent. They are not available for sale in the freehold market.
15. Rental Villas Under Construction - It is the sum of all villas in several villa compounds that are under construction and the developer intends to offer them for rent. They are not available for sale in the market.
16. Rental Market – The overall market for residential rental properties (apartments and villas) and includes properties offer for rent on Short Stay and Long Stay basis. While the organised players (Serviced Apartments, Un-serviced Apartments and villa compounds) dominate the market, a sizeable number of properties are available directly from individual property owners.
17. Residential Market – The Residential Market is the sum of all the marketable and proposed freehold residential projects in the Kingdom of Bahrain. These projects may be under construction or fully constructed.
18. Semi-furnished – Those rental units that generally offer the following furnishings – hot plate / stove / cooking range, washer and dryer, curtains, ACs and lighting fixtures. The tenants bring their own furniture for use during their stay. There are more permutation and combination possible by deleting one or more of these items and adding others.
19. Serviced Apartments – Refers to rental units where the property owners / managers provide daily/weekly cleaning services inside the apartment on a regular basis and also on-demand. This service is in addition to cleaning and maintaining the common areas such as reception area, lift lobby, stair cases, corridors, etc.
20. Short Stay – In the hospitality industry, short stay is defined as any stay shorter than 30 days. A customer can stay for a minimum of 1 day but can extend the stay as required. The charged rent is quoted as a Daily Tariff.
21. Unfurnished – Refers to rental units that have no furnishings or appliances provided within. Tenants bring their own appliances and furnishings.
22. Un-serviced Apartments – Refers to rental units where property owners / managers provide daily/weekly cleaning services only for the common areas (e.g. reception area, lift lobby, stair cases, corridors, etc.). Tenants are responsible for cleaning their own apartments.
39 Annexes
Annex 3: Rental Properties Grading Methodology
Not all rental properties are alike as they differ in their location, offered furnishings inside the unit and installed facilities / amenities within the property. The area wise analysis of properties is done to account for the differences in locations. But a grading model is required to account for the differences in furnishings inside the unit and facilities / amenities within the property.
The furnishings inside the rental unit may include various kitchen appliances, TVs, music systems, beds, sofa sets, dining table, kitchen crockery, sanitary wares in bathrooms, etc. Similarly, the facilities / amenities within the property may include common swimming pool, separate swimming pool for ladies and gents, children pool, fully equipped gymnasium, steam / sauna, jacuzzi, games area, tennis court, mini movie theatre, business centre, etc.
For the purpose of grading, we have developed a point system that segregates the various property features into “hygiene” and “motivational” factors. The parallel terms used for the rental developments are Basic Amenities and Additional Amenities.
1. Basic Amenities - The Basic Amenities are those factors that create dissatisfaction when they are absent but do not add any additional value when they are present. For the Furnished apartments, these factors are considered standard. The examples are basic cooking appliances in the kitchen, beds with mattresses in the bedrooms, sofa set and one TV in the living room and 24 hours security watchmen. The presence of these factors doesn’t allow the property owners to charge extra for their products but if they are missing, the property owners will have to reduce the rent to attract potential customers.
2. Additional Amenities - The Additional Amenities are those factors that create additional pull for customers when they are present. For Furnished apartments, the Additional Amenities are dish washer in kitchen, high definition home theatre system, multiple TVs in apartments, shower chambers, swimming pool, fully equipped gymnasium, business centres, jacuzzi and sauna, etc. The list is endless. The presence of these factors allows property owners to charge extra for these facilities depending upon their relative value to potential customers.
We have captured information on 44 factors on all the rental properties. These factors are divided into Basic Amenities and Additional Amenities. We have not given any point for the presence of Basic Amenities but subtracted one point for every missing feature. For the Additional Amenities, points are given depending on the perceived relative importance to potential consumers.
The cumulative points are added for each property and segregated into five grades. These grades are:
1. Ultra Luxurious Grade – These are the 5 Star developments and a handful of branded properties. The brands are generally regional / local brands. These properties offer all conceivable pieces of furnishing and also high end facilities such as equipped business centre, coffee shop with restaurant, high class guest lobby, etc. All of these properties are Serviced Apartments.
2. A+ Grade – These are high class developments (both branded and unbranded) with almost equally good furnishings compared to Ultra Luxurious properties. They also offer good facilities / amenities such as swimming pool, gymnasium, steam / sauna. But they lack the very high end facilities such as a business centre, coffee shop, etc.
3. A Grade – These are good, largely unbranded, properties that have most of the furnishings available in A+ Grade. They generally have most of the required facilities such as swimming pool, gymnasium, etc. but do not have all of the ones available in A+ Grade.
4. Standard Grade – These properties tick all the essential boxes of a Furnished apartment but don’t go beyond offering the Basic Amenities.
5. Below Par Grade – Those properties have some of the very essential factors of Furnished apartments missing.
40 Annexes
Annex 4: Data Sources and the Structure of the Database
The data presented in this report is collected through extensive primary surveys of the rental developments in Bahrain. The most important feature of our database is its universal extent of coverage. We understand that real estate is a very localized subject and every micro market exhibits a distinct character in terms of supply, Occupancy Level and rentals. Thus, rather than making any futile attempts towards designing a representative sample of the market, we opted for covering 100% of the market.
In Sep-09, we tracked 345 operational and 59 under construction rental developments for apartments and 95 operational and 16 under construction villa compounds. The cut off date for our data set is Oct 30th, 2009.
When a rental apartment is tracked, information on the number of units for every product category is captured along with the assessment of the apartment sizes. Additionally, the quoted rents are captured for each product category available in the development.
For grading purposes, we also noted down all the furnishings available in the apartments and all the amenities offered within the property. In total we have captured information on 44 grading related variables on each rental development.
The information on each project is entered in the database with its location, area and suburb (in case of Bahrain it is Governorate). All projects are summed up area-wise to form the supply of that area. In turn, the areas are summed up to arrive at the supply numbers of the entire market. This bottoms-up approach provides high degree of flexibility in reading the data at any level.
41 44 Profiles PROFILES
RealCAPITA
Established in the Kingdom of Bahrain on April 2006 as a closed share holding real estate company, RealCAPITA is the alternatively new real estate investment firm based in Bahrain. With an authorized capital of US$ 200 million, and a paid up capital of US$ 64 million, RealCAPITA is considered one of the largest institutions of its kind in Bahrain. Its core strategy is grounded in understanding real estate fundamentals and transacting sound deals based on this knowledge. This strategy is vital for surviving the highly competitive operating environment which favours institutions with superior knowledge, resources and value added capabilities. RealCAPITA’s true strength is in its team of industry leaders with a proven track-record in acquisitions, finance, institutional asset management, concept development and project management.
Since its establishment in 2006, RealCAPITA has been able to successfully develop and structure real estate transactions valued at almost US$ 3 billion. The following is a list of projects already undertaken by RealCAPITA:
Amwaj Gateway Developing six 20-story residential towers and townhouses which are located at the entrance of Amwaj Islands. The development shall accommodate 550 units within a gated community supported by a wide range of amenities. The project has been awarded the 1st Green Buildings Award in Bahrain reflecting its notable efforts to promote energy efficiency from the design stage to final implementation.
RealLANDS RealLANDS is a Bahrain-based company managed and run by RealCAPITA that has been engaged in acquiring plots of lands across the Kingdom of Bahrain and the MENA region. It has a paid-up capital of US$ 25 million.
RealGARDENS Developing 47 luxury villas for sale located in Al Jasra. The development also houses several swimming pools, tennis courts, a health club and a playground for kids. Al Jasra is an exclusive residential area that attracts the upper-end of society.
RealSUITES Developing two 12 storey luxurious towers situated in Um Al Hassam, Bahrain. The intention is to develop the properties for rental income. The central locality of the project, high demand and limited availability of high-end apartments in the area positions it to attract strong returns to investors.
43 PROFILES
Injaz Asia The establishment of Injaz Asia as a property fund focusing on investing in the real estate market in both developing and emerging economies in South East Asia. The fund is dedicated to invest directly in opportunistic property assets in Singapore, Hong Kong and Malaysia among other key cities in Asia. Its strategy will seek to acquire, own and manage distressed and undervalued properties in prime locations with high potential for value appreciation through tactical turnovers.
RealRESIDENCE This development of eight 6-storey buildings (each with a unique façade) will be located in the newly residential zoned Al Hidd area. The project will provide 144 high standard units for sale. The Al Hidd area is witnessing rapid developments, as it prepares to house Bahrain’s largest commercial sea port with supporting industrial and commercial facilities.
RealMAROC This development of 13,000 lower-middle affordable housing units in major Moroccan cities will be carried out in partnership with a leading Moroccan developer, Jet Group, our country partner. Jet Group has a long track record in developing affordable housing of the highest quality in their class, backed by strong control of their supply chain.
RealPALAIS Developing eleven 3-4 storey buildings with the cost of Euro 50mn that offers 182 luxurious residential units .The property is located close to the city of “Saint-Julien-en-Genevois” on the French side of the Swiss-French borders. Providing an extremely attractive location due to it’s close proximity to Geneva(8 km).
Bait Al Mal Al Khaleeji The establishment of a non-banking financial services firm in Saudi Arabia along with 4 partners (2 of which are GCC-based financial institutions). The company intends to offer premium wealth management, brokerage and corporate finance services to high net worth Individuals and corporate clients in Saudi Arabia. The company will be headquartered in Dammam, with offices in Riyadh and Jeddah.
44 PROFILES
Bahrain Logistics Company The company will offer logistic, warehousing and transport services. The company brings together leading logistics partners in Bahrain and the GCC including Yousif Bin Ahmed Kanoo, BANZ and TRAFCO. The company will operate out of the industrial zone in Hidd area and will extend operation to the Eastern Province in Saudi Arabia within the second year of operations.
RealJUBAIL The establishment of a real estate development company focusing on residential properties in the city of Jubail. Jubail is a global player in the petroleum industry and suffers from a severe shortage of residential units. RealJUBAIL will address this attractive market need and will also benefit from the effect of well-supported housing programs run by most industrial employers.
Tangier Investment Park Establishment of an industrial/logistics community in Tangier. The city is going through an industrial expansion supported by new port facilities, road and railway infrastructure. The development covers an area over 250 hectares and TIP will involve various components. Medium and light industries and logistic facilities are the core components supported by a high-end office park, commercial outlets, and civic amenities.
RealVIEWS Developing a luxurious 22-storey high residential tower on Al Fateh Highway, at the heart of the Capital Manama. The tower will deliver premium residential apartments and the most exclusive sky villa in Bahrain. The tower has uninterrupted sea views from the north-east, east and south-east sides.
45 Liases Foras Profile
Liases Foras (www.propertyscience.com ) is dedicated to research and scientific studies in the real estate industry. Micro Detailing and Field Research are the core capabilities of the company that it has evolved over 12 years of constantly monitoring the real estate industry. Prior to Bahrain, the firm was responsible for creating the most comprehensive database on the Indian real estate industry that provides timely and accurate information to market participants. The proprietary databases, models and theories on the real estate market have propelled the firm into a coveted space in the Indian real estate industry which has enlightened investors, developers, private equity and venture funds, banks and financial institution and above all consumers.
Liases Foras Middle East (based in Bahrain) is part of Liases Foras Real Estate Rating and Research (India) Pvt. Ltd. and is the first Indian International Property Consultant (IPC).
In India, Liases Foras covers more than 8,000 projects quarterly to generate the most comprehensive and authentic database across Mumbai, Delhi, Bangalore, Pune and Nagpur. The company has also launched India’s first real estate sensitivity index called RESSEXTM in 2006.
Liases Foras is credited with the development of several new theories on real estate development such as “Magnate Theory of Locality Development” which help forecast the real estate development pattern of various localities. The company has also evolved a scientific project grading methodology for market-efficient real estate pricing. This methodology smoothes out outsized market cycle movements and provides a more reliable baseline forecast.
Liases Foras serves more than 100 clients in India and Middle East. Some of the prominent clients are:
1. HDFC
2. Maharashtra Chamber of Housing Industry (MCHI)
3. Urban Infra Ventures Capital Limited
4. Hiranandani Constructions
5. K Raheja Universal
6. Kalpataru Properties
7. Nirmal Lifestyle
8. Lodha Group
9. Keystone Realtors Pvt. Ltd
10. Kanakia Spaces
46 PREVIOUS ISSUES
BAHRAIN
3rd Quarter 2008
1. RealOUTLOOK 2. RealOUTLOOK 3. RealOUTLOOK Residential Q3 2008 Commercial Q3 2008 Residential Q4 2008
4. RealOUTLOOK 5. RealOUTLOOK 6. RealOUTLOOK Rental Q1 2009 Residential Q1 2009 Residential Q2 2009
48 51 PREVIOUS ISSUES
7. RealOUTLOOK 7. RealOUTLOOK Commercial Q2 2009 Residential Q3 2009
DISCLAIMER
This report was produced by RealCAPITA and Liases Foras for general information only.
As a general report, this material does not necessarily represent the view of RealCAPITA or Liases Foras in relation to particular properties or projects.
Information and opinions contained herein have been complied or arrived by RealCAPITA and Liases Foras from sources believed to be reliable, however both RealCAPITA and Liases Foras do not hold any legal responsibility due to the fairness, accuracy, completeness or correctness of the information and opinions contained in this document.
No warranty or representation, express or implied, is made to the accuracy or completeness of the information contained herein, and same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listing conditions otherwise imposed.
This document is not intended to take into account any investment suitability needs of the recipient. In particular, this document is not customized to the specific investment objectives, financial situation, risk appetite or other needs of any person who may receive this document. RealCAPITA and Liases Foras strongly advise every potential investor to seek professional legal, accounting and financial guidance when determining whether an investment in real estate is appropriate to their needs.
49 مراجعة قطاع اإليجارات
جدول 5: م�ؤ�شرات ال�سوق املنظم للفلل )يونيو - �سبتمرب 2009( يونيو 2009 �سبتمرب 2009 ن�سبة التغري التعرفة التعرفة )مار�س – �سبتمرب ال�شهرية ال�شهرية 2009( 3 غرف نوم + غرفة خادمة 1,040 1,044 0.4% 4 غرف نوم + غرفة خادمة 1,424 1,420 -0.3% 5 غرف نوم + غرفة خادمة 2,012 2,075 3.1% 3 غرف نوم + غرفة خادمة + بركة �سباحة 1,278 1,278 0.0% 4 غرف نوم + غرفة خادمة + بركة �سباحة 1,873 1,833 -2.1% 5 غرف نوم + غرفة خادمة + بركة �سباحة 2,727 2,544 -6.7% 6 غرف نوم + غرفة خادمة + بركة �سباحة 3,500 3,500 0.0% * الفارق العددي لن�سب الإ�شغال
نظرة م�ستقبلية ل�سوق الإيجارات ال�سكنية يف البحرين �شهدت الفرتة املن�صرمة )مار�س لغاية �سبتمرب 2009( حتول عدد من امل�شاريع ال�سكنية املعدة للبيع اىل قطاع الت�أجري, مما و�ضع هذا القطاع حتت �ضغوط هائلة من حيث ن�سب الإ�شغال و معدلت الت�أجري. ول يبدو �أن هذه الظاهرة �ستتوقف يف القريب, حيث ل تزال امل�شاريع ال�سكنية تواجه �صعوبة كبرية يف بيع وحداتها اجلاهزة مما يدفعها للت�أجري. يحدث ذلك بالتزامن مع تباط�أ يف معدلت منو الوظائف باململكة ح�سب �إح�صائات هيئة تنظيم �سوق العمل, مما يعني ًمزيدا من الرتاجع ملعدلت الإ�شغال.
وب�شكل عام, ف�إن نظرتنا �سلبية ل�سوق الت�أجري للفرتة املقبلة مع توقع ت�صحيح يف معدلت الت�أجري تتجاوز 10%.
50 قطاع الإيجارات
2 –ال�سوق املنظم للفلل: هذا ال�سوق تتخطى حاجز الـ %90 مع ثبات ن�سبي يف معدلت الإيجارات. مت ر�صد�سوق ت�أجري الفلل يف اململكة من خالل جممعات الفلل ال�سكنية واملرتكزة يف منطقة �شمال هذا الأداء املتوازن لل�سوق املنظم للفلل ميكن �أن يعزى البحرين كالبديع, و�سار واجلنبية وباربار. يبدو هذا اىل م�ستويات العر�ض املتدنية ًجدا لهذه الفئة على ال�سوق يف و�ضع جيد مقارنة بالأو�ضاع الإقت�صادية الرغم من ظهور جمموعة من م�شاريع الفلل ولكن للبيع امل�صاحبة لالأزمة املالية. فال تزال ن�سب الإ�شغال يف دون الت�أج
جدول 4: �أليات ال�سوق املنظم للفلل فى البحرين )مار�س - �سبتمرب 2009( يونيو 2009 �سبتمرب 2009 ن�سبة التغري )مار�س – �سبتمرب 2009( عدد جممعات الفلل املعرو�ضة لاليجار 93 95 2.2% الفلل امل�ؤجرة 1,779 1,852 4.1% الفلل اخلالية 109 157 44.0% ن�سبة ال�شغال 93.9% 91.5% * -2.4% الفلل حتت الن�شاء 289 216 -25.3% * الفارق العددي لن�سب الإ�شغال
يق�سم ال�سوق املنظم للفلل من حيث �أحجام الفلل )عدد غرف النوم(, حيث ت�شري الأرقام اىل �أن الغالبية من الفلل تقع �ضمن فئة الثالث والأربع غرف نوم بالإ�ضافة اىل غرفة اخلادمة )%80 من �إجمايل الفلل املعرو�ضة( ومبعدلت �إ�شغال تبلغ %90 �أو �أكرث.
مت �إحت�ساب معدلت الإيجار ال�شهرية للفلل بح�سب �أحجامها بدل من ح�سابها باملرت املربع املبني, وذلك ًنظرا للتفاوت الكبري يف �أحجام الفلل حيث ترتاوح بني 350مرت مربع لغاية 1,000مرت مربع. جتدر الإ�شارة اىل �أن �أ�سعار الت�أجري ترتفع مبقدار %20 عند �إ�ضافة بركة �سباحة خا�صة للفيال امل�ؤجرة. كما �أن �أغلب الفلل امل�ؤجرة تكون على �أ�سا�س ت�أثيث ن�صفي و غري �شاملة لعقود الكهرباء والبلدية بعك� سعقود الت�أجري لل�شقق املفرو�شة. ويبني اجلدول �أدناه معدلت الإيجارات للفرتة بني يونيو و �سبتمرب 2009: 51 قطاع الإيجارات
حتليل لأهم مناطق اليجارات ال�سكنية ت�ضم منطقة جنوب املنامة عدة مناطق مثل احلورة، العدلية، �أم احل�صم و�شارع املعار�ض. وتعترب جنوب املنامة ثاين �أكرب لل�شقق املفرو�شة يف البحرين جتمع لوحدات الإيجار ال�سكني يف البحرين ول تزال ن�سبة %90 تعترب منطقة و�سط املنامة مركز الن�شاط القت�صادي يف ال�شغال بها يف حدود .وب�إلقاء نظرة فاح�صة, يتبني �أن البحرين حيث ت�ضم �أهم امل�شروعات التجارية والإدارية. و املنطقة تعد من �أهم مناطق الت�أجري ق�صري الأجل, والذي ي�شهد قد قمنا بر�صد 15 م�شروع ًا معرو� ًضا لاليجار ال�سكني و 9 فرتة �إنتعا�ش كبري على م�ستوى اململكة ب�شكل عام. ولكن بالرغم م�شروع تا حتت الن�شاء. وت�شري الإح�صاءات اىل �أن منطقة من هذا الأداء الإيجابي لفئة الت�أجري ق�صري الأجل, ف�إن فئات الو�سط املنامة قد ت�ضررت ب�شكل كبري جراء الأزمة الإقت�صادية الت�أجري الأخرى كانت �سلبية الأداء, وباملح�صلة ف�إن منطقة ً ً الأخرية, حيث �إنخف�ضت معدلت الإ�شغال باملنطقة من %91 جنوب املنامة مل ت�شهد تغريا كبريايف معدلت الت�أجري املعدلة 1% اىل %82 تقريب ًا, مما �ساهم كذلك يف خف�ض معدلت الت�أجري )�أقل من (. بواقع %4 مقارنة ب�شهر مار�س 2009. يبدو �أن منطقة املحرق مل حتقق �أي من توقعاتنا بعد الأداء تعترب منطقة اجلفري من �أهم املن طق ا ال�سكنية املف�ضلة املتميز للمنطقة يف الدرا�سة ال�سابقة حيث حققت �أعلى للمغرتبني من الوليات املتحدة و�أوربا. وحتتوي اجلفري على م�ستويات الإ�شغال. فقد هبطت معدلت الإ�شغال ب�أكرث من 4% 6% �أكرب جتمع من الوحدات امل�ؤجرة يف البحرين. وت�شري البيانات , كما �إنخف�ضت معدلت الت�أجري ب�أكرث من , لتكون 11% �إىل �أن ن�سبة الأ�شغال قد �إنخق�ض ب�شكل ملحوظ من 92.3% حم�صلة عملية الت�صحيح باملنطقة مقارنة ب�إيجارات يف �شهر مار�س اىل %88 يف �شهر �سبتمرب من العام 2009. الفرتة املن�صرمة. ويبدو �أن قلة املن�شئات امل�ساندة )حمالت وقد �أدى هذا الإنخفا�ض م�صحوب ًا ب�إنخفا�ض معدلت الت�أجري وجممعات جتارية, خدمات عامة( يف املناطق ال�سكنية اجلديدة اىل ت�صحيح معدلت الت�أجري بواقع %5للفرتة حمل الدرا�سة. كالب�سيتني و احلد هي العامل الرئي�س وراء توقف عجلة الأداء ومما يزيد من �صعوبة الو�ضع ملنطقة اجلفري هو الكم الهائل الإيجابي للمنطقة. من ال�شقق قيد الإن�شاء )حوايل 2,000 وحدة( والتي �ست�شكل عبئ ًا ًكبريا على معدلت الإ�شغال والت�أجري عند دخولها ل�سوق الت�أجري.
تعترب منطقة ال�سيف من �أهم املناطق التجارية حيث حتتوي على 5 جممعات جتارية. كذلك تعترب من املناطق الإدارية الهامة حيث ت�ضم �أكرث من 40 مبنى �إداري، وتتميز كذلك بوجود �شبكة طرق ذات م�ستوى عال وكثافة مرورية �أقل من منطقة و�سط املنامة. وحتتوي منطقة ال�سيف على عدد حمدود ن�سبي ًا من ال�شقق امل�ؤجرة)910 �شقة( �إل �أن املنطقة تراجعت من حيث متتعها بن�سبة �إ�شغال عالية حيث تدنت هذه الن�سبة من 91.2% يف �شهر مار�س لغاية %85يف �شهر �سبتمرب 2009. وقد �صاحب هذا الإنخفا�ض يف معدلت الإ�شغال �إنخفا�ض يف معدلت الت�أجري بواقع %1 ليبلغ �إيجار املرت املربع يف املنطقة 9.300 دينار بحريني للمرت املربع.
52 مراجعة قطاع اإليجارات
يبدو جلي ًا �أن ال�شقق �صغرية احلجم تتمتع بطلب �أقوى يف ال�سوق ونتيجة لزيادة الطلب على الوحدات ال�صغرية بالإ�ضافة من ال�شقق ذات الأحجام الكبرية. لقد بد�أ امل�ستهلكون وحتت اىل �إرتفاع �إيجاراتها, بد�أت هذه الفئة وباخل�صو�ص فئة وط�أة الأزمة الإقت�صادية بالإجتاه نحو ال�شقق �صغرية احلجم ال�ستديوهات حتوز �إهتمام امل�ستثمرين والذين يجدون يف هذه حيث �إرتفعت ن�سب الإ�شغال فيها اىل حدود %91-90, كما ال�شقق عوائد �صافية على الإ�ستثمار تقارب %8 �سنوي ًا. �أن �إيجارات هذه الفئة �إرتفعت بن�سب ترتاوح بني 3 اىل 10% مقارنة ب�إنحدار �إيجارات ال� قق شكبرية احلجم اىل قرابة جدول 3: م�ؤ�شرات ال�سوق املنظم لل�شقق املفرو�شة فى البحرين %10. طبق ًا حلجم ال�شقق )مار�س - �سبتمرب 2009(
جدول 3: م�ؤ�شرات ال�سوق املنظم لل�شقق املفرو�شة فى البحرين ًطبقا حلجم ال�شقق )مار�س - �سبتمرب 2009( معدل التغري معدل التغري التعرفة التعرفة التعرفة التعرفة يف التعرفة يف التعرفة اليومية ال�شهرية اليومية ال�شهرية اليومية ال�شهرية مار�س 2009 �سبتمرب 2009 �إ�ستوديو 44 556 51 612 15.9% 10.1% غرفة نوم 39 563 41 581 5.1% 3.2% غرفتي نوم 51 696 53 701 3.9% 0.7% 3 غرف نوم 138 1,014 128 986 -7.2% -2.8% 4 غرف نوم - 1,290 1,190 0.0% -7.8% غرفتي نوم )طابقني( - 1,100 1,000 0.0% -9.1% 3 غرف نوم )طابقني( - 1,400 120 1,366 0.0% -2.4% بيوت �سطحية 175 1,622 212 1,799 21.1% 10.9% * الفارق العددي لن�سب الإ�شغال
53 مراجعة قطاع اإليجارات
ب�لنظر اىل �سوق الت�أجري من حيث فرتات الت�أجري, وعلى النقي�ض ًمت�م�, ف�إن �سوق الت�أجري تلط الأجل 3 نالح. اأن الفرتة من م�ر�ض 2009 لغ�ية �سبتمرب 2009 ك�ن الأكرث ًت�سررا �سمن هذه الدرا�سة, حيث تراجعت �سهدت ًن�س�ط� ًاإيج�بي� ل�سوق الت�أجري ق�سري الأجل1, معدلت الإ�سغ�ل اىل م� دون %80, كم� اإنخف�ست حيث اأرتفعت اأ�سع�ر الإيج�رات بن�سبة كبرية بلغت معدلت الإيج�رات بن�سبة بلغت , %10مم� اأدى اىل %14, معتمدة يف ذلك على زي�دة ن�س�ط الوافدين من تدهور متو�سط الإيج�رات املعدل لهذا ال�سوق بن�سبة اململكة العربية ال�سعودية مرةاأخرى بعد تراجع اأعداد %17. ويبدو ًجلي� اأثر اإرتف�ع متو�سط الت�أجري يف اأداء امل�س�فرين بداية الع�م 2009. هذا ال�سوق, ف�لربغم من هذا الرتاجع ل يزال �سعر ت�أجري املرت املربع يفوق نظرييه ب�أكرث من 15%.
وقد اإحتف. �سوق الت�أجري طويل الأجل2 بثب�ت اأداءه من حيث ن�سب الإ�سغ�ل اأو معدلت الإيج�ر, وبزي�دة طفيفة واأم� من حيث امل�ستوى, فال يزال تق�سيم ال�سوق املنظم يف متو�سط الإيج�ر املعدل بن�سبة %2ليبلغ �سعر املرت لل�سقق املفرو�سة ًث�بت� مق�رنة ب�لدرا�سة ال�س�بقة يف املربع املوؤجر يف هذا النمط 5.400 دين�ر بحريني. م�ر�ض 2009. ولكن املالح. اأن ال�سقق ذات الت�سنيف�ت الع�لية ك�نت الأ�سد ًت�سررا بعملية الت�سحيح حيث هبطت معدلت الإيج�رات لهذه الفئ�ت قرابة 7%.
�سكل : تق�سيم ال�سوق املنظم لل�سقق املفرو�سة فى البحرين ًطبق� للم�ستوى )�سبتمرب (
متو�سط ٪35.9
اأقل من املتو�سط ٪10.5
فخمة ٪10.7
درجة اأوىل ٪15.2
فوق املتو�سط ٪27.8
kÉeƒj 30 øY π≤J I~à ≥≤°û∏d ÒLCÉàdG áÄa :πLC’G Ò°üb ÒLCÉàdG 2 kÉeƒj 30 øY ~jõJ I~à ≥≤°û∏d ÒLCÉàdG áÄa :πLC’G πjƒW ÒLCÉàdG 3 πLC’G Ò°üb ÒLCÉà∏d 25%h ,πLC’G πjƒW ÒLCÉà∏d ≥≤°ûdG øe %75 ôaƒJ Ée IOÉY »àdGh ≥≤°û∏d ÒLCÉàdG áÄa :πLC’G §∏à ÒLCÉàdG 4 54 قطاع الإيجارات
ولكن امل�ؤ�شر املقلق هو زيادة عدد ال�شقق حتت الإن�شاء �إزدادت ن�سبة ال�شقق �ضمن هذه الفئة من %79 اىل بن�سبة %26. فعلى الرغم من عدم الإعالن عن %82.5خالل ال�ستة �أ�شهر املن�صرمة. ويعود هذا م�شاريع جديدة يف �سوق ال�شقق امل�ؤجرة, ال �أن هذه الإقب لا لقدرة امل�ستثمرين على فر�ض زيادة يف قيمة الزيادة يف العر�ض تتوا�صل عرب حتويل م�شاريع �سكنية الإيجارات تقدر بـ %20 مقارنة بال�شقق امل�ؤجرة معدة للبيع اىل �سوق الت�أجري, مما ينب�أ باملزيد من الإعتيادية. نرى �أن هذه الزيادة مبالغ فيها مقارنة ال�صعوبات ل�سوق ال�سقق املفرو�شة املنظم. باخلدم تا املقدمة, ولذلك ف�إننا نتوقع �أن تنخف�ض هذه الزيادة و تتقارب قيمة الإيجارات بني الق�سمني �ضمن ال�سوق املنظم لل�شقق املفرو�شة, يبدو �أن ال�شقق املذكورين. الفندقية 1 بد�أت ت�ستحوذ �إهتمام املطورين حيث
جدول 2: م�ؤ�شرات ال�سوق املنظم لل�شقق املفرو�شة فى البحرين ً طبقالنوع اخلدمات )مار�س - �سبتمرب 2009( معدل التغري معدل التغري من مار�س �إىل من مار�س �إىل 09 �سبتمرب- 09 �سبتمرب - مار�س - 09 �سبتمرب - يونيو - 09 �سبتمرب - (%) 09 (%) 09
ال�شقق الفندقية ال�شقق امل�ؤجرة ن�سب الإ�شغال 91.2% 87.5% * -3.7% 89.1% 93.5% * 4.4% متو�سط اليجار ال�شهرى للمرت املربع )دينار بحريني( 6.26 6.19 -1.1% 5.23 5.19 -0.8% املتو�سط املعدل لاليجار ال�شهرى للمرت املربع )دينار بحريني( 5.70 5.42 -5.0% 4.66 4.85 4.0% * الفارق العددي لن�سب الإ�شغال
55 مراجعة قطاع اإليجارات
ي�سعدنا يف �شركة ريل كابيتا �أن نطرح التقرير التا�سع اخلا�ص بدايات عملية الت�صحيح حيث بد�أت ن�سب الإ�شغال ب�سوق العقار البحريني �ضمن �سل�سة تقارير RealOUTLOOK بالرتاجع, كما بد�أت �أ�سعار الت�أجري بالإنخفا�ض. التي تتناول �أربع قطاعات رئي�سية �ضمن ال�سوق العقاري )القطاع ال�سكني، التجاري، املكتبي، الإيجارات(. هدفنا تبدو عملية الت�صحيح وا�ضحة الت�أثري للمبان حديثة من خالل ا�صدار هذه التقارير هو مواجهة النق�ص احلاد يف الإن�شاء, حيث ت�شهد �صعوبة بالغة يف حتقيق ن�سب البيانات و الح�صائيات املتعلقة بال�سوق العقاري ب�شكل عام �إ�شغال مقبولة وذلك ًنظرا لإنخفا�ض ن�سب الطلب �إذ ن�سعى من وراء ذلك مل�ساعدة امل�ستثمرين واملهتمني بهذا الرتاكمي. ال�سوق على اتخاذ قرارات ا�ستثمارية �صحيحة مبنية على معلومات �سليمة وموثقة. 1. ال�سوق املنظم لل�شقق املفرو�شة: تراجعت ن�سب الإ�شغ ل الل�سوق املنظم لل�شقق ويعترب هذا التقرير الإ�صدار الثاين لتقرير قطاع الت�أجري املفرو�شة )والتي تعد �أكرب مكون لقطاع الت�أجري ً ً ال�سكني. و يقدم هذا التقرير حتليال وافيا للقطاع املذكور ال�سكني( دون حاجز الـ %90, لت�ستقر عند 2009 خالل الربع الثالث من عام . %88.6ومبقدار �إنخفا�ض 2.3 نقطة مئوية منذ بداية عام 2009. كما ترافق ذلك مع �إنخفا�ض �أهم مالمح قطاع اليجارات ال�سكنية يف طفيف يف �أ�سعار الت�أجري, �إل �أن �أثر تراجع ن�سب البحرين: الإ�شغال �ضخم هذا الإنخفا�ض ليفقد متو�سط 3% يف الوقت الذي بد�أت فيه قطاعات �سوق العقار البحريني الإيجارال�شهري للمرت املربع املعدل من قيمته بالإ�ستقرار الن�سبي, ي�شهد قطاع الت�أجري ال�سكني يف مار�س 2009.
جدول 1: �أليات ال�سوق املنظم لل�شقق املفرو�شة فى البحرين )مار�س - �سبتمرب 2009( مار�س 2009 �سبتمرب ن�سبة التغري )مار�س – 2009 �سبتمرب 2009( عدد العقارات املعرو� ةض لاليجار 343 345 0.6% ال�شقق امل�ؤجرة 11,015 11,040 0.2% ال�شقق اخلالية 1,012 1,264 24.9% ن�سبة ال�شغال 90.8% 88.6% * -2.3% متو�سط اليجار ال�شهرى للمرت املربع )دينار بحريني( 6.02 5.99 -0.5% املتو�سط املعدل لاليجار ال�شهرى للمرت املربع )دينار بحريني( 5.47 5.30 -3.0% ال�شقق حتت الن�شاء 2,621 3,310 26.3% * الفارق العددي لن�سب الإ�شغال
56 BAHRAIN البحرين RENTAL قطاع اإليجارات
Bahrain Rental قطاع االيجارات Market Review السكنية فى البحرين Q3 2009 الربع 3 2009
REAL ESTATE MARKET REPORTS تـقـاريـر �سوق الـعـقـارات ISSUE 9 اال�صدار 9 www.realcapita.com www.realcapita.com