Bahrain Rental Market Review Q3 2009

Transcription

1 BAHRAIN RENTAL Bahrain Rental Market Review Q REAL ESTATE MARKET REPORTS ISSUE 9

2 BAHRAIN RENTAL CONTENTS Rental Market Summary 3 Rental Market Summary 3 Moderate Correction Begins in Bahrain Rental Market 4 Occupancy Ratio Drops Below 90% in SS 1 5 High Premium for Services Fuelling More Interest in Serviced Apartments 6 Improved Performance Only in the Short Stay Category 7 The Mix of Property Grades Remained the in SS 1 8 Higher Grade Properties Undergo Higher Degrees of Correction 10 Demand Favours Smaller Products 11 Area Wise Analysis 15 Central Manama: Occupancy and Average Monthly Rent Declined 16 Juffair: Considerable Drop in Occupancy, More to Come in the Future 19 Seef District: Big Drop in Occupancy, Concealed Correction in Average Monthly Rent 21 Southern Manama: Divergent Trends in Different Market Segments 24 Muharraq (excluding Amwaj) The Hardest Hit Rental Market 27 Rentals Market Dynamics in Organised Villas SS 2 29 Occupancy Ratio Declines in SS 2 but Remains Above 90% 29 SS 2 also Runs on Staple Variety Products 30 Villa Rentals in SS 2 are Stable 31 Villas in SS 2 & SS 3 Are Mostly Semi-Furnished 33 Villa Rentals May Correct Significantly due to New Supply in the Pipeline 33 Rental Market Outlook 33 The Unorganised Segment Threatens to Undermine The Organised Segment Significantly 34 Annexes 35 Annex 1: Definitions of the Term Used in the Report 36 Annex 2: Rental Establishments Grading Methodology 38 Annex 3: Data Sources and the Structure of the Database 40 Profiles 42 RealCAPITA 43 Liases Foras 46 Previous Issues 47

3 Rental Market Review

4 Rental Market Review RENTAL MARKET SUMMARY 1. A moderate correction has begun in Bahrain s Rental Market. Occupancy is slipping and Monthly Rentals are getting squeezed. 2. While existing properties have been able to retain customers, newly operated properties are facing very challenging times as the incremental demand in the market is very low. 3. The Occupancy Ratio for organised Furnished apartments SS 1 the biggest sub segment in the Rental Market - dropped to 88.6% in Q which is a 2.3 percentage points drop compared to Q In the last three months, the Average Monthly Rent dropped as well from BD 6.02 per sq.m. to BD 5.99 per sq.m. a decline of a mere 0.5%. The effect of this slight drop is amplified by the decline in Occupancy Ratio and as a result, the Occupancy Adj. Average Monthly Rent declined by 3%. 5. The most worrying number, however, is a jump of 26% in the number of Rental Apartments Under Construction. While not many new rental projects have started over the last six months, the increase in the supply pipeline is primarily on account of many freehold residential developments converting to the Rental Market. 6. The big jump in the rental supply pipeline has come at a time when even the Operational Properties are facing a drop in Occupancy Ratio. This may foretell a prolonged correction period for the Rental Market over the coming quarters. 7. Off late, the Short Stay category has generated increased interest in the market with several new operators trying to enter this segment. The continued strength of tourist inflow from Saudi Arabia was the key motivation amidst the nervousness in the market that the Long Stay market does not provide attractive growth opportunities. 8. For the Short Stay category, while the Occupancy Ratio dropped from 90.3% to 85.5% in the last three months, the Average Monthly Rent jumped by a whopping 14%. 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. 9. The Occupancy Ratio at Juffair fell from 92.3% in to 88.8% in Q The Average Monthly Rent dropped by around 1.3%; the combined effect of these two factors is a 5% correction in the Occupancy Adj. Average Monthly Rent. It is noteworthy that Juffair is the biggest rental cluster in the country. 10. In addition to the wide coverage of organised Furnished apartments SS 1, we have carried out a sample-based coverage of the organised villas SS 2 sub segment ( villa compounds) in Northern Bahrain. This includes locations such as Budaiya, Barbar, Saar, Janabiya, Al Jasra and Hamala. 11. We tracked 95 Operational Properties in villa compounds in Q with 1,852 villas. We registered 157 vacant villas, which gives an Occupancy Ratio of 91.5%. SS 2 is thus performing beyond expectations. There were concerns in the market that the crisis will result into high vacancy for villa compounds but it has held up remarkably well. The primary reason for this is the relatively limited supply of villa compounds in Bahrain. 12. Our data shows that in the last three months, the Average Monthly Rent of various products in SS 2 have remained stable. 13. Despite some positive indicators, we note that a sizeable share of the freehold supply is entering the Rental Market. Many developers have converted freehold projects in search of the regular flow of rental income. In essence, more rental supply is competing for the same customers. 14. All this is happening at a time when the employment base has stopped growing in Bahrain. Official employment figures show that, after growing at a rapid pace till Q1 2009, the private sector employment base has come to a standstill over the last two quarters. 15. This will lead to further drop in Occupancy Ratios across all areas, particularly in the Long Stay category, which may result into 10-15% correction in rentals. We maintain a negative outlook on Bahrain Rental Market. The Occupancy Adj. Average Monthly Rent declined by 3%. 3

5 Rental Market Review The newly opened properties are facing very challenging times Moderate Correction Begins in Bahrain Rental Market As the Residential Market regains some stabilisation, moderate correction is visible in the Rental Market. Occupancy is slipping and Monthly Rentals are getting depressed. While the existing rental properties have been able to retain customers, newly opened properties are facing very challenging times as the incremental demand in the market is very low. On the positive side, the Short Stay category has shown sizeable growth in Average Monthly Rent. Also the villa rental market, surprisingly though, has maintained very good health with Occupancy Ratio of more than 90%. Despite such positives, there remains little doubt that the overall rental Market is undergoing correction. The Rental Market is entering a correction phase while other segments are experiencing early signs of stabilisation. To this extent, the Rental Market is lagging behind other real estate segments. But this is not surprising as the Rental Market is mainly driven by employment growth with natural population growth providing some additional support. The employment base in Bahrain has not shown any decline in the crisis although it has now stopped growing. That is why the scale of correction in the Rental Market has been moderate so far. As discussed in our previous survey of the Rental Market (Q1 2009), we have divided this market into 3 sub segments: Sub Segment 1 SS 1 : organised Furnished apartments; Sub Segment 2 SS 2 : organised villas (mostly villa compounds); Sub Segment 3 SS 3 : unorganised apartments and villas. Details of these sub segments are provided in Annex 1 Structure of Bahrain Rental Market. This report focuses mainly on SS 1 and SS 2. Occupancy Ratio Drops Below 90% in SS 1 The Occupancy Ratio in SS 1 dropped below 90% in Q Chart 1 shows that of the total Operational Apartments, 88.6% are the occupied while 11.4% are vacant. 4

6 RENTAL MARKET Chart 1: Operational Apartments in SS 1 Split by Occupied and Vacant Apartments (Sep-09) 11.4% Occupied Apartments 88.6% vacant Apartments In Q we tracked 11,040 Operational Apartments, which is marginally more than the corresponding number for in Q Of these apartments,1,264 were vacant resulting in an Occupancy Ratio of 88.6%. This represents a drop of 2.3 percentage points during the last six months. The Average Monthly Rent dropped from BD 6.02 per 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 Occupancy Adj. Average Monthly Rent is 3%. This is the true extent of correction in the Rental Market. 26% increase in Apartments under Construction is a very worrying number. Table 1 shows that we tracked 345 Operational Properties in SS 1 in Q We actually tracked a handful more than this number but some properties were temporarily withdrawn from the market on account of either maintenance work or the lease term expiries for the company that is leasing the property. These properties were not considered for any of the calculations. The most worrying number, however, is the sharp jump in the number of Rental Apartments Under Construction that increased from 2,621 in Q to 3,310 in Q a jump of more than 26%. While not many new rental projects have started over the last six months, the increase in the supply pipeline is primarily on account of many freehold residential developments converting to the Rental Market. The big jump in rental supply has come at a time when even the Operational Properties are struggling to maintain their 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) * Simple difference of percentage points between the two periods. Mar-09 Sep-09 % Change (Mar-09 Sep-09) Operational Properties % Operational Apartments 11,015 11, % Vacant Apartments 1,012 1, % Occupancy Ratio 90.8% 88.6% -2.3% * Average Monthly Rent (BD / sq.m.) % Occupancy Adj. Average Monthly Rent (BD / sq.m.) % Rental Apartments Under Construction 2,621 3, % Despite these negatives, the Rental Market continues to remain the only stable source of cash flow for real estate developers. The drop in Occupancy Ratio is moderate and nowhere as serious as dire conditions in the Residential Market where sales have simply disappeared. On balance, the Rental Market in Bahrain is running reasonably well amidst the crisis. 5

7 Rental Market Review High Premium for Services Fuelling More Interest in Serviced Apartments The two distinct categories of supply in SS 1 are Serviced Apartments and Un-serviced Apartments with the differentiating factor being the housekeeping services for the former. While both varieties offer cleaning services for the common areas, operators of Services Apartments charge a premium for providing periodic and on-demand housekeeping services. Chart 2 shows that of the total Operational Apartments in Q3 2009, 82.5% are Serviced Apartments and 17.5% are Un-serviced Apartments. The share of Serviced Apartments was 79% in Q There has been a shift of almost 3.5 percentage points towards the Serviced category in the last six months. In terms of units, this means that almost 375 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 of the Serviced and Un-serviced categories. The Occupancy Ratio in Serviced Apartments fell from 91.2% in Q to 87.5% in Q This drop took place with 1.1% correction in Average Monthly Rent. The combined effect was a 5% drop in Occupancy Adj. Average Monthly Rent. On the contrary, the Occupancy Ratio for Un-serviced Apartments rose from 89.1% in Q to 93.5% in Q Despite this increase in Occupancy Ratio, the Average Monthly Rent dropped marginally by 0.8%. The combined effect in this category was a 4% increase in Occupancy Adj. Average Monthly Rent. This may indicate that while the supply is shifting to the Serviced category, the demand may be going the other way. Table 2: Key Performance Indicators of Serviced Apartments (2009) Mar-09 Sep-09 % Change (Mar-09 Sep-09) Occupancy Ratio 91.2% 87.5% -3.7% * Average Monthly Rent (BD / sq.m.) % Occupancy Adj. Average Monthly Rent (BD / sq.m.) % * Simple difference of percentage points between the two periods. 6

8 RENTAL MARKET Table 3: Key Performance Indicators of Un-serviced Apartments (2009) Mar-09 Sep-09 % Change (Mar-09 Sep-09) Occupancy Ratio 89.1% 93.5% 4.4% * Average Monthly Rent (BD / sq.m.) % Occupancy Adj. Average Monthly Rent (BD / sq.m.) % The common notion that rents are going up and will keep going up is obviously false and it has no supporting market evidence. * Simple difference of percentage points between the two periods. The key reason for the supply shift away from the Un-serviced category is the 20% premium in Average Monthly Rent for Serviced Apartments. We still believe that this premium is somewhat overstated as the Serviced category includes all the Ultra Luxurious Grade properties that are mostly the high priced 5 Star branded properties. These properties are completely missing from the Un-serviced category, which is why the Average Monthly Rent of this category is low. But even when these properties are excluded from the calculation, the premium remains at 14% - still a very high premium for providing extra housekeeping services. The continued presence of this premium encouraged more Unserviced Apartments to shift to the Serviced category. We continue to believe that a 14% premium is not justifiable and it should fall over time. So far the premium has not declined much but because of this the demand appears to be shifting to the Un-serviced category. This is good enough indication that the premium is unsustainable and will most likely contract over the coming quarters. Improved Performance Only in the Short Stay Category We have renamed some of the terms that we used in our last survey of the Rental Market (Q1 2009) to bring the terms in line with the internationally accepted practises. Long Term Basis has been renamed as Long Stay, which is an accepted term in hospitality for customers staying over 30 days. Similarly, Daily Basis has been changed to Short Stay, which is used for customers staying for less than 30 days. The term Mixed Basis has been removed and that category is now referred to as Any Stay Duration. Detailed definitions of these terms are given in Annex 2 Definitions of the Terms Used in this Report. The breakdown of the total rental supply into the three categories in Q remained similar to what it was in Q The share of Short Stay category dropped from 16.4% in Q to 15.2% in Q The share of Any Stay category increased from 16.7% to 17.9% during the 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

9 Rental Market Review Tables 4, 5 and 6 show the key performance indicators for the three categories. The Long Stay category has improved the Occupancy Ratio by 1.3 percentage points and the Average Monthly Rent by 0.7%. Combined, the Occupancy Adj. Average Monthly Rent improved by 2% between over the last 2 quarters. This change indicates that the Long Stay market remains good with stable Occupancy and rentals. Over the last two quarters, just one new property has been added to this category and therefore the supply remained almost constant. This explains why the Occupancy did not decline while rentals remained at the same level. Table 4: Key Performance Indicators for the Long Stay Category (2009) Mar-09 Sep-09 % Change (Mar-09 Sep-09) Occupancy Ratio 92.0% 93.2% 1.3% * Average Monthly Rent (BD / sq.m.) % Occupancy Adj. Average Monthly Rent (BD / sq.m.) % * 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 Q 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

10 RENTAL MARKET Table 5: Key Performance Indicators for the Short Stay Category (2009) Mar-09 Sep-09 % Change (Mar-09 Sep-09) Occupancy Ratio 90.3% 85.5% -4.6% * Average Monthly Rent (BD / sq.m.) % The Any Stay Duration category has suffered the biggest correction. Occupancy Adj. Average Monthly Rent (BD / sq.m.) % * Simple difference of percentage points between the two periods. The Any Stay Duration category has suffered the biggest correction. The Occupancy Ratio dropped by 6.7 percentage points and the Average Monthly Rent declined by 10%. Combined, the Occupancy Adj. Average Monthly Rent dropped by almost 17%. This is the only category among the three that has suffered a correction in terms of the combined effect. This category includes almost all the internationally and locally branded Serviced Apartments in Bahrain that are high grade properties. These have suffered because of their premium pricing. Table 6: Key Performance Indicators for the Any Stay Duration Category (2009) * Simple difference of percentage points between the two periods. Mar-09 Sep-09 % Change (Mar-09 Sep-09) Occupancy Ratio 86.5% 79.8% -6.7% * Average Monthly Rent (BD / sq.m.) % Occupancy Adj. Average Monthly Rent (BD / sq.m.) % The Mix of Property Grades Remained the in SS 1 In order to understand how different grades of Furnished Apartments are fairing in the market, we developed a grading system that classifies properties based on the quality of furnishings and facilities. This system uses point to segregate various property features into Basic and Additional amenities. Our model segregates the entire SS 1 supply into the following five categories: 1. Ultra Luxurious Grade 2. A+ Grade 3. A Grade 4. Standard Grade 5. Below Par Grade Detailed definitions of these grades are available in Annex 3 - Rental Properties Grading Methodology 9

11 Rental Market Review Almost one third of Apartments supply is of Standard Grade. Chart 4 shows the breakdown of SS 1 supply into various grades. The Ultra Luxurious Grade accounts for 10.7% followed by 15.2% for the A+ Grade and 27.8% for the A Grade. The largest category remained the Standard Grade, which accounts for 35.9% and Below Par Grade accounts for 10.5% only. The mix of property grades has remained about the same since Q Chart 4: Grade Wise Breakdown of SS 1 Supply (Sep-09) 10.5% Below par Grade 10.7% Ultra Luxurious Grade 15.2% A+ Grade 27.8% A Grade 35.9% Standard Grade Higher Grade Properties Undergo Higher Degrees of Correction Table 7 shows the key performance indicators of properties of various grades. The Ultra Luxurious Grade is the only category where the Occupancy Ratio has remained stable and 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. The A+ Grade and A Grade categories suffered similar drops in Occupancy Ratio but the Average Monthly Rent in A+ Grade dropped by more than 7%, which lead to 9% correction in its Occupancy Adj. Average Monthly Rent. It clearly appears that the higher grade properties have undergone higher degrees of price correction than the lower grade properties. 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 Q to 89.5% in Q The higher than normal correction in the Below Par Grade may appear surprising at the first glance given its spectacular Occupancy till Q 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

12 RENTAL MARKET Table 7: Key Performance Indicators of Various Grades of SS 1 Supply (2009) Mar-09 Ultra Luxurious Grade Sep-09 % Change (Mar-09 Sep-09) Occupancy Ratio 87.8% 87.9% 0.1% * Average Monthly Rent (BD / sq.m.) % Occupancy Adj. Average Monthly Rent (BD / sq.m.) % A+ Grade The higher grade properties have undergone higher correction than the lower grade properties. Occupancy Ratio 92.4% 90.6% -1.8% * Average Monthly Rent (BD / sq.m.) % Occupancy Adj. Average Monthly Rent (BD / sq.m.) % A Grade Occupancy Ratio 90.6% 89.3% -1.3% * Average Monthly Rent (BD / sq.m.) % Occupancy Adj. Average Monthly Rent (BD / sq.m.) % Standard Grade Occupancy Ratio 89.9% 87.0% -2.9% * Average Monthly Rent (BD / sq.m.) % Occupancy Adj. Average Monthly Rent (BD / sq.m.) % Below Par Grade Occupancy Ratio 94.9% 89.5% -5.4% * Average Monthly Rent (BD / sq.m.) % Occupancy Adj. Average Monthly Rent (BD / sq.m.) % * Simple difference of percentage points between the two periods. Demand Favours Smaller Products Table 8 shows the product wise break down of SS 1. The three basic products of 1 Bed, 2 Bed and 3 Bed apartments account for 97.6% of the total Operational Apartments in SS 1. This was the exact mix back in Q

13 RENTAL MARKET Demand has increased for smaller Apartments. Table 8: Breakdown of SS 1 Supply by Product Categories (Sep-09) Product Category Number of Operational Apartments % Share Studio % 1 Bed 2, % 2 Bed 6, % 3 Bed 1, % 4 Bed % 2 Bed Duplex 8 0.1% 3 Bed Duplex % Penthouse % Total 11, % * Simple difference of percentage points between the two periods. The occupancy levels for various products are shown in Chart 5. The Occupancy Ratio of studio apartments has gone up considerably from 77% in Q to almost 92% in Q However, this sharp jump is misleading. At the time of our last survey of the Rental Market (Q1 2009), a new development with a significant number of studio apartments was just opened. The Occupancy Ratio of studios in Q was thus understated. The ongoing crisis is forcing consumers to trade down to smaller size apartments. This has increased the demand for smaller apartments while their supply has remained limited, particularly that of studio apartments. This has pushed the rentals for studio and 1 Bed apartments higher. 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

14 Rental Market Review In our last survey of the Residential Market (Q2 2009) we noted that studio apartments are becoming an attractive product category for property investors on account of significant rental demand. Studio apartment in certain areas such as Exhibition Road and Juffair can offer net rental yield in excess of 8% based on an estimated monthly rent of BD Table 6 shows that the Monthly Rental for studio is far higher. We caution that the Monthly Rent of a studio apartment at BD 612 is overstated on account of 5 Star branded properties, but when all such properties are removed from the calculations, the Monthly Rent is still in excess of BD 400. This shows that the net rental yield on a studio apartment can be in double digit territory. Studio Apartments are becoming an attractive product category for property investors. Chart 5: Occupancy Levels of Various Product Categories in SS 1 (Sep-09) 91.9% 89.5% 88.0% 89.0% 90.2% 87.5% 92.0% 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) Daily Tariff Mar-09 Monthly Rent * Simple difference of percentage points between the two periods. Daily Tariff Sep-09 Monthly Rent %Change in Daily Tariff % Change in Monthly Rent Studio % 10.1% 1 Bed % 3.2% 2 Bed % 0.7% 3 Bed % -2.8% 4 Bed % -7.8% 2 Bed Duplex % -9.1% 3 Bed Duplex % -2.4% Penthouse % 10.9% 13

15 AREA-WISE ANALYSIS

16 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 following sections focus on the dynamics of the main areas in the Kingdom. There are six areas with available supply of SS 1 : 1. Central Manama 2. Juffair 3. Seef District 4. Southern Manama 5. Muharraq (excluding Amwaj) 6. Hidd The classification of these areas is based on carefully weighted characteristics. In fact, since our last survey of the Rental Market (Q1 2009), we have made a couple of changes in our area definitions to address the market more efficiently. These changes will not have a material impact on the historical numbers and inferences. Manama is broken down into three parts Central Manama, Juffair and Southern Manama. Central Manama is the northern most part of Manama before Exhibition Road. This The area of Budaiya is defined broadly to include Saar, Budaiya, Al Jasrah, Janabiya and Buguwa. All these locations are part of the Northern Governorate and possess more than 80% of the supply of villa compounds SS 2 of Bahrain. Saar and Budaiya are high-end locations with several large villa compounds. These properties attract a large number of senior expatriate professionals working in Bahrain and in the Eastern Province of Saudi Arabia due to proximity to the King Fahad Causeway. These individuals routinely commute to Saudi Arabia via the causeway, while preferring the more liberal lifestyle that Bahrain offers. Hidd has new supply of SS 1 that is currently under construction and thus it is not yet discussed in this section. When this supply becomes operational, it will also be taken into consideration. Additionally, a later section in the report also discusses the available supply of SS 2. We have tracked SS 2 supply in Budaiya, which is also defined in this section. We haven t tracked any rental supply in the other areas of Bahrain. 15

17 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. Central Manama has been significantly affected by overall market weakness. Most of the operational rental supply at Central Manama is located in old areas such as Al Burhama, Al Naeem, Gufool, etc. Some projects are located in Diplomatic Area as well. This is in contrast to the freehold residential supply, which is coming up on reclaimed land along the northern coast of Manama in projects such as Bahrain Bay, Reef Island and Bahrain Financial Harbor. In the future, rental supply may also come up in these projects. Traffic congestion in Central Manama, particularly on King Faisal Highway in front of Bahrain Financial Harbour, is increasingly resulting in rising inconveniences to daily commuters. However, major infrastructure developments and expansions of the existing road network have been approved to help relieve the pressure in the long-run on the aging roads system. As per Table 7 the Occupancy Ratio improved from 72.7% in Q to 82.7% in Q However, the Occupancy Ratio in Q was understated on account of two newly launched developments. Excluding these, the Occupancy Ratio was 91%. So the Occupancy Ratio has actually declined from 91% to 82%. It is also the reason we see a 4.4% drop in Average Monthly Rent. This is supported by anecdotal evidences, which suggest that the overall weakness in the market has affected Central Manama quite significantly. 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

18 RENTAL MARKET Table 10: Dynamics of SS 1 Supply at Central Manama (2009) * Simple difference of percentage points between the two periods. Mar-09 Sep-09 % Change (Mar-09 Sep-09) Operational Apartments % Occupancy Ratio 72.7% 82.7% 10.0% * Average Monthly Rent (BD / sq.m.) % Occupancy Adj. Monthly Rent (BD / sq.m.) % Rental Apartments Under Construction % Central Manama caters primarily to the Long Stay customers. Chart 6 shows that about half the rental supply is for Long Stay customers and the other half is mostly for Any Stay Duration. There has been some shift from the Long Stay market to Short Stay market over the last six months but we reckon that this may be a temporary trend. There is no change in the grade wise distribution of supply as no new development has been added to the market in the last six months. Chart 6: Central Manama SS 1 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

19 RENTAL MARKET The outlook for Central Manama is weak. The areas of Al Burhama, Gufool and Naeem have several projects under construction which may be ready for operations in the next six months. These locations are not suitable for Short Stay customers and the incremental demand in the Long Stay segment is weak. Therefore, the Occupancy Ratio may decline further when new supply is added to the market. The consumer fact sheet shown in Table 11 reveals that there has beena decline in Daily Tariffs and Average Monthly Rent across all product categories. A studio apartment can now be rented for BD 450 per month, which is BD 50 less than what it was six months ago.. These rentals may fall further in the coming quarters. Table 11: Central Manama Consumer Fact Sheet (Sep-09) Daily Tariff (BD) Monthly Rent (BD) Studio Bed Bed Bed 188 1,569 4 Bed Bed Duplex Bed Duplex - - Penthouse - 1,200 * Simple difference of percentage points between the two periods. 18

20 Rental Market Review 2. Juffair Juffair: Considerable Drop in Occupancy, More to Come in the Future Although from an administrative point of view, Juffair falls within the Manama district, we have defined it as a 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. Projects shifting from Residential to Rental Market in Juffair is causing major difficulties. 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 Monthly Rent dropped by around 1.3%; the combined effect of these two is a 5% correction in the Occupancy Adj. Average Monthly Rent. The biggest cause of concern is the quantum jump in the number of Rental Apartments Under Construction. These were around 1,281 in Q and now they stand at 1,953. While in terms of number of projects, it is an addition of only 3 projects, but these have added close to 700 apartments. All three projects have been shifted from the Residential Market to the Rental Market. When these projects are completed, the number of Operational Apartments will increase by almost 35%. We suspect that this will be too much for the market to absorb and it will affect the Occupancy Ratios of many developments in this area. Table 12: Dynamics of SS 1 Supply at Juffair (2009) * Simple difference of percentage points between the two periods. Mar-09 Sep-09 % Change (Mar-09 Sep-09) Operational Apartments 5,750 5, % Occupancy Ratio 92.3% 88.8% -3.5% * Average Monthly Rent (BD / sq.m.) % Occupancy Adj. Monthly Rent (BD / sq.m.) % Rental Apartments Under Construction 1,281 1, % 19

21 RENTAL MARKET Over the last 2 quarters, the share of the Long Stay category has increased underscoring the point that Juffair remains a preferred area for long-term renters (Chart 8). Despite this, we have noticed several hospitality operators looking for suitable developments for Short Stay customers, primarily for families coming from Saudi Arabia. But it is yet to be seen whether such a move materialises in a meaningful market size or not. Chart 9 shows that the grade wise distribution of supply remains more or less the same as it was six months ago. Chart 8: Juffair SS 1 Supply Split by Customer Stay Duration (Sep-09) 1.1% Short Stay Customers 18.0% Any Stay Duration 80.9% Long Stay Customers Chart 9: Juffair SS 1 Supply Split by Grade (Sep-09) 34.6% Standard Grade 3.6% Below Par Grade 9.6% Ultra Luxurious Grade 17.5% A+ Grade 34.7% A Grade The outlook for Juffair remains very weak due to the notable number of Rental Apartments Under Construction. Once these apartments are ready for operation, they will face serious difficulties in finding rental customers. We have discussed this issue with several hospitality operators in Juffair and all of them agreed with our assessment. They remained very reluctant to sign up with any new development for leasing to Long Stay customers. To make matters worse, a good chunk of freehold residential supply is entering the Rental Market at an unorganised level ( SS 3 ). This new supply will also compete for the same set of customers, which will further push the Occupancy Ratio down. We suspect that the Long Stay segment at Juffair may not see much growth in rentals for many years. The consumer fact sheet in Table 13 doesn t show much drop in either Daily Tariffs or Monthly Rents. But this is just a matter of time before the underlying weakness in the market starts becoming visible in the numbers as well. Table 13: Juffair Consumer Fact Sheet (Sep-09) Daily Tariff (BD) Monthly Rent (BD) Studio Bed Bed Bed Bed Bed Duplex Bed Duplex Penthouse * Simple difference of percentage points between the two periods. 20

22 Rental Market Review 3. Seef District Seef District: Big Drop in Occupancy, Concealed Correction in Average Monthly Rent The Seef District is adjacent to Central Manama and also includes Sanabis. It is an established retail destination with 5 operational malls and an international exhibition centre. 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. Seef District is the most expensive rental area in Bahrain with the Average Monthly Rent reaching as high as BD 9.68 per sq.m. 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 hard by the financial crisis. Many companies are cutting their headcounts and there is hardly a chance that they would require more commercial space over the next 1-2 years. 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. When this new development is excluded from the calculations, the Occupancy Ratio drops by 3 percentage point and the Average Monthly Rent declines by 4%. Combined, these two make the Occupancy Adj. Average Monthly Rent drop by 7%. 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 Q and Q are not directly comparable. 21

23 RENTAL MARKET Table 14: Dynamics of SS 1 Supply at Seef District (2009) * Simple difference of percentage points between the two periods. Mar-09 Sep-09 % Change (Mar-09 Sep-09) Operational Apartments % Occupancy Ratio 91.2% 85.7% -5.5% Average Monthly Rent (BD / sq.m.) % Occupancy Adj. Monthly Rent (BD / sq.m.) % Rental Apartments Under Construction % Currently there are apartments for Short Stay customers in Seef District. This was not the case six months ago. The newly opened development is a branded 5 Star property which caters to Short Stay customers. Due to this, the share of Ultra Luxurious Grade apartments has gone up from 39% in Q to 45% in Q Chart 10: Seef District SS 1 Supply Split by Customer Stay Duration (Sep-09) 38.9% Any Stay Duration 51.1% Long Stay Customers Chart 11: Seef District SS 1 Supply Split by Grade (Sep-09) 36.9% A Grade 8.2% Standard Grade 45.1% Ultra Luxurious Grade 10.0% Short Stay Customers 9.8% A+ Grade The outlook for Seef District is also week. We have noticed that many projects at Seef District were originally planned as freehold residential or commercial developments. However, in the absence of consumption of freehold residential or commercial space, these may look to convert to the Rental Market. This has not happened so far but many property owners are actively considering it in the coming quarters. Such a move will put further pressure on the Occupancy Ratio and will lead to a bigger drop in the rentals. 22

24 Rental Market Review Amidst this churn, we note that there is a limited chunk of supply of Ultra Luxurious Grade and A+ Grade Long Stay apartments at Seef District, which continues to do well. Such exclusive products, when in limited supply, do not get affected by the market conditions easily. The consumer fact sheet numbers shown in Table 15 are not directly comparable to the numbers of Q because of the introduction of one high grade supply which pushed up the average rental values.. The average rentals have remained the same but when like to like comparison is done, we notice correction in several cases. The Outlook for the Area remains weak, with further corrections. Table 15: Seef District Consumer Fact Sheet (Sep-09) Daily Tariff (BD) Monthly Rent (BD) Studio Bed Bed * Simple difference of percentage points between the two periods. 3 Bed Bed Bed Duplex Bed Duplex - - Penthouse * Simple difference of percentage points between the two periods. 23

25 4. Southern Manama Rental Market Review Southern Manama: Divergent Trends in Different Market Segments Despite minor corrections for the Area overall, sub-categories hold major differences in performance. The area of Southern Manama includes locations such as Hoora, Exhibition Road, Adliya, Um Al Hassam and Mahooz. This area is treated independently of Central Manama and Juffair as it differs significantly in its real estate character. In terms of freehold residential supply, Southern Manama 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 Manama, which includes Exhibition Road, Hoora, Adliya, Mahooz and Um Al Hassam, dropped by 1.2 percentage points and the Average Monthly Rent remained almost at the same level. But there have been very significant changes within the various segments at Southern Manama. When we analysed the supply of Short Stay properties in Southern Manama, we noted that compared to Q1 2009, the Average Monthly Rent increased by almost 10%. In the case of Long Stay properties, the Average Monthly rent dropped by around 3% and for the Any Stay Duration category, the rent dropped by almost 8%. We analysed the performance of the Short Stay category (for the entire Kingdom) in a previous section titled Improved Performance in the Short Stay Category. Southern Manama remains the biggest cluster of properties operating on Short Stay basis and an improved performance in this area is the primary reason for the impressive showing of this category on a country level. Table 16: Dynamics of SS 1 Supply at Southern Manama (2009) Mar-09 Sep-09 % Change (Mar-09 Sep-09) Operational Apartments % Occupancy Ratio 91.1% 89.9% -1.2%* Average Monthly Rent (BD / sq.m.) % Occupancy Adj. Monthly Rent (BD / sq.m.) % Rental Apartments Under Construction % * Simple difference of percentage points between the two periods. 24

26 RENTAL MARKET About half the supply in this area is for Long Stay customers, which are mostly the developments in Adliya, Mahooz and Um Al Hassam. Around 41% of the supply focuses on Short Stay customers, which are the developments on Exhibition Road. This area mostly houses medium to lower grade properties with more than 80% of supply falling in the bottom three grades. Chart 12: Southern Manama SS 1 Supply Split by Customer Stay Duration (Sep-09) 41.6% Short Stay Customers 9.1% Any Stay Duration 49.2% Long Stay Customers Chart 13: Southern Manama SS 1 Supply Split by Grade (Sep-09) 24.8% Below Par Grade 2.8% Ultra luxurious Grade 13.4% A+ Grade 18.5% A Grade 40.6% Standard Grade 25

27 RENTAL MARKET Our previous assessment of this area back in Q was good, particularly for the Short Stay market as the crisis seems to have not affected the tourist flow from Saudi Arabia and Kuwait. This has turned out to be correct but the increase in rentals in the Short Stay category surpassed our expectations. From this point onwards, the chances of further growth in rentals in this category are less but it should continue to do well. The Long Stay category has undergone some correction in rentals and faces more correction with a handful of under construction projects getting ready for operation. The consumer fact sheet in Table 17 shows that the Average Monthly Rents across most product categories have dropped over the last six months. Table 17: Southern Manama Consumer Fact Sheet (Sep-09) Daily Tariff (BD) Monthly Rent (BD) Studio Bed Bed Bed Bed Bed Duplex Bed Duplex - - Penthouse * Simple difference of percentage points between the two periods. The outlook for this area is bright as average rents remain attractively low. 26

28 Rental Market Review 5. Muharraq (Excluding Amwaj) Muharraq (excluding Amwaj) The Hardest Hit Rental Market Muharraq (excluding Amwaj) currently has a dominant local population and in our definition includes Busaiteen. 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. Muharraq, has witnessed the most serious correction among all areas in Bahrain. 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. Over the last six months, the Occupancy Ratio dropped by 6.2 percentage points and the Average Monthly Rent dropped by 4.5%. Consequently, the Occupancy Adj. Average Monthly Rent dropped by close to 11% over the last 2 quarters the most serious correction among all areas in Bahrain. Table 18: Dynamics of SS 1 Supply at Muharraq (excluding Amwaj) (2009) Mar-09 Sep-09 % Change (Mar-09 Sep-09) Operational Apartments % Occupancy Ratio 92.9% 86.7% -6.2%* Average Monthly Rent (BD / sq.m.) % Occupancy Adj. Monthly Rent (BD / sq.m.) % Rental Apartments Under Construction % * Simple difference of percentage points between the two periods. The area has no development that targets Short Stay customers, all developments are focusing on Long Stay customers. Also there is no Ultra Luxurious Grade supply. A whopping 62% of the supply falls into Standard Grade. 27

29 Rental Market Review Busaiteen is fast emerging as a competitive rental cluster. Chart 14: Muharraq (excluding Amwaj) SS 1 Supply Split by Customer Stay Duration (Sep-09) 0.0% Chart 15: Muharraq (excluding Amwaj) SS 1 Supply Split by Grade (Sep-09) 11.8% Below Par Grade 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 Bed Bed Bed Bed Bed Duplex Bed Duplex - - Penthouse - - * Simple difference of percentage points between the two periods. 28

30 RENTAL MARKET Rentals Market Dynamics in Organised Villas SS 2 In addition to our extensive coverage of SS 1, we have carried out a sample-based survey of SS 2 i.e. organised villas (villa compounds) in Northern Bahrain. This includes locations such as Budaiya, Barbar, Saar, Janabiya, Al Jasra and Hamala. As per our definition, all these locations fall under the area of Budaiya. For this sub segment, the first survey was carried out in Q2 2009, and the data was updated for Q There are a handful of villa compounds in Southern Manama (Adliya, Mahooz and Um Al Hassam) and Central Manama (Al Burhama, Naeem and Gufool). These compounds have not been covered in this round of survey and will be added in the future. Budaiya accounts for more than 80% of all the supply of villa compounds in Bahrain and thus our current sample of SS 2 covers a very large chunk of this market segment. SS 2 is relatively a simple segment compared to SS 1 due to the following reasons: 1. There is no distinction of Serviced or Un-serviced category in SS 2 because housekeeping services are never provided by any of the villa compounds. The management agencies of these compounds take care of only the common area cleaning and maintenance. 2. Unlike the apartments segment, no villa compounds are offered on Short Stay basis and therefore there are no Daily Tariffs. Villas are offered only on Long Stay basis with the lease contracts of one year or more. So far we have not fully developed the grading system for villa compounds as the grading variables are completely different. We are actively working on it and we hope to introduce a detailed system in our next survey of the Rental Market. Occupancy Ratio Declines in SS 2 but Remains Above 90% Table 20 reflects the current market conditions in SS 2. We tracked 95 Operational Properties amongst villa compounds in Q with 1,852 villas. We registered 157 vacant villas, which gives an Occupancy Ratio of 91.5%. Although still excellent, this is 2.4 percentage points lower that what it was three months ago. 29

31 Rental Market Review Villa Rentals have performed beyond expectations due to limited supply. We must say that SS 2 is performing beyond expectations. There were serious concerns in the market that the crisis will result in high vacancy for villa compounds. Before having access to the results of our servey, we were also apprehensive about this segment. But it has held up remarkably well and still runs Occupancy above 90% at a time when we are probably reaching the height of the crisis. The primary reason for the remarkable Occupancy is the very limited supply of villa compounds in Bahrain. There are just 1,852 villas in our sample, which possibly covers close to 80% of the entire SS 2. While several villa projects were released for sale in the freehold residential category over the last 2-3 years, it appears not many villa compounds have been added in the Rental Market. This supply bottleneck is the key reason for the good performance of SS 2 this far. Table 20: Dynamics of Organised Villas Segment SS 2 (2009) * Simple difference of percentage points between the two periods. Mar-09 Sep-09 % Change (Mar-09 Sep-09) Operational Properties % Operational Villas % Vacant Villas % Occupancy Ratio 93.9% 91.5% -2.4% Rental Villas Under Construction % SS 2 also Runs on Staple Variety Products Much like the apartments, the villa compounds segment also runs on a few staple products. Table 21 lists the products that are available in these compounds. The products are segregated as per the number of bedrooms in a villa. An additional maid room is normally given with all the villas. What is noteworthy is when a personal pool is added to a villa, it becomes a different product. The market regards it as a premium product and as we show later, there is much difference in the Monthly Rentals. Table 21 shows that 3 Bed + Maid and 4 Bed + Maid varieties account for more than 80% of SS 2 supply. The former is running an Occupancy Ratio close to 95%, the latter is around 90%. The 5 Bed + Maid products also runs close to 95% Occupancy. The products with personal pools are interesting with the 3 Bed + Maid + Personal Pool variety running a low Occupancy, while the 4 Bed variety running almost 93% Occupancy. The Occupancy Ratio of the 3 Bed + Maid + Personal Pool variety is somewhat understated as one villa compound has recently finished the renovation of such villas and was not fully operational at the time of the survey. 30

32 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 Unlike the apartments, the assessment of the built up areas of villas through visual inspection is nearly impossible. We noticed wide variations in villa sizes with the smaller villas at 350 sq.m. and some of the big villas at 1,000 sq.m. Therefore, we have not calculated the Average Monthly Rent for SS 2 in BD per sq.m. terms as it will most likely be based on inaccurate data. Table 22 shows the comparison; between Q and Q3 2009, the Average Monthly Rent of various products have remained stable with some correction seen in the 5 Bed + Maid + Personal Pool variety. What is very interesting to note is that by adding a personal pool to a 3 Bed + Maid villa, property owners are able to charge 22% higher Monthly Rent. Therefore this variety of products offers much higher rental yields. The total number of villas with independent pools across all product categories is just 233 now but the trend is gaining mass momentum and we may see many more villas with independent pools in the future. 31

33 RENTAL MARKET Table 22: Price Trends in Various Product Categories in SS 2 (2009) * Simple difference of percentage points between the two periods. Jun-09 Sep-09 % Change (Jun - Sep) 3 Bed + Maid % 4 Bed + Maid % 5 Bed + Maid % 3 Bed + Maid + Personal Pool % 4 Bed + Maid + Personal Pool % 5 Bed + Maid + Personal Pool % 6 Bed + Maid + Personal Pool % It is very important to note that the Average Monthly Rents shown in Table 22 are for Semi-furnished villas and exclusive of municipality and electricity payments. Therefore, these rentals are not directly comparable with the rentals of apartments which are for fully Furnished units and include municipality and electricity payment. Some villa compounds offer inclusive contracts (i.e. municipality and electricity charges are covered by the landlord) and some others offer the option of renting a fully Furnished villa. But the overwhelming majority offers Semi-furnished and exclusive contract. Roughly speaking, the Average Monthly Rent goes up by about 35% if a villa is fully Furnished (standard furniture) and an inclusive lease contract is offered. The Average Monthly Rent of even the smallest variety villa (3 Bed + Maid) is more than BD 1,000. There are just 7 compounds that offer villas below BD 1,000 of monthly rent. While more than 80% of the apartment Rental Market falls below BD 1,000 monthly rent mark, almost 99% of the villa Rental Market is above this mark. Overall, SS 2 has maintained good health with marginal correction so far. The limited supply of villa compounds is a key factor supporting the segment. 32

34 Rental Market Outlook

35 Rental Market Review Many freehold developments, particularly those in the advanced stage of construction, are actively considering releasing their current unsold apartments to the Rental Market. The Unorganised Segment Threatens to Undermine The Organised Segment Significantly Since our last survey back in Q1 2009, we have noticed that a sizeable freehold residential supply ends up in the Rental Market and competes for the same set of customers. This new supply directly is drawing on the same consumer base of the organised segments ( SS 1 and SS 2 ). Some prominent examples of this phenomenon are Abraj Al Lulu at Central Manama and Riffa Views at Southern Governorate. Abraj is currently being handed over to its buyers and it has more than 1,000 apartments. Hundreds of these apartments are being introduced in the Unorganised segment of the Rental Market. More such freehold projects will be handed over in 2010, which will impact the Occupancy of the entire SS 1 segment. Similarly, once Riffa Views is fully handed over, this alone may lead to an introduction of several hundred villas for rent, which will impact the Occupancy in SS 2 considerably. All this is happening at a time when the employment base has just stopped growing in Bahrain. Table 23 shows the official employment figures from the Labour Market Regulatory Authority (LMRA). The data shows that, after growing at a rapid pace till Q1 2009, private sector employment has come to a standstill over the last two quarters. Lack of growth in this sector means that the customer base for the Rental Market is not growing. Table 23: Quarterly Employment Growth in Bahrain Q Q Q Q Q Q Q Total Employment Base in Bahrain 511, , , , , , ,143 Public Sector 59,922 59,658 57,898 59,067 59,016 59,291 59,427 Private Sector 384, , , , , , ,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

36 Annexes 37

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-today 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

38 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 SS 1 Organised Furnished Apartments Serviced Apartments Properties Rental Properties Sub Segment 2 SS 2 Organised Villas Furnished Villa Compounds Semi Furnished / Unfurnished Villa Compounds Sub Segment 3 SS 3 Unorganised Apartments & Villas Furnished Apartments Semi Furnished/ Unfurnished Apartments Stand-alone Villas 37

39 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

40 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

41 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

42 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, 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

43 44 Profiles

44 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

45 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

46 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. TIP 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 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

47 Liases Foras Profile Liases Foras ( ) 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 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

48 PREVIOUS ISSUES BAHRAIN 3rd Quarter RealOUTLOOK Residential Q RealOUTLOOK Commercial Q RealOUTLOOK Residential Q RealOUTLOOK Rental Q RealOUTLOOK Residential Q RealOUTLOOK Residential Q

49 PREVIOUS ISSUES 7. RealOUTLOOK Commercial Q RealOUTLOOK Residential Q 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

50 مراجعة قطاع اإليجارات جدول 5: موؤTشرات الùسوق املنظم للفلل )يونيو - Sسبتمرب 2009( يونيو 2009 التعرفة الûشهرية Sسبتمرب 2009 التعرفة الûشهرية نùسبة التغري )مارSس Sسبتمرب ) % -0.3% 3.1% 0.0% -2.1% -6.7% 0.0% 1,044 1,420 2,075 1,278 1,833 2,544 3,500 1,040 1,424 2,012 1,278 1,873 2,727 3,500 3 غرف نوم + غرفة خادمة 4 غرف نوم + غرفة خادمة 5 غرف نوم + غرفة خادمة 3 غرف نوم + غرفة خادمة + بركة Sسباحة 4 غرف نوم + غرفة خادمة + بركة Sسباحة 5 غرف نوم + غرفة خادمة + بركة Sسباحة 6 غرف نوم + غرفة خادمة + بركة Sسباحة * الفارق العددي لنùسب الإTشغال نظرة مùستقبلية لùسوق الإيجارات الùسكنية يف البحرين Tشهدت الفرتة املنüصرمة )مارSس لغاية Sسبتمرب 2009( حتول عدد من املûشاريع الùسكنية املعدة للبيع اىل قطاع التÉأجري, مما وVضع هذا القطاع حتت Vضغوط هائلة من حيث نùسب الإTشغال و معدلت التÉأجري. ول يبدو أان هذه الظاهرة Sستتوقف يف القريب, حيث ل تزال املûشاريع الùسكنية تواجه Uصعوبة كبرية يف بيع وحداتها اجلاهزة مما يدفعها للتÉأجري. يحدث ذلك بالتزامن مع تباطÉأ يف معدلت منو الوظائف باململكة حùسب اإحüصائات هيئة تنظيم Sسوق العمل, مما يعني مزيدا من الرتاجع ملعدلت الإTشغال. وبûشكل عام, فÉإن نظرتنا Sسلبية لùسوق التÉأجري للفرتة املقبلة مع توقع تüصحيح يف معدلت التÉأجري تتجاوز 10%. 50

51 قطاع الإيجارات 2 الùسوق املنظم للفلل: مت رUصد Sسوق تÉأجري الفلل يف اململكة من خالل جممعات الفلل الùسكنية واملرتكزة يف منطقة Tشمال البحرين كالبديع, وSسار واجلنبية وباربار. يبدو هذا الùسوق يف وVضع جيد مقارنة بالأوVضاع الإقتüصادية املüصاحبة لالأزمة املالية. فال تزال نùسب الإTشغال يف هذا الùسوق تتخطى حاجز ال 90% مع ثبات نùسبي يف معدلت الإيجارات. هذا الأداء املتوازن للùسوق املنظم للفلل ميكن اأن يعزى اىل مùستويات العرVض املتدنية جدا لهذه الفئة على الرغم من ظهور جمموعة من مûشاريع الفلل ولكن للبيع دون التÉأج جدول 4: األيات الùسوق املنظم للفلل فى البحرين )مارSس - Sسبتمرب 2009( Sسبتمرب يونيو عدد جممعات الفلل املعروVضة لاليجار الفلل املوؤجرة الفلل اخلالية نùسبة الTشغال الفلل حتت النûشاء نùسبة التغري )مارSس Sسبتمرب 2009( 2.2% 4.1% 44.0% -2.4% * -25.3% 1, % 216 1, % 289 * الفارق العددي لنùسب الإTشغال يقùسم الùسوق املنظم للفلل من حيث اأحجام الفلل )عدد غرف النوم(, حيث تûشري الأرقام اىل أان الغالبية من الفلل تقع Vضمن فئة الثالث والأربع غرف نوم بالإVضافة اىل غرفة اخلادمة )80% من اإجمايل الفلل املعروVضة( ومبعدلت اإTشغال تبلغ 90% اأو أاكرث. مت إاحتùساب معدلت الإيجار الûشهرية للفلل بحùسب اأحجامها بدل من حùسابها باملرت املربع املبني, وذلك نظرا للتفاوت الكبري يف اأحجام الفلل حيث ترتاوح بني 350 مرت مربع لغاية 1,000 مرت مربع. جتدر الإTشارة اىل أان اأSسعار التÉأجري ترتفع مبقدار 20% عند اإVضافة بركة Sسباحة خاUصة للفيال امل ؤوجرة. كما أان أاغلب الفلل امل ؤوجرة تكون على اأSساSس تÉأثيث نüصفي و غري Tشاملة لعقود الكهرباء والبلدية بعكùس عقود التÉأجري للûشقق املفروTشة. ويبني اجلدول اأدناه معدلت الإيجارات للفرتة بني يونيو و Sسبتمرب 2009: 51

52 قطاع الإيجارات حتليل لأهم مناطق اليجارات الùسكنية للûشقق املفروTشة يف البحرين تعترب منطقة وSسط املنامة مركز النûشاط القتüصادي يف البحرين حيث ت ضم اأهم املûشروعات التجارية والإدارية. و قد قمنا برUصد 15 مûشروعا معروVضا لاليجار الùسكني و 9 مûشروعات حتت النûشاء. وتûشري الإحüصاءات اىل اأن منطقة الوSسط املنامة قد ت ضررت بûشكل كبري جراء الأزمة الإقتüصادية الأخرية, حيث اإنخف ضت معدلت الإTشغال باملنطقة من 91% اىل 82% تقريبا, مما Sساهم كذلك يف خف ض معدلت التÉأجري بواقع 4% مقارنة بûشهر مارSس تعترب منطقة اجلفري من اأهم املناطق الùسكنية املف ضلة للمغرتبني من الوليات املتحدة واأوربا. وحتتوي اجلفري على اأكرب جتمع من الوحدات امل ؤوجرة يف البحرين. وتûشري البيانات اإىل اأن نùسبة الأTشغال قد اإنخق ض بûشكل ملحوظ من %92.3 يف Tشهر مارSس اىل 88% يف Tشهر Sسبتمرب من العام وقد اأدى هذا الإنخفاVض مüصحوبا بÉإنخفاVض معدلت التÉأجري اىل تüصحيح معدلت التÉأجري بواقع 5% للفرتة حمل الدراSسة. ومما يزيد من Uصعوبة الوVضع ملنطقة اجلفري هو الكم الهائل من الûشقق قيد الإنûشاء )حوايل 2,000 وحدة( والتي Sستûشكل عبئا كبريا على معدلت الإTشغال والتÉأجري عند دخولها لùسوق التÉأجري. ت ضم منطقة جنوب املنامة عدة مناطق مثل احلورة العدلية اأم احلüصم وTشارع املعارVض. وتعترب جنوب املنامة ثاين اأكرب جتمع لوحدات الإيجار الùسكني يف البحرين ول تزال نùسبة الTشغال بها يف حدود 90 %.وبÉإلقاء نظرة فاحüصة, يتبني اأن املنطقة تعد من اأهم مناطق التÉأجري قüصري الأجل, والذي يûشهد فرتة اإنتعاTش كبري على مùستوى اململكة بûشكل عام. ولكن بالرغم من هذا الأداء الإيجابي لفئة التÉأجري قüصري الأجل, فÉإن فئات التÉأجري الأخرى كانت Sسلبية الأداء, وباملحüصلة فÉإن منطقة جنوب املنامة مل تûشهد تغريا كبريا يف معدلت التÉأجري املعدلة )اأقل من 1%(. يبدو أان منطقة املحرق مل حتقق أاي من توقعاتنا بعد الأداء املتميز للمنطقة يف الدراSسة الùسابقة حيث حققت اأعلى مùستويات الإTشغال. فقد هبطت معدلت الإTشغال بÉأكرث من 6%, كما اإنخف ضت معدلت التÉأجري بÉأكرث من 4%, لتكون حمüصلة عملية التüصحيح باملنطقة 11% مقارنة بÉإيجارات الفرتة املنüصرمة. ويبدو أان قلة املنûشئات املùساندة )حمالت وجممعات جتارية, خدمات عامة( يف املناطق الùسكنية اجلديدة كالبùسيتني و احلد هي العامل الرئيùس وراء توقف عجلة الأداء الإيجابي للمنطقة. تعترب منطقة الùسيف من اأهم املناطق التجارية حيث حتتوي على 5 جممعات جتارية. كذلك تعترب من املناطق الإدارية الهامة حيث ت ضم أاكرث من 40 مبنى اإداري وتتميز كذلك بوجود Tشبكة طرق ذات مùستوى عال وكثافة مرورية اأقل من منطقة وSسط املنامة. وحتتوي منطقة الùسيف على عدد حمدود نùسبيا من الûشقق املوؤجرة) 910 Tشقة( اإل اأن املنطقة تراجعت من حيث متتعها بنùسبة اإTشغال عالية حيث تدنت هذه النùسبة من %91.2 يف Tشهر مارSس لغاية 85% يف Tشهر Sسبتمرب وقد Uصاحب هذا الإنخفاVض يف معدلت الإTشغال اإنخفاVض يف معدلت التÉأجري بواقع 1% ليبلغ اإيجار املرت املربع يف املنطقة دينار بحريني للمرت املربع. 52

53 مراجعة قطاع اإليجارات يبدو جليا اأن الûشقق Uصغرية احلجم تتمتع بطلب أاقوى يف الùسوق من الûشقق ذات الأحجام الكبرية. لقد بد أا املùستهلكون وحتت وطÉأة الأزمة الإقتüصادية بالإجتاه نحو الûشقق Uصغرية احلجم حيث إارتفعت نùسب الإTشغال فيها اىل حدود 90-91%, كما اأن اإيجارات هذه الفئة إارتفعت بنùسب ترتاوح بني 3 اىل 10% مقارنة بÉإنحدار اإيجارات الûشقق كبرية احلجم اىل قرابة ونتيجة لزيادة الطلب على الوحدات الüصغرية بالإVضافة اىل اإرتفاع اإيجاراتها, بداأت هذه الفئة وباخلüصوUص فئة الSستديوهات حتوز إاهتمام املùستثمرين والذين يجدون يف هذه الûشقق عوائد Uصافية على الإSستثمار تقارب 8% Sسنويا. جدول 3: موؤTشرات الùسوق املنظم للûشقق املفروTشة فى البحرين طبقا حلجم الûشقق )مارSس - Sسبتمرب 2009(.10% جدول 3: موؤTشرات الùسوق املنظم للûشقق املفروTشة فى البحرين طبقا حلجم الûشقق )مارSس - Sسبتمرب 2009( التعرفة اليومية التعرفة الûشهرية التعرفة اليومية التعرفة الûشهرية مارSس Sسبتمرب معدلالتغري يف التعرفة اليومية معدل التغري يف التعرفة الûشهرية 10.1% 15.9% اإSستوديو 3.2% 5.1% غرفة نوم 0.7% 3.9% غرفتي نوم -2.8% -7.2% , غرف نوم -7.8% 0.0% 1,190 1,290-4 غرف نوم -9.1% 0.0% 1,000 1,100 - غرفتي نوم )طابقني( -2.4% 0.0% 1, ,400-3 غرف نوم )طابقني( 10.9% 21.1% 1, , بيوت Sسطحية * الفارق العددي لنùسب الإTشغال 53

54 مراجعة قطاع اإليجارات بÉلنظر اىل Sسوق التÉأجري من حيث فرتات التÉأجري, نالح اأن الفرتة من مÉرSض 2009 لغÉية Sسبتمرب 2009 Tسهدت نûسÉطÉ اإيجÉبيÉ لùسوق التÉأجري قüسري الأجل 1, حيث اأرتفعت اأSسعÉر الإيجÉرات بنùسبة كبرية بلغت 14%, معتمدة يف ذلك على زيÉدة نûسÉط الوافدين من اململكة العربية الùسعودية مرةاأخرى بعد تراجع اأعداد املùسÉفرين بداية العÉم وقد اإحتف Sسوق التÉأجري طويل الأجل 2 بثبÉت اأداءه من حيث نùسب الإTسغÉل اأو معدلت الإيجÉر, وبزيÉدة طفيفة يف متوSسط الإيجÉر املعدل بنùسبة 2% ليبلغ Sسعر املرت املربع املوؤجر يف هذا النمط دينÉر بحريني. وعلى النقي ض متÉمÉ, فÉإن Sسوق التÉأجري تلط الأجل 3 كÉن الأكرث ت سررا Vسمن هذه الدراSسة, حيث تراجعت معدلت الإTسغÉل اىل مÉ دون 80%, كمÉ اإنخف ست معدلت الإيجÉرات بنùسبة بلغت 10%, ممÉ اأدى اىل تدهور متوSسط الإيجÉرات املعدل لهذا الùسوق بنùسبة 17%. ويبدو جليÉ اأثر اإرتفÉع متوSسط التÉأجري يف اأداء هذا الùسوق, فÉلربغم من هذا الرتاجع ل يزال Sسعر تÉأجري املرت املربع يفوق نظرييه بÉأكرث من 15%. واأمÉ من حيث املùستوى, فال يزال تقùسيم الùسوق املنظم للûسقق املفروTسة ثÉبتÉ مقÉرنة بÉلدراSسة الùسÉبقة يف مÉرSض ولكن املالح اأن الûسقق ذات التüسنيفÉت العÉلية كÉنت الأTسد ت سررا بعملية التüسحيح حيث هبطت معدلت الإيجÉرات لهذه الفئÉت قرابة 7%. Tسكل : تقùسيم الùسوق املنظم للûسقق املفروTسة فى البحرين طبقÉ للمùستوى ) Sسبتمرب ) متوSسط 35.9 اأقل من املتوSسط 10.5 فخمة 10.7 درجة اأوىل 15.2 فوق املتوSسط 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

55 قطاع الإيجارات ولكن املوؤTشر املقلق هو زيادة عدد الûشقق حتت الإنûشاء بنùسبة 26%. فعلى الرغم من عدم الإعالن عن مûشاريع جديدة يف Sسوق الûشقق امل ؤوجرة, ال أان هذه الزيادة يف العرVض تتواUصل عرب حتويل مûشاريع Sسكنية معدة للبيع اىل Sسوق التÉأجري, مما ينبÉأ باملزيد من الüصعوبات لùسوق الùسقق املفروTشة املنظم. Vضمن الùسوق املنظم للûشقق املفروTشة, يبدو أان الûشقق الفندقية 1 بد أات تùستحوذ اإهتمام املطورين حيث اإزدادت نùسبة الûشقق Vضمن هذه الفئة من 79% اىل 82.5% خالل الùستة اأTشهر املنüصرمة. ويعود هذا الإقبال لقدرة املùستثمرين على فرVض زيادة يف قيمة الإيجارات تقدر ب 20% مقارنة بالûشقق املوؤجرة الإعتيادية. نرى اأن هذه الزيادة مبالغ فيها مقارنة باخلدمات املقدمة, ولذلك فÉإننا نتوقع اأن تنخف ض هذه الزيادة و تتقارب قيمة الإيجارات بني القùسمني املذكورين. جدول 2: موؤTشرات الùسوق املنظم للûشقق املفروTشة فى البحرين طبقا لنوع اخلدمات )مارSس - Sسبتمرب 2009( معدل التغري من مارSس اإىل Sسبتمرب - (%) 09 Sسبتمرب - 09 يونيو - 09 Sسبتمرب- 09 مارSس - 09 معدل التغري من مارSس اإىل Sسبتمرب - (%) 09 الûشقق املوؤجرة الûشقق الفندقية * 4.4% 93.5% 89.1% * -3.7% 87.5% 91.2% نùسب الإTشغال -0.8% % متوSسط اليجار الûشهرى للمرت املربع )دينار بحريني( 4.0% % املتوSسط املعدل لاليجار الûشهرى للمرت املربع )دينار بحريني( * الفارق العددي لنùسب الإTشغال 55

56 مراجعة قطاع اإليجارات يùسعدنا يف Tشركة ريل كابيتا أان نطرح التقرير التاSسع اخلاUص بùسوق العقار البحريني Vضمن Sسلùسة تقارير RealOUTLOOK التي تتناول اأربع قطاعات رئيùسية Vضمن الùسوق العقاري )القطاع الùسكني التجاري املكتبي الإيجارات(. هدفنا من خالل اUصدار هذه التقارير هو مواجهة النقüص احلاد يف البيانات و الحüصائيات املتعلقة بالùسوق العقاري بûشكل عام إاذ نùسعى من وراء ذلك ملùساعدة املùستثمرين واملهتمني بهذا الùسوق على اتخاذ قرارات اSستثمارية Uصحيحة مبنية على معلومات Sسليمة وموثقة. ويعترب هذا التقرير الإUصدار الثاين لتقرير قطاع التÉأجري الùسكني. و يقدم هذا التقرير حتليال وافيا للقطاع املذكور خالل الربع الثالث من عام اأهم مالمح قطاع اليجارات الùسكنية يف البحرين: يف الوقت الذي بداأت فيه قطاعات Sسوق العقار البحريني بالإSستقرار النùسبي, يûشهد قطاع التÉأجري الùسكني بدايات عملية التüصحيح حيث بداأت نùسب الإTشغال بالرتاجع, كما بداأت اأSسعار التÉأجري بالإنخفاVض. تبدو عملية التüصحيح واVضحة التÉأثري للمبان حديثة الإنûشاء, حيث تûشهد Uصعوبة بالغة يف حتقيق نùسب اإTشغال مقبولة وذلك نظرا لإنخفاVض نùسب الطلب الرتاكمي. 1. الùسوق املنظم للûشقق املفروTشة: تراجعت نùسب الإTشغال للùسوق املنظم للûشقق املفروTشة )والتي تعد اأكرب مكون لقطاع التÉأجري الùسكني( دون حاجز ال 90%, لتùستقر عند 88.6% ومبقدار اإنخفاVض 2.3 نقطة مئوية منذ بداية عام كما ترافق ذلك مع اإنخفاVض طفيف يف اأSسعار التÉأجري, اإل اأن اأثر تراجع نùسب الإTشغال Vضخم هذا الإنخفاVض ليفقد متوSسط الإيجارالûشهري للمرت املربع املعدل 3% من قيمته يف مارSس عدد العقارات املعروVضة لاليجار الûشقق امل ؤوجرة الûشقق اخلالية نùسبة الTشغال متوSسط اليجار الûشهرى للمرت املربع )دينار بحريني( املتوSسط املعدل لاليجار الûشهرى للمرت املربع )دينار بحريني( الûشقق حتت النûشاء جدول 1: األيات الùسوق املنظم للûشقق املفروTشة فى البحرين )مارSس - Sسبتمرب 2009( Sسبتمرب مارSس نùسبة التغري )مارSس Sسبتمرب 2009( 0.6% 0.2% 24.9% -2.3% * -0.5% -3.0% 26.3% 11,040 1, % ,310 11,015 1, % ,621 * الفارق العددي لنùسب الإTشغال 56