Bahrain: Bahrain’s retail sector branching out

The development of middle and lower gain housing units in outlying areas in Bahrain is not only welcome news for those looking for a home to buy, it as well signals a wave of new opportunities for retailers eyeing untapped markets in the kingdom.

Appetite for retail space, from both local and international investors, has been supported by positive consumer sentiment in recent quarters, next the economy grew 5.1% in constant prices in the third quarter of this year, according to official data published at the start of December, with GDP rising 1.7% in the quarter, despite a mixed economic picture.

Moving out

The retail sector has outperformed other real estate investment classes in the completed three quarters, with increased request from international and local retailers for mall space in the capital inclunding smaller community malls, according to world real estate consultancy CBRE.

“Smaller community mall projects are helping to drive evolution in the sector with local retail developments in and around the capital witnessing strong request,” said CBRE in its Q3 2014 MarketView statement.

This trend was as well noted by consultancy Cluttons in its new assessment of Bahrain’s property market, which outlined a move from highly centralised retailing in large multi-outlet hubs to retail space outside the capital or smaller neighbourhood retail centres. It noted exceptionally strong levels of request in the initial three quarters, particularly for smaller units of 50-100 sq m.

This shift has spurred the evolution of developments in Bu Quwah, Muharraq, Isa Town and Riffa, with outlying markets from presently on to be widely serviced by retailers.

“We have by presently begun to record high request from retailers, looking for smaller schemes around the capital,” said Harry Goodson-Wickes, Cluttons chief for Bahrain.

The request for additional retail space in suburban areas will accelerate in the coming years as national programmes to provide subsidised residential units for Bahraini nationals come to fruition. In mid-November, King Hamad ordered that the pace of delivery of new units be stepped up, with an extra 40,000 homes to be handed over. A lot of of these units will be in areas outside the major hub of Manama, creating wider opportunities for retailers to serve these expanding urban centres.

Much of the request will be for consumer goods, household and mid-range general products, rather than high-end or luxury retail outlets that are represented in a lot of of the upscale malls and shopping centres in the capital.

Consumer confidence holds strong

Bahrain’s retailers have as well been buoyed by poll results that show rising consumer sentiment. According to the new regional survey by online jobs website bayt.com and polling company YouGov, released in late September, consumer sentiment has improved since the results of the last survey in March with Bahrain’s consumer confidence index (CCI) climbing from 107.51 points to 113.86. According to the survey, a third of respondents said they intended to buy a desktop or laptop computer within the next six months – one of the highest percentages in the region – while a quarter are planning to buy furniture with request for white goods and electronics following close behind.

An extra key indicator in the CCI is expectations on economy and finance. Additional than 80% of those surveyed said they expected their financial position to improve or remain the same over the next two quarters, with just 12% expecting a downturn. However, the wider economic outlook is less certain, with just under a third of respondents expecting an development in the economy and 19% forecasting a weakening over the following six months.

Bahrain’s parliamentary elections, held at the end of November, came at a time of a mixed economic performance and prospects. Challenges include high unemployment part younger generations − standing at 27.5% according to the World Economic Forum (WEF) statement − and weak credit ratings of Baa 2 and BBB from Moody’s and Standard & Poor’s.

Bridging retail trade

Nonetheless, the retail sector is benefitting from its strategic location in the region, helping to lure overseas investment , while large regional events such as the Jewellery Arabia exhibition in November, which attracted retailers from additional than 30 nations and drew in sales of BD11m ($29.2m) over five days, are cementing Bahrain’s position globally.

Cluttons noted increasing interest from Chinese retailers keen to enter the local market to take chance of the lucrative tourist trade from Saudi Arabia, and as well helped by projects such as Dragon City, a Chinese-themed retail development in Diyar Al Muharraq that is due to open its doors mid-2015.

The trade between Saudi Arabia and Bahrain will be given a substantial boost thanks to plans to build a second causeway running parallel to the existing causeway. The existing King Fahd Causeway carries additional than 8m vehicles annually, though congestion on the 25km road link has seen long delays during peak travel times.

The retail sector is as well hoping to ride on the back of tourism and mixed-used projects such as The Avenues, a $50m project to regenerate a stretch of waterfront in Manama, opposite Bahrain Bay. Construction on the landmark project began in October with estimates of its completion in early 2016.