INTERVIEW: Cluttons' Faisal Durrani discusses Bahrain
Faisal Durrani is international research and business development manager at Cluttons.
What property opportunities are available for aviation in Bahrain?
Bahrain Airport recently announced plans for a $2 billion upgrade, and that increases passenger capacity to 13 or 14 million over the next five years from about nine or ten million now.
In parallel to that, you have an increase in cargo capacity, which will be almost doubled.
For the aviation sector, the opportunity lies in both these. First off you have Gulf Air, which is the anchor tenant at Bahrain International Airport. In order for the economy to prosper, Bahrain could learn lessons from some of the surrounding GCC states where air travel has opened up opportunities that did not previously exist.
Fostering growth in the airport by building a new world class facility could be a catalyst to boost both business trade investment and tourism.
Bahrain itself offers businesses an excellent opportunity and is a great gateway for businesses looking to target Saudi Arabia – particular with the King Fahd Causeway.
The doubling of cargo capacity at the airport is quite timely and links in well with the performance of the real estate market at the moment.
On the whole, the commercial market in Bahrain is pretty subdued due to [the] low oil price environment.
However, there has been one stand-out performer that we have been talking about for a year to 18 months now, and that is the retail sector, which has remained extremely buoyant. In response to this buoyance, we have seen a large number of retail developments brought forward across Bahrain.
What we are expecting to see in response is an increase in demand for warehousing space across Bahrain as retailers move in – in fact, in most of the industrial estates in the country, there is a shortage of warehousing space.
In particular, there is a shortage of speculative plots, and if we look at models from other cities in the Gulf, like Dubai, Sharjah or even Muscat, where you have airport freezones that have been built alongside the airport to cater for this specialist demand, that is quite a big area of opportunity that is yet to be tapped.
How have the oil process affected the commercial sector?
You have an economy that has historically been very reliant on hydro-carbons receipts. The latest figures I could find were from 2012, which showed me that 87% of the total income of the government of Bharani came from oil and has, and that underscores how important oil is to the Bahraini economy.
Now we are ibn a situation where the oil prices are well below the government’s required price to break even, which suggests than government is going to have a budget deficit this year.
What that means for the commercial market is when you have a reduction in the number of infrastructure projects on government spending, there is a direct impact on the rate of creating new jobs and therefore the rate of take-