Bahrain Real Estate DTZ Bahrain

Bahrain’s real estate market is starting to feel the effects of the global economic crises but its more modest growth rates should prevent it from seeing a sharp decline. How can you describe the current Bahraini real estate market?

You can sum it up with one word: adjusting. Bahrain was way behind some of the other Gulf States in the development curve and therefore it was much less affected than witnessed elsewhere. Some of the more speculative projects have been put on hold and others have been cancelled. The projects that you see being built at the moment will provide a far better balance between supply and demand than might have been the case if all the proposed projects had gone ahead.

How does Bahrain compare to other GCC countries, for instance, Dubai?

I can’t really comment on Dubai. Bahrain has always had a prudent approach to everything it has ever done. I'm sitting here with the benefit of hindsight and we can all say that Dubai built far too much far too quickly. History will show that the countries that have this type of mass explosion, the bubble will always burst- for example, Singapore, Hong Kong, Spain. There is always a severe price correction at some point and that is what happened in Dubai. Bahrain was never at that level as widespread development only started 2 or 3 years ago. It also has a different GCC based target market rather than global.

What do you see in the future development of the property prices in Bahrain and supply and demand of residential offices and retail?

In the retail sector there is a lot of retail space, and you may think there should be an oversupply situation, the fact of the matter is that Bahrain benefits greatly from the visitors from Saudi Arabia arriving via the Causeway. We have probably hit the point of not needing any more mega malls but more regional shopping facilities of 30,000-40,000 square meters in the larger residential areas are required. There is still a shortage of Grade A office space in Bahrain and there will be an on-going requirement for building more Grade A premium office space. Further significant developments will come in places like Bahrain Bay, and these will incorporate good parking facilities which are critical.

What are you predictions for price growth?

I do not see prices growing in the office sector in the short term. I think the best buildings will always come at a premium but I would forecast probably that the office rents will stay steady at best. My only slight concern is for buildings built as freehold properties that may not be able to be sold and may enter the lease market and affect rent levels.

One of the main challenges in the real estate market in Bahrain is tight liquidity, what can be done to address this issue?

I am not sure its liquidity, I think it’s more confidence. I think confidence took a severe knock in the wake of the collapse in Dubai and the ripples spread to the other Gulf States. Developers need to re-think their business models for projects and address issues relating to deposits and payments made by purchasers. I think they will need to utilise their own funds to get their projects to a certain level before turning to the market. I would like to see payments actually linked to progress in construction as opposed to the current model that is tied to dates and takes no account of delivery Delays sap investor confidence.

Do you see any signs of confidence returning to the market or are we still uncertain in investing in the market?

In the residential sector people are watching because they don't want to buy now when they can get it cheaper in two months. There is nevertheless a good amount of interest in property and we expect it to improve in the third quarter of this year.

DTZ business has 5 key business lines. According to your research what are the market needs at the moment?

We have requirements for regional shopping, grade A office space, and the new flavor of the month which is industrial property (a long-time neglected sector). It has never been attractive to own a shed but the airport expansion and the new Sheikh Khalifa port will create a need for logistics and warehousing.

How would you describe your strategy and what are your strategic goals at DTZ Bahrain?

We would like to be the number one property advisor in the GCC and North Africa. We originally started in 1975 and we were the first international property advisor in the Middle East and now we have offices in six Gulf states and we envision that growing substantially. We have ambitions in North Africa, Libya, and Egypt particularly.

How do you compete with similar companies, what kind of added value can you provide?

Some of us have been awhile and have quite a bit of experience of having been through two or three of these recessions that enables us to give creative advice to our clients. We are proactive in coming up with these solutions and I don't think there is any substitute for experience when it comes to this.

What are your major challenges at DTZ?

Like any other global company, we have been hit by the global recession in terms of our turnover so we have to work smarter and we have to analyze our baseline costs and make sure our staff is operating productively. We have raised new capital for the business and we will seek to grow both organically and by acquisition.

How have you clients behaved since the start of the global economic downturn and how has this impacted your operations?

Our clients have behaved well. We have been very fortunate to have loyal clients over the years and this is probably because we have been here for quite some time. We have shown our commitment and it is matched by our Clients.

Do you see a lot of due diligence in your potential clients before they come to the country?

Yes, our Clients have options. They can locate anywhere in the Gulf. Bahrain is working hard to promote itself and we like to work alongside the Economic Development Board to help in attracting companies to Bahrain. Bahrain has a reputation for transparency in the financial sector which is of real value when it comes to decision making.

When such a delegation comes, what do you have to offer?

A database of thirty plus years in Bahrain has left us with a lot of information and statistics. We have a strong consulting and research team here who compile statistics and bespoke reports which are invaluable as the Real Estate markets, unlike the financial market in Bahrain, are not transparent. With our database and seasoned professionals we can provide companies with the information they need to make an informed decision.

DTZ is managing the Bahrain World Trade Center, as a company maintaining an icon in Bahrain, what are your major responsibilities in promoting and developing Bahrain?

We have to ensure that everybody's experience from the minute they make contact with the Bahrain World Trade Center is first class and that they can appreciate the benefits of being here. It is a landmark building that has become Bahrain’s icon. Beyond it being a photo opportunity we need to explain to visitors what kind of business destination is on offer which is a fantastic mix of Offices , High Quality Retail, a five star hotel a Fitness club and loads of parking.. The building has to look good at all times and we have to provide a very efficient and value for money service.

Apart from Bahrain World Trade Center, you also have 14 other buildings that you manage, what new projects do you have in the pipeline?

There are a number of projects that we are working on at any one time. Some of these are at an early stage whilst others are more advanced. There are a couple of significant projects we are involved in and to us this is a great sign of the confidence people have in Bahrain and DTZ. What is the feedback you receive from your clients based in the Bahrain World Trade Center? It is positive feedback that is well worth waiting for. We had some issues in finishing the project but we are very happy and have yet to hear any negative comments from anyone who has moved in.

What are the major challenges that the Bahrain World Trade Center is facing?

The major challenges are maintaining a high occupancy level. We have to understand our tenants businesses and we have to provide them with the best value for money services bearing in mind the prestigious nature of this building. People have come here for a Rolls Royce experience and we are going to give them just that at a competitive cost.

Bahrain World Trade Center Towers is design by Atkins and its the first of its kind to use wind energy harnessed by three massive turbines that provide 11 to 15% of the offices electricity, equivalent to 200-250 homes for a year. What other environmental features are integrated in the building and do you see a lot of interest in this?

There has been a huge amount of interest, its groundbreaking. This is the first building of its kind to do this and it’s fantastic. The technology in relation to the turbines is still new and it is complemented by BWTC being aa smart building with a sophisticated building management system. The cladding and galzing are designed to reduce operational costs We have also used a district cooling system that is particularly cost efficient. We also do paper recycling and energy efficient lighting as well as reflection pools to create a cool environment through evaporation. Even our water taps won’t allow you to use excess water. We have installed about all of these things very carefully and all of this is geared toward lowering the operational costs of the building for the benefit of the environment and the companies in the building.

By how much compared to the other buildings?

We only started operating four months ago so it is hard to say. It is a long term strategy and the cost of providing these environmental savings need to be recouped and transferred on but the ballpark estimate will be between 10 to 15%.

To what extent have developers in Bahrain embraced environmentally sustainable buildings, is there a global initiative moving towards green buildings?

Globally and regionally there is an initiative but I don’t think it is developer led, I think it is occupier lead. Unless tenants demand their buildings are sustainable then there is no pressure on developers to do it. There is a cost to making buildings green and if your tenants are not prepared to pay for it developers won’t do it. It’s occupiers and governments that need to legislate to force developers to do it. I think there will need to be change in that direction.

The Bahrain Environmental Agency is dedicated to data; have you been working with them on this building?

No, not yet as I said it’s still early days for us operationally.

To what extent is DTZ addressing sustainable development in your other properties?

In Bahrain we are implementing the best practices where we can. Where we inherit buildings we will look at things like recycling and the efficiency of the air and heating systems. When we are inheriting older buildings, they were never designed with energy efficiency in mind s there is a limit on what we can implement.

Where are you clients coming from?

Bahrain generally attracts investors from the GCC countries but that is not to say that we don't have any from the outside. We have some clients from the Far East and the subcontinent as well and there are other western countries looking to invest in property funds who are monitoring the market.

What kind of companies would you like to see com to Bahrain?

Big companies that are innovative and coming here to invest long-term and create wealth. We have an on-going program within our office to Bahrainize this office and use the local workforce who is very well educated. Bahrain is very fortunate to have a high level of women who are availbale to work and well educated. In terms of human resource, this is a major plus for Bahrain and we would like to see more companies doing the same.

How do you assess your relationship with the public sector? Has it been helpful to you in establishing your operations?

Bahrain is a fantastic place to establish a business and we have offices in six different countries but Bahrain was the easiest and cheapest place to establish an operating base by far. In fact, Bahrain is the cheapest operating base in the Middle East. Bahrain has become our Regional headquarters. The advantages of settling here are cost and also communication (both practical and telephonic). The local telecom markets provide premium services due to the competition in the market. Additionally, Bahrain is about an hour away to most places in the GCC by air and has permanent link to Saudi Arabia via the causeway. Within a few years there will also be a permanent link to Qatar. Then of course, we are also a hub to the north which is a fantastic advantage. I've been here a while but when I travel around the GCC there’s no other place I would rather live than Bahrain.

Do you see a lot of interests from companies to set up their regional headquarters in Bahrain’s World Trade Center?

Yes. We anticipate a lot of companies will be looking for cheaper operating bases and will not want to sacrifice the quality of where they are and I think that BWTC can provide this. As long as we can provide the space for companies to be here I don’t see any hurdles in companies coming back to Bahrain.

How do you facilitate the companies to come here?

We can give them a complete package of information across all Real estate sectors and we also work with EDB. They provide us with the basic information packages that businesses need to establish their business no matter if they are a one man show or an international company. We are a real estate advisory so we will try to try to advise them on real estate but we’ll also advise them on schools, housing, and on the clubs that are available if they wish. It is a very open environment here and we try to attract these companies the best we can by showing them around and making them feel comfortable and at home here.

What advice do you have to give these companies?

There’s no culture shock coming to Bahrain. It’s very open and westernized in its approach and the majority of its people are bilingual so there is no problem with settling in at all. As long as Bahrain satisfies their strategic objectives, it is really the only location for them in the Middle East.

What is your vision for Bahrain and how do you vision Bahrain in 2015?

I think the key issue to address is the infrastructure in terms of the roads and the accessibility. There are on-going discussions regarding this and if it is successfully addressed it will give Bahrain a great advantage. I want to see Bahrain remain true to its roots and stay a cosmopolitan and friendly place and I hope to be here in 2015 to see it.