Director – Sales and Marketing
Mikal Real Estate
As the effects of Covid-19 are felt around the world, real estate companies are impacted in different ways, largely dependent on region and asset class. In the short term, real estate executives are concerned with preserving values and liquidity, keeping tenants and visitors safe and complying with governmental requirements.
Key Problems Faced in the Market
– Over supply
Over supply continues to govern residential property prices and rents in Bahrain. Adding to the trend of subdued market conditions in the office sector and higher vacancies, the completion of projects under construction are increasingly pressuring landlords to attract tenants.
– Increased Energy Cost
Bahrain has witnessed an increase in energy costs which has resulted in the residential market to shift from larger to smaller units.
– Emerging Work From Home Culture
Occupiers are expected to analyse their office requirements with a strong probability of downsizing as more flexible working conditions are offered to employees. These trends were seen emerging globally with companies such as Twitter and Fujitsu allowing staff to work from home or the office dependent on their convenience.
– Restrictions on Travel
With a considerable portion of income coming from tourism and hospitality sector, have helped Bahrain diversify its source of income amid falling oil prices. Travel bans and Covid – 19 restrictions have hit the industry hard with minimum tourists visiting.
Creative Government Interventions
At this crucial time support from authority has been extended to help businesses across sectors survive and minimise monetary and manpower loss.
– Over supply in some areas and sectors has balanced by stable, even slightly rising, rents and prices.
– The Kingdom of Bahrain has been quick to respond and has done so efficiently, announcing relief measures.
– Benayat, a new streamlined platform has been opened. Which reduces the time taken to obtain a construction permit to five days versus several months taken in the past.
– Adoption of International Real Estate Standards with the launch of Bahrain Valuation Standards (BVS) aimed at higher protection for investors and banks and greater transparency and accuracy in the overall market.
– Mantra to Overcome
Tough times may call for different approaches to survive in the market. Our suggestion from the experience of serving the Bahrain community for past years is to stick to the basics. Stick to the principles that made you the kind of service provider you are today. Identifying the key changes in the market and evolving accordingly is inevitable but keeping your basics intact could take you a long way.
– Customer Relationship
Customer relationship is and has always been the key to success for any business. Maintaining a robust customer relationship should be a priority as it is the fundamental for conducting any business.
– Going Digital
The whole world is going digital. This pandemic has increased the phase of digitalisation in our economy. People can conduct business at the comfort of their home. It is vital to identify the trend at the earliest and to make an excelled digital presence in the market, especially in the context of social distancing and safety.
– Online Marketing and Advertisements
It is hard not to notice the growth of internet consumption in our society. The Internet and social media have immaculate influence in our recent times, the importance of which only increased in recent times. Targeted digital marketing can provide us an upper hand over other players in the market.
– Government Regulations
It is of utmost importance to follow government regulations imposed in light of the pandemic. Following additional rules and regulations imposed by the government regarding safety and business conduct and utilising the benefits provided by the government is crucial to survive.
Bahrain’s real estate market has outperformed many major investment destinations this year. The advantage of the market is driven by fundamentals which have shown improvement since early this year, and investors who have been committed for the long term. If the expectations of economists worldwide are realised and the real estate market continues to track the economy closely, a revival in market condition in Bahrain is a plausible central forecasting scenario. The high-level takeaways below suggest a new reality for the real estate sector – one where digital transformation, enhanced flexibility, trusting relationships and holistic approach to ESG Considerations are required to deliver true competitive advantage to real estate owners, investors and stakeholders. It will have a significant influence on how real estate markets will fare over the coming years and understanding their longer-term impacts will be key to future success.
This article was published as part of the fifth edition of Property Finder Bahrain’s Trends Report