Anti-government unrest in Bahrain has had a ‘catastrophic’ affect on the Sitra Mall project, with nearby violent demonstrations deterring potential tenants from taking up retail space, according to a new report announced on Sunday.
Real estate consultant’s CBRE’s latest Bahrain MarketView said the six year-old Sitra Mall was one of the main victims of the ongoing violent unrest in the country and the impact can only be described as ‘catastrophic’.
“Failure to locate the anchor tenants in locations that have any impact on the rest of the mall, poor access, social unrest in close proximity to the mall and outlets that fail to meet the needs of the mostly low-income villages nearby are all factors in this mall’s sad decline,” CBRE said in its analysis.
While Sitra has suffered, some of the other malls are still performed well, CBRE oberved. City Centre and Seef Mall have seen high occupancy and strong rental rates, while Moda Mall recently announced a US$13m refurbishment programme.
The country’s regional malls were forced to slash rental rates by up to 75 percent in a bid to retain high profile tenants and compete for footfall with the City Centre mall, CBRE said in February.
CBRE said the three-year old Bahrain City Centre has quickly dominated the market and rival regional malls in the kingdom have struggled to retain tenants and footfall.
“The malls in this area have largely been ‘cannibalised’ by City Centre which was not only able to attract many of the key tenants from the other malls, but at almost double the rental rate,” the report said.
“The remaining malls have been faced with increasing vacancy rates and lower profile tenants and in some cases rates have fallen by almost 75 percent as mall management have sought to maintain both occupancy and footfall levels,” it added.
CBRE noted that the retail mall sector in Bahrain has historically been dominated by the collection of so called regional malls in the Seef and Sanabis areas, which have benefited from Saudi weekend visitors.
Bahrain City Centre, operated by the UAE’s Majid Al Futtaim Group, consists of over 340 brands and retailers spread over 150,000 sqm and is the largest entertainment and retail destination in the kingdom.
"With over 20 new brands - including some internationally popular stores opening their doors for the first time in the Kingdom, Bahrain City Centre is broadening key categories such as fashion, beauty and dining to please our visitors. We're pleased to introduce these new, unique brands in time for the current winter/fall season," Ray Scott, asset director for Bahrain City Centre, said in November 2011.
CBRE predicts that pressure on the malls is likely to increase further with the increase of smaller neighbourhood centres. “As these centres have increasingly opened throughout the Kingdom, visitation levels to the major malls has fallen even further, and it remains to be seen how events in this sector will unfold over the next two or three years,” the CBRE warned.
Due to the ongoing political unrest in the country and the long-term fallout from it, a report late last year by Business Monitor International (BMI) forecast that Bahrain’s retail sales will fall from an expected US$1.81bn in 2011 to US$1.77bn by 2015.
This is a reflection both of the political uncertainty in the country and of the deteriorating outlook for the global economy as we head into the middle part of the forecast period.
Despite this, BMI’s analysis predicted strong growth for the automotives sector, with sales forecast to rise by nearly 17 percent from an expected 49,157 units in 2011 to 57,300 units by 2015.
By Arabian Business