A predicted exodus of financial institutions from Bahrain has not materialised, according to a new study.
After months of speculation and rumours, there have been no confirmed reports of any companies in the sector moving large operations after the political turmoil that gripped the country in the spring, reports CB Richard Ellis (CBRE), a property specialist.
"I suspect that the projected growth of business will be stunted, but as for businesses leaving, it hasn't happened," said Mike Williams, the senior director of Middle East research and consultancy at CBRE.
But Bahrain's office market is feeling the effects of the unrest. "General sluggishness in demand" coupled with a "significant increase" in high-quality office space has brought down rental rates for prime office space by 15 per cent in the past year, to 8 Bahraini dinars (Dh77.93) a square metre per month.
Two years ago, prime office space was renting for more than 12 dinars a sq metre per month. Secondary space can now be found for close to 5 dinars a sq metre, CBRE reports.
It expectsabout 170,000 sq metres of prime office space to enter the market this year, bringing the total available space to about 660,000 sq metres. It could take years for the market to absorb the new space. But rates should stabilise over the next year, CBRE says.
"It's nearing the point where [building owners] would rather leave space empty than allow rates to go much further south," Mr Williams said.
Obtaining accurate information on the status of the financial institutions was difficult, Mr Williams said. Four international operations reportedly cut staff in Bahrain, but The National could not confirm any of those movements.
Citibank denied reports it had moved some of its operations.
"To the contrary, we continue to invest in Bahrain in line with a long-term business strategy, which remains in place," a bank spokesman said. One company confirmed as contemplating a move is Robeco Investment Management, which has an office in Manama. The company is in the process of opening an office in Dubai and is in "ongoing discussions" about the fate of its Bahrain office, a spokeswoman said.
Dubai and Qatar were expected to benefit from the unrest in Bahrain, luring companies with stability and inexpensive office space. But there has been little movement, agents say.
"We saw some initial requests, but they haven't gone any further," said Ian Albert, the managing director of the Middle East office of the property brokerage Colliers International.