Real Estate

Bahrain struggles to fill existing office space as supply grows

March 25, 2025, 12:53 PM

Office space occupancy in Bahrain has remained at around 85 percent, below those of its GCC peers

Bahrain office space demand is weak
More space entering market
Downward pressure on rents

Bahrain is facing difficulty in filling its available office space even as the kingdom prepares for more supply.

Demand for the space is “weak”, with limited interest from existing businesses and new entrants, commercial real estate services and investment provider CBRE said in a report.

The Gulf state, the smallest by population in the six-member GCC, had approximately 1.38 million sq m of office supply by mid-2024.

“The office sector has been struggling for some time due to the oversupply,” said Hashim Kadhem, head of professional services in Bahrain at commercial and residential real estate service provider Savills Middle East.

The issue will be exacerbated this year with the opening of the Future Generation Tower in Bahrain Bay, adding over 40,000 sq m to the market. The Onyx Skyview, also in Bahrain Bay, will bring another 40 commercial office spaces to the mixed-use district in early 2027.

“This will give downward pressure to rental rates for older stock,” said Kadhem.

Furthermore, American multinational infrastructure consulting firm Aecom has been appointed as master planner for the Beyon Digital City project, a 380,000 sq m development in the Hamala area on the western coast of Bahrain, which will include “contemporary office spaces”.

The sector has also been hit by a number of larger space occupiers, predominantly banks, consolidating or paring back their presence, Kadhem said.

As a result, occupancy levels have remained largely unchanged, sitting at approximately 85 percent for the past two years.

This compares with Dubai, where office occupancy levels are at 92 percent and expected to exceed 94 percent by the end of this year, according to real estate consultancy Cushman & Wakefield Core.

In Saudi Arabia, Savills Middle East reported that Riyadh’s premium office space occupancy rate hit 98 percent in November last year.

Rent price for high-end grade A office space in Bahrain has fallen by almost 2 percent year on year to BD6.4 ($17) per sq m, Savills Middle East found.

Prices are among the lowest in the GCC’s capitals and biggest cities, half those of Jeddah and one-third of Abu Dhabi.

“We will see a period of stabilisation as the market reacts to the new supply that’s coming on,” said Matthew Green, head of research at CBRE Mena.