Warehouse project moves forward, confident of demand

The Bahrain Investment Wharf encapsulates all of these aspirations and then some. A warehousing cluster covering more than 429,000ft² of built-up space at the Wharf is principally aimed at meeting commercial storage demand from within the kingdom, particularly that coming from small and mid-sized enterprises. But the developer is quite confident that business prospects can flow in from outside the country too.

Location advantage

“Bahrain’s geographic position coupled with its proximity to the Khalifa Bin Salman Port and all major transport links make the Bahrain Investment Wharf attractive to businesses from outside the kingdom,” says Amin Al Arrayed, general manager of First Bahrain, the company building the warehousing facility. “We expect most of our tenants to be from the ever-growing SME [small and medium enterprises] sector from all industries.”

The First Bahrain facility is scheduled for completion in three phases, the primary of which should be done by year’s end. The developer’s aim is to complement the new stock with a flexible pricing structure, a business centre and an online procurement and billing system backed up by facility management services.

“We expect to provide a strong value proposition for organisations looking to capitalise on Bahrain’s proximity to Saudi Arabia, just as we would for any organisation looking to benefit from the opportunities within the region,” says Al Arrayed.

The cluster format is further enhanced by the adjoining Bahrain International Investment Park, a 247-hectare business park which has been developed by the Ministry of Industry and Commerce.

It caters specifically to those companies looking to launch manufacturing or international services operations in
the kingdom.

Maintaining value for land, rents

“It is true that the focus of the kingdom has tended towards the heavy industrial market with our aluminium production, but we anticipate that following the completion of the Bahrain Investment Wharf, there will be significant growth in light industrials and logistics,” says Al Arrayed. “When this growth occurs, modern facilities and infrastructure will be attractive to regional and international operators looking to set up in the kingdom. We also feel that this will help maintain strong value for land and rents over the coming five years.”

Lower decline in lease rates

The latest transactional data suggests that, compared with Dubai’s, lease rates in Bahrain’s commercial space have experienced less of a decline. While multiple warehousing schemes have been announced, in the short-term, Bahrain is expected to continue experiencing a supply shortage of high-grade warehousing space. “The rates for warehousing have not changed recently. However, the current rates reflect a different concept of warehousing from what we are offering, so there is no direct comparison,” the official adds.

The leasing process has already started, and the developer believes there will be significant increase in take-up once the first phase is ready. The lease rate model incorporates a number of service tiers relating to the actual space that will be taken up by the tenant, and includes administrative, transportation and logistical support.

Although the vestiges of a soft market can still be felt within the Gulf’s real estate space First Bahrain is not concerned: “Any developer should, especially in this market, be looking to the long-term, rather than the potential for a short-term gain,” says Al Arrayed.
 

Does First Bahrain have any plans to recreate the concept of Bahrain Investment Wharf elsewhere in the region?
Absolutely, our vision is to expand across the GCC, allowing tenants to utilise the regional network of warehouses within their rental agreement. The majority of our investments are in Bahrain, but Saudi Arabia and Oman are target markets for us, and we currently have a project in Saudi Arabia under feasibility review.
 
As a developer, will you look to other real estate forms in the medium-term?
We have worked hard to ensure that we have a strong financial footing with low gearing to capitalise on opportunities as they arise, whatever real estate form they may take.
In Bahrain, we purchased a piece of land in Janabiyah which we are studying to ensure we make the best use of it, given the current market conditions. 

It is likely this will be turned into a mid-range residential community project. We are keen to operate in the space where we are able to fill gaps in the market, and a loft community concept is what we are imagining for the Janabiyah site — something not done before in Bahrain.
 
There have been instances of developers with similar interests as yours aligning with international partners for their projects. Do you see that happening with your company as well?
We always seek to align ourselves with international best practices and have consistently chosen to partner with leaders in their respective fields. It is crucial that we have a number of international partners to ensure the success of our projects.

In this respect, First Bahrain chose Tebodin, an international consultancy with over 20 offices worldwide, to do the architectural and engineering designs as well as the construction management for our warehousing project at Bahrain Investment Wharf. Of equal importance, however, is the development of key local partners.

The main contractor for our warehousing development is Abdullah H Al Darazi & Sons, a Bahraini firm. Their contract, worth over $6 million, contributes significantly to job creation and growth in our local economy, which is good for the businesses which will locate in the projects we develop.

Why did the company think of appointing a brand consultant at this stage of the flagship development of the Wharf?
Branding and positioning are fundamental components of an effective marketing strategy which will differentiate our offering in the minds of the consumer. Unisono is our chosen partner for branding consultancy because of their proven success in developing award-winning corporate identities which encompass more than a name and a logo.
First Bahrain is building its reputation as an entrepreneurial developer, which builds successful companies, not just nice buildings. The performance of our development is not just based on our financial return, but on the overall ability of the people and businesses who occupy the properties we build. Our branding helps us keep goals like these in focus as we take the long view in our investments.