With the GCC retail sector valued at $253.2bn in sales in 2018 and tourists one of the main sources of mall footfall across the region, Bahrain is keen to consolidate its position as an important regional and international shopping destination. A major expansion of the kingdom’s mall offering is under way, while the upgrade and expansion of Bahrain International Airport is set to increase visitor capacity. Indeed, around 270,000 sq metres of retail space was expected to come on-line during 2019, bringing the gross leasable area (GLA) to over 1.2m sq metres, according to the consultancy firm Alpen Capital.
Nevertheless, the country faces a number of challenges in order to ensure that demand remains in step with this increase in supply. The regional economic downturn appears set to restrict expanded consumption. Furthermore, Saudi Arabia’s recent efforts to increase the public entertainment offering, notably in terms of cinemas, along with its earlier move in June 2016 to increase the foreign investment ceiling from 75% to 100%, will likely impact the Bahraini retail sector in 2020 and beyond. In addition, the country is facing increasing competition in the region, with neighbouring states in the GCC also increasing their mall and retail store offering.
Growing Market
Bahrain’s wholesale and retail trade has shown impressive growth in recent times, with a compound annual growth rate of 3.9% between 2012 and 2016, and a value of $1.5bn, according to Alpen Capital. In 2017 the GLA stood at 948,000 sq metres, with Grade A and Grade B malls taking up 90% of the total space. Occupancy levels too were high, at 95-100%, with the 10 largest malls aggregating a footfall of 51m visitors per year.
The country’s largest shopping centre, at 150,000 sq metres is City Centre Mall. Attracting over 13.5m visitors a year, the complex features over 350 stores and 60 dining outlets. The second largest is the 135,000-sq-metre Seef Mall, which offers 370 outlets, including 55 restaurants, food stalls and cafes. Another notable element to the country’s retail landscape is Dragon City – the country’s largest wholesale and retail trading centre – which houses over 787 commercial units. The complex, which opened in December 2015, has grown steadily in recent years attracting 6.1m visitors during the first nine months of 2019, with the average footfall in August exceeding 25,000 visitors per day, a 8.6% increase on the same month in 2018. Bahrain’s offering is set to expand further in the coming years, with work under way on three additional malls in 2019, according to real estate analysts Cavendish Maxwell.
Entertainment
However, this creates a challenge in aligning foot traffic with the higher supply. In an effort to address this issue, the Bahrain Tourism and Exhibitions Authority has supported an increasing number of paired retail and entertainment events, including the month-long Shop Bahrain festival, which celebrated its fifth year in 2019. This strategy has provided a boost for the sector, with the number of retail transactions standing at a record 145,256 in 2018, an 11.7% increase on the previous year, representing some BD19m ($50.4m) in revenue, according to Cavendish Maxwell.
The sector has also sought to diversify the entertainment offering available at the country’s shopping centres. Domestic companies such as Tarteeb Events Production and Services have begun to organise stand-up comedy nights, video gaming conferences and other niche events that have been traditionally under-served in the region. “We need to work on expanding the entertainment offering to bring tourists in,” Shumalan Naicker, territory head at the retail and hospitality firm Landmark Group Bahrain, told OBG. The country’s new malls are also seeking to leverage niche markets, with the 200,000-sq-metre Marassi Galleria including a 2400-sq-metre underwater zoo, bouldering facilities and a rooftop jungle.
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