Bahrain's office rents fell in the third quarter after a brief period of stability earlier this year, says a report from CB Richard Ellis.
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"Rental rates appear to have bottomed out, having reached levels below which landlords are simply not prepared to go," the report said, noting rents in prime commercial areas such as Seef and the diplomatic area had fallen to between 4 Bahraini dinars (Dh38.96) and 8 dinars per square metre per month.
Bahrain's office rental rates have not risen since the first quarter of 2009.
"Weak market conditions … have been exacerbated by significant volumes of office space, which has already entered the market in 2011, with more due in 2012," the report said.
While it noted little evidence of an exodus of financial services firms to elsewhere in the Gulf, neither did it report companies taking advantage of cheaper office space.
In August, the French bank Credit Agricole said it would move its Bahrain operations to Dubai.
Last week, Moody's Investors Service said it would retain its "negative" outlook for Bahrain's banking system as a result of the fallout from the kingdom's recent political unrest and growing concern over banks' exposure to the property sector.
"Real estate exposure continues to be Moody's primary asset-quality concern within Bahrain's banking system over the next 12 to 18 months," the ratings agency wrote in a report.
