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New King Hamad Causeway will boost Bahrain economy

Report: Project to benefit residential, retail and industrial markets

King Fahd Causeway averages daily volumes of 50,000 vehicles.
King Fahd Causeway averages daily volumes of 50,000 vehicles.

The recent announcement of King Hamad Causeway, the second terrestrial link between Saudi Arabia and Bahrain, is expected to deliver a significant economic boost to Bahrain’s residential, industrial and retail markets, according to global real estate consultancy Cluttons.

The existing 25km King Fahd Causeway averages daily volumes of 50,000 vehicles, with the total number of crossings reaching 19mn during 2013, up 12% on 2012.

The economy is heavily reliant on the traffic funnelled into the Kingdom by the causeway, which has helped to underpin growth across the residential, retail and industrial sectors in particular.

Harry Goodson-Wickes, head of Cluttons Bahrain, said: “Since its opening in 1986, the current causeway has been a significant contributor to growth in the economy. The announcement of a second connection to Saudi will no doubt boost the performance of the residential and retail markets further. We have recorded a steady rise in demand from Saudi nationals seeking to purchase weekend homes in Bahrain this year.

"In addition, the steady level of domestic housing requirements has prompted several developers to make a return to the market to capitalise on this growing pool of buyer demand. The longer term ramifications for the residential market are too early to judge, but there will be an obvious long term boost to the broader market with more traffic expected to flow into the Kingdom from Saudi Arabia.”

Bahrain's position at the centre of the Arabian Gulf also gives distributors easy access to all GCC ports. Furthermore, efficient transport links by land and air also enable swift access to the broader Middle East region. Bahrain's proximity to Saudi Arabia, the Middle East's largest economy, is of particular attraction to logistics companies.

Faisal Durrani, Cluttons’ international research and business development manager, added: “On a macro level, the announcement is exceptionally significant. The Bahraini economy which is still working to find its feet following the global downturn and unprecedented national tensions will receive a tremendous boost from improved connectivity with the rest of the GCC.

"The Kingdom already serves as a critical logistics hub for the central Gulf and the new $5bn King Hamad Causeway will further strengthen the attractiveness for logistics and industrial occupiers looking for additional hubs in the region, aside from Dubai. Furthermore, Bahrain already has an impressive network of industrial estates, all of which further enhance its proposition as a go-to logistics hub on the door step to Saudi Arabia. The added element of an integrated rail link as part of the new causeway will no doubt deliver an even stronger economic boost to Bahrain.”

Goodson-Wickes concluded: “The retail sector also stands to benefit from the extra link to the mainland. Retail is one segment of the real estate landscape that continues to rebound strongly and with further weekend tourist traffic as a result of the new causeway, particularly from Saudi Arabia; retailers will be rushing to position themselves in the best locations. In fact we are already seeing Chinese and other major regional and international brands seeking out space in retail developments such as The Lagoon and Alargan Village.

"This announcement will no doubt drive further interest in this exciting segment of the real estate market.” 

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