In line with some other Gulf real estate firms, Seef Properties’ business model is dependent on retail and tourism spending. When times are good, as they were prior to the social unrest that broke out in early 2011, the company feels the benefit, with significant footfall increases yielding substantial hikes in revenue.

The positive outcome for Seef Properties is that the company has managed to minimise the impact of the turmoil on its bottom line and the relatively short-lived nature of the downturn in tourist arrivals last year, which was mainly confined to the first quarter.

According to Sico, the number of visitors to Bahrain during the second quarter of 2011 actually increased by 20 per cent compared with the first three months. While the unrest had a tangible impact, the economy recovered to expand by 2 per cent over the course of 2011 and is forecast to grow by 2-4 per cent this year.

Although the unrest clearly impacted Seef’s hospitality and leisure lines, it nonetheless managed to improve the operational performance of its retail portfolio by 6.2 per cent in 2011. Although gross earnings for 2011 of  BD10.63m were lower than the BD11.13m in the previous year, the impact could have been far worse than it was.

The firm’s management responded to the unrest with rent reductions to mall tenants, which although it may hit income streams in the second quarter, ensured few of its tenants went under. 

Figures for subsequent quarters in 2011 provide further cause for comfort. Gross lease income from its mall operations grew by 12 per cent year-on-year in the third quarter of 2011, with only a handful of shops lying empty in September. Equally impressively, net lease income grew 22 per cent quarter-on-quarter in the third quarter.

The company’s mall operations will continue to underpin its revenue outlook, as it embarks on a more diverse strategy for expansion. If Bahrain can avoid a repeat of the events in 2011, it should provide a platform for sustained growth both within domestically, and possibly regionally.