Let's say that for an apartment building to be viable and to survive, it needs to be 50 percent occupied. Let's say that there are 100 people that need to stay in apartments. With one building, the one landlord will be happy and make a lot of money.
Then a second building is built and 50 percent of the people move into it. Now both buildings can survive with 50 percent occupation. The landlords are not making a lot of money, but both can still survive.
Now a third landlord comes along and builds a third building. Some people move into it because it's always nice to stay in a new building.
So now there are 33 people in each building, in other words, only 33 percent of each building is occupied.
But a building needs 50 percent occupation to survive. Now, none of the three landlords is making any money. This is called "over-supply".
This is what is happening in Bahrain and the rest of the Middle East.
In Bahrain, especially in Juffair, there is an over-supply of apartments, yet they are constructing more buildings. And the new ones under construction are huge.
In fact, it looks like the number of apartments in Juffair will double in the next two years. Who is going to live in these new apartment blocks?
The same has happened with the malls. There are too many and not enough customers. The same can be said for office blocks. There is an over-supply of office space in the Diplomatic Area, but still they are constructing huge buildings. There are not enough businesses in the world to fill them.
Dubai's policy was "build it and they will come" and we know what happened, but it seems Bahrain has not learnt from Dubai's mistakes.
Bahrain should stop constructing buildings and build more roads. The road infrastructure in Juffair is appalling.
To get to some apartment buildings you have to drive a 4x4. One apartment building has a huge pool of water and mud at the entrance. It is chaos after it rains.
I seldom go out these days because of traffic problems. I would like to go out more and spend money in malls, but I cannot be bothered to sit in traffic for hours.
