Bahrain real estate transactions continue to grow amid moderate performance

PHOTO

Doha, Qatar: Real estate transactions in Bahrain totalled 5,279 in Q2 2023, according to SLRB data. This marks an increase of 7.1% year-on-year, but a decrease of 16.7% compared to last quarter, which is likely due to Ramadan and both Eid holidays falling during Q2.

Looking at Bahrain’s residential sector, average quoted apartment rents increased by 2.1% in Q2 across governorates compared to Q1, while quoted apartment sales rates fell by 1.1%. The highest rates continue to be seen in the Capital Governorate, although the Muharraq Governorate is beginning to close the gap, with newly delivered quality assets achieving higher rates in the likes of Diyar Al Muharraq and Dilmunia. In terms of villas, there were marginal changes in rates in Q2, with quoted rents falling by 1.0% and sales increasing by 0.6% compared to Q1.

In the office sector, we have seen an uptick in registered leases in CBRE’s managed properties in H1 2023. The Grade A & B commercial office market continues to serve two main demand drivers: government and quasi-government entities seeking larger floor plates, and international firms requiring small-to-medium-sized units. While rental rates remain relatively stable, vacancy rates have begun to fall for the first time in recent years, reaching their lowest rate since 2019, now estimated to be standing at 26.3%.

Within the hospitality sector, STR data shows that Manama’s average occupancy rate sits 11.2% higher year-on-year in the year to date to June 2023, increasing from 46.1% in 2022 to 51.3% in 2023. Over the same period, Manama’s ADR increased only marginally by 1.8%, while RevPAR increased by 13.1%. In June, Bahrain signed a Memorandum of Understanding with Saudi Arabia to promote the two countries as one regional and global tourist destination.

The agreement establishes a framework to collaborate in efforts to market tourism programmes and activities in both countries. In the retail sector, CBRE Bahrain’s biannual retail occupancy survey recorded increases in the majority of the surveyed set of malls in H1 2023. Of the 20 malls surveyed, 70% recorded occupancy growth, with the most notable seen at Dana Mall in the Capital, which benefited from recent store openings and the launch of Epix Cinemas. Average occupancy across the set increased 3.6 percentage points compared to H2 2022, now sitting at 70%.

The highest occupancy rates have been recorded at Dragon City, the Avenues, and City Centre. While the current occupancy level is at its highest level since the onset of the COVID-19 pandemic, the average occupancy rate still sits some 10 percentage points below its 2019 levels.

Heather Longden, Director - Advisory & Transactions, at CBRE in Bahrain comments: “CBRE has recorded an uptick in registered leases within our managed office properties and a minor reduction in vacancy rates to 26.3%. All key performance indicators in the hospitality sector have shown signs of improvement year-on-year and according to the BTEA, Bahrain International Airport welcomed 4,098,582 passengers during the first six months of 2023, up 43.2% from the same period in 2022. While retail occupancy rates have improved marginally to reach 70%, average rental rates have dropped in the first half of 2023 as supply of shopping centre space continues to grow.”