Bahrain's residential capital values remain upbeat in Q2

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Bahrain - Overall residential capital values in Bahrain have remained upbeat for a full year as of June, a testament to the resilience of the kingdom's market, according to Savills, a global real estate services provider.

This was largely driven by the 2.9% quarterly increase in the pricing of mid-end villas, stated Savills in its Q2 2022 Bahrain Property Market update.

Meanwhile, apartment capital values increased marginally by 1.2% y-o-y in the mid-end sector. However, low-end apartment sale prices have failed to display any price growth over the past two years owing to the competitive pricing of the mid-end segment.

In the rental market, the villa segment in Bahrain continued to perform strongly with 3% q-o-q price growth amid increased demand as renters seek more space.

On the other hand, mid and high-end apartments were unchanged for the second consecutive quarter whilst low-end apartments recorded quarterly declines of 3.6%, pressured by the increased supply of better units at competitive rates, it stated.

Demand for office space continues to remain strong across Bahrain aided by an improvement in economic sentiment and growth in the non-oil sector, which expanded 5.5% y-o-y in Q1 2022. The Grade B and Grade C project offerings across the city have particularly seen an increase in occupier demand over the last few quarters on account of relative affordability.

Meanwhile, rental values across Grade A developments have remained stable during the quarter. Foreign investments into the country continue to grow from USD 1.77 bn recorded in 2021, which was a significant jump of 73% from 2020.

Speaking on the outlook for the commercial sector, Swapnil Pillai, Associate Director Research, Middle East, said: "The country continues to lead as a preferred choice for fintech and other related companies in the region, resulting in the steady uptake of office space. Developer offerings across the city are evolving in line with the occupier demand."

"We therefore anticipate higher occupancy levels across developments that cater to changing tenant requirements, especially relating to modern space design and ESG," he added.

Hashim Kadhem, head of professional services, Savills Bahrain said, “Strong growth in non-oil GDP during Q1 2022 has created positive momentum which has spilled over into the real estate sector. Price and rental growth has therefore remained largely stable or grown."

"However, we will continue to monitor inflation data, which might result in further interest rate hikes by the Central Bank of Bahrain, presenting itself as a downside risk to the pace of growth," he added.