Bahrain’s real estate market continues to grow, driven by government support, rising investor confidence, and an increasing demand for real estate in the region, shows the latest report by Savills.

This is despite a three per cent drop in trading in the first quarter compared to the corresponding period in the previous year, as per the Survey and Land Registration Bureau (SLRB).

Data also shows the value of real estate transactions in the kingdom dipped 1.2pc year-on-year (YoY) to BD1.1 billion in 2023. However, the volume of transactions surged by 24.1pc YoY during the same period.

Analysts point to a shift in buyer behaviour, with a focus on mid-range properties. Increased availability of affordable housing with improved amenities is attracting tenants, while luxury waterfront properties remain in demand, driven by the kingdom’s tourism industry.

“Bahrain’s coastal location and flourishing high-end tourism industry continued to drive demand for luxury waterfront properties, which appeal to buyers seeking exclusivity and comfort,” said the firm’s head of professional services Hashim Kadhem.

A steady stream of project completions anticipated in 2024 could widen the gap between supply and demand. This may lead to a short-term decline in capital values, particularly for apartments which saw a slight quarterly increase of 0.3pc in Q1, primarily driven by the high-end segment (averaging BD832/sqm). Tighter liquidity conditions, lower loan-to-value ratios, and higher lending rates have impacted demand for premium developments, especially villas, which experienced a 4.5pc YoY decline in capital values (averaging BD583/sqm).

Overall rental values in the residential sector witnessed marginal declines compared to Q4 2022. Apartment rents fell by 1.3pc YoY, with the biggest drop observed in the low-end segment (down 5.6pc YoY to BD425 per month). Mid-end rents declined 3.5pc YoY (BD493 per month), while high-end properties saw a slight annual increase (BD649 per month).

Villa rental rates also saw a 1pc average decline. Low-end villas dropped 3.1pc YoY (BD775 per month), with mid-end and high-end segments averaging BD1,069 per month and BD1,275 per month, respectively, after a 1pc YoY correction.

The office sector witnessed renewed interest, primarily from businesses extending leases in high-quality Grade A properties, with rental rates averaging BD6.4 per sqm a month. This stability is expected to be challenged by upcoming completions like Sayacorp Tower and Seef Boulevard, potentially leading to a 1-3pc capital value drop. In contrast, low-end office properties in the Capital Governorate experienced a 6pc quarter-on-quarter capital value decline.

Demand in the office sector is driven by financial services and government entities, with a growing interest in LEED-certified spaces for environmental and social responsibility goals. Additionally, co-working spaces are seeing increased demand from startups and right-sizing businesses.

Retail and trade sectors exhibited resilience with stable rental rates for the fourth consecutive quarter. The festive season in Q1 2024 boosted mall footfall, and government initiatives aimed at tourism growth could further enhance the retail sector. Industrial space demand remains focused on manufacturing, with an average space requirement of 1,500-3,000 sqm. While rental rates for large and medium-sized warehouses increased by 1.2pc YoY, they remain steady overall.

The Bahrain real estate market presents a complex picture. While some segments are experiencing a slowdown, others are showing signs of growth. The upcoming project completions and their impact on prices, alongside government efforts to boost tourism, will be key factors to watch in the coming quarters.


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