BAHRAIN’S real estate market is buoyant, with residential transactions surging by 5.1 per cent and industrial lease rates soaring by 5.3pc during the first nine months of 2023, according to Knight Frank.
The global real estate consultancy’s latest report ‘Bahrain Real Estate Market Review – Autumn 2023’ notes that the overall value of transactions rose 1.9pc during the same period to BD814 million.
Expats, comprising more than half of Bahrain’s population by 2022, remain a dominant force in the rental market, fuelling a persistent demand for rental properties, especially in expat-enclaves like Juffair, Amwaj Islands, and Al Seef, the report underlines.
“The higher growth in transaction volumes compared to transaction values suggests a decline in prices,” said the firm’s Mena head of research and partner Faisal Durrani.
“Villa developments have continued to captivate buyers, with average sales prices in the mid-end segments holding steady at BD625 per square metre. However, the cost of credit has affected premium developments, particularly apartments, which saw a 2pc decline to BD665 per square metre.”
On the office market, the report says corporate tenants’ preference for premium Grade A offices has ignited a robust demand for upscale office spaces over the past year. Yet, rental rates have held steady at BD58 per square metre in Q3 2023.
Knight Frank regional partner and Mena head of valuations and advisory Stephen Flanagan sees increased demand and rental rates in the kingdom’s office market based on a higher than initially forecast GDP growth projection of 2.7pc, supported by rising economic confidence, favourable government policies, and growing business activity.
He lists the introduction of the Golden Licence Scheme, which benefits foreign and local businesses, as a key government policy change and growth driver.
The retail sector faces challenges due to excess inventory and the shift to online shopping, leading to a 5pc decline in average lease rates, says the report.
The pandemic has accelerated the shift to online retailing, prompting the retail industry to evolve rapidly.
“Consumers now seek shopping destinations that offer experiences, mirroring trends elsewhere in the world. This change in consumer behaviour has sparked a demand for destination retail and mixed-use developments that incorporate the public realm, F&B, and entertainment. Furthermore, there is a genuine risk of oversupply in this segment of the real estate market,” Mr Flanagan added.
The industrial sector has experienced growth, with warehouse lease rates increasing by 5.3pc due to a demand-supply imbalance. Government initiatives aimed at boosting the industrial sector have attracted businesses to Bahrain.
The hospitality sector is undergoing an ambitious transformation, with the aim of attracting 14.1 million visitors annually by 2026, up 42pc from 9.9m last year and increasing tourism’s contribution to GDP to 11.4pc.
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