May 17, 2023
According to real estate expert Savills, the Bahrain real estate sector maintained its upward trend from 2022, although at a slower pace due to global economic uncertainties.
In the residential market, villa developments were popular in Q1 2023, with a 5.2% year-on-year increase in capital values in the mid-end segment. Villa rates reached BD603/sq m compared to BD573/sq m in Q1 2022. However, the demand for high-end apartments declined due to increased credit costs, resulting in a 1.3% quarter-on-quarter drop in their values.
In the rental market, low-end and mid-end villas remained in high demand as people limited their expenses in response to the global economic landscape. Although there was no price growth in the low-end segment during the current quarter, rents gradually increased over the past few quarters, making prices 18.5% higher compared to Q1 2022, reaching an estimated BD800/month. On the other hand, the apartment rental market continued to face downward pressure due to a supply/demand imbalance.
Enquiry levels for office spaces remained robust, especially for mid-end and high-end properties, leading to a 15% year-on-year increase in rental values, particularly within the mid-end segment. Rental values across 90% of the Grade A stock tracked by Savills remained stable in the high-end segment. However, on average, rents experienced a quarterly decline of 1.5% and an annual decline of 2.1%. The sales market mirrored the sentiment of the rental market, with mid-end capital values experiencing year-on-year growth of 4.6%, primarily attributed to reduced available stock in that particular sub-sector.
Incentives for investors
Hashim Kadhem, Head of Professional Services in Bahrain, said the government policy changes such as the introduction of the Golden Licence scheme for foreign and local businesses are a step in the right direction. “Incentives to investors such as priority in allocation of land for investments, streamlined access to business licensing and building permit approvals, among others, will help further stimulate the economy and thereby benefit the commercial real estate sector this year,” noted Kadhem.
On the kingdom’s economic indicators, Swapnil Pillai, Associate Director Research, Middle East said: “Bahrain’s economic data shows promising signs of continued resurgence which will bode well for sectors including real estate as we progress into the year. GDP grew by 4.9% in 2022, the highest recorded in over five years, whilst Foreign Direct Investments (FDI) grew by 5.8% y-o-y to reach BD13.3 billion in 2022.”
“The positive economic momentum was also reflected across the real estate sector with the Survey and Land Registration Bureau data showing that the value of real estate transactions increased by 17% y-o-y in Q1 2023 to BD243.1 million,” he added.
Source: MEPmiddleeast
