Bahrain’s housing scene ‘set to worsen’
Manama, August 4, 2010
The rate of growth in the waiting list for affordable housing in Bahrain exceeds the rate at which the Government can address the problem and the situation looks set to worsen in the short term, said a report.
The need to social housing – offered to households earning less than BD400 ($1,060) per month – has now reached approximately 53,000 households and is growing by three or four thousand units per annum, according to a market view report by CB Richard Ellis, the leading commercial property and real estate services adviser.
The report said: “It is extremely disconcerting to discover that 53,000 households fall into this category when the total number of Bahrainis in employment is only around 138,000.”
The next category of housing is defined as “affordable” and the report said this category is also ‘fraught with problems’ for Bahraini households.
The report stated this problem apparently lies with two key issues.
Firstly, the typical Bahraini household prefers to live in, and own a villa or townhouse, on a plot of land owned by them (true Freehold). In an economy where house trading is at an embryonic point in its development cycle, Bahrainis see their first home as also being their long term permanent home.
The second issue lies with the land. Due to the rampant land trading that has taken place in Bahrain in the last few years, prices of land earmarked for low density residential development have risen sharply and in most areas can be found in a range broadly around the BD20 per sq ft level.
Based on a small plot of 225 sq m, the cost of the land alone would be around BD50,000 ($132,000). The subsidised mortgage for mid to low-income Bahrainis offered by the Government only amounts to BD40,000 ($106,000) –not even enough to buy the small plot of land on which a Bahraini household would want to build their house.
“When the costs of construction are added in, it is simply not possible for developers to meet the demand for ‘affordable’ housing,” the report said.
“There is a structural problem in Bahrain in that the relatively low average salaries of Bahrainis, allied with the availability and cost of finance simply do not allow them to buy the houses that the developers build for them,” it concluded. – TradeArabia News Service
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