Bahrain posts solid real estate growth; 2021 deals hit $2.6bn
MANAMA, February 22, 2022
Bahrain's real estate sector witnessed solid growth in 2021 with the transactions value surging to BD1 billion ($2.62 billion), up 46 per cent over the previous year, underpinned by landmark government initiatives and an improving outlook, according to global real estate advisor Savills.
Various government initiatives introduced throughout the course of 2021 have helped drive an increase in property transaction values in Bahrain and generated optimism in local market sentiment across the residential sector, stated Savills in its Q4 2021 update on the Bahrain market.
To maintain this strong growth momentum, the government revealed a four-year National Real Estate Plan 2021-2024 in March 2021 to promote investments into the sector, develop innovative real estate enterprises, and preserve all the stakeholders’ rights, thereby creating a secure and transparent real estate sector.
In October, the government had announced a new national economic growth and fiscal balance plan. The multi-year, five-pillar plan is one of the largest economic reform programmes for the Kingdom and aims to improve Bahrain’s long-term competitiveness, it stated.
Swapnil Pillai, Associate Director Research, Middle East, said: "Offshoots of a gradual recovery in the market were already visible as the Q4 2021 Savills residential capital value index remained stable. This is the second consecutive quarter where prices across the residential sector remained unchanged across apartments and villas."
"However, on an annual comparison, prices remain on average, 1.6% and 4.2% lower across apartments and villas, respectively, compared to Q4 2020, creating room for increased investments," stated Pillai.
According to him, the residential rental index for Q4 2021 remained relatively stable on a quarterly basis; however, similar to capital values, on an annual comparison, rental values across apartments were 5% more affordable.
The decline in prices was more prominent across the mid-end (3.5% y-o-y) and high-end (1.4% y-o-y) segment, whilst they remained stable across the low-end segment, he added.
On the future outlook, Hashim Kadhem, Head of Professional Services, Bahrain, said: "Looking ahead, we anticipate the high-end sale market will continue to witness delays in absorption with developers unwilling to revise their pricing strategies."
"However, they are still offering extensive incentives with many developers also partnering with banks to offer attractive mortgage products," he stated.
In the commercial segment, Savills said the uncertainty in the office sector in Bahrain was reflected by an average y-o-y drop in office sales prices of nearly 2.9%.
In the rental market, mid-end offices experienced an average y-o-y decrease of 13.3% due to the dual effects of tenants who either sought cheaper, low-end alternatives, or relocated to higher-end office developments that offered competitive rates, stated the property expert.
Kadhem said: "Going forward, a deeper analysis of office space that’s required will occur. International tenants are likely to adopt hybrid working practices, leading to downsizing of existing spaces and take-up of smaller spaces."
"Also, there will be an increased focus on the repurposing of older stock that does not meet the Environmental Social and Governance (ESG) requirements of tenants," he added.-TradeArabia News Service
