According to international real estate advisory firm CBRE, Bahrain’s real estate transactions continue to increase despite moderate performance across important sectors like residential, office, retail, and hospitality.
In Q2 2023, there were a total of 5,279 real estate transactions in Bahrain, according to SLRB data. This is a 7.1% year-over-year growth but a 16.7% reduction from the previous quarter, which is most likely since Ramadan and both Eid holidays fell in Q2, according to the report.
In Bahrain’s residential market, the average quoted apartment rent rose by 2.1% on a governorate-wide average in Q2 over Q1 while the quoted flat sales rates dropped by 1.1%.
According to CBRE’s Bahrain Real Estate Market Review Q2 2023, the Capital Governorate continues to have the highest rates, but the Muharraq Governorate is starting to catch up as newly delivered high-quality assets are attaining higher rates in places like Diyar Al Muharraq and Dilmunia.
Villas experienced slight rate changes in Q2, with quoted rents declining by 1% and sales rising by 0.6% in comparison to Q1.
As compared to Q2 2022, sales rates were essentially stable on an annual basis for flats and slightly decreased for villas. Regarding rents, it continued its upward trend year over year, with apartment rents rising 4.6% and villa rents rising 7.3% in the year leading up to Q2 2023.
For the six months ending June 30, 2023, CBRE reported an increase in registered leases in its managed properties in the office sector.
The demand for small- to medium-sized units from international businesses and larger floor plates from governmental and quasi-governmental organizations remain the two key demand drivers for Grade A and B commercial office space.
According to the statement, while rental rates have remained largely consistent, vacancy rates have started to decline for the first time in recent years, hitting their lowest level since 2019, which is currently estimated to be 26.3%.
However, there is a sizable pipeline of supply scheduled to enter the market in H2 2023 and into the following year, which would probably have an impact on the headline rate, especially given current occupier demand trends, it was said.
In H1 2023, the majority of the malls included in CBRE Bahrain’s biannual retail occupancy study had gains in foot traffic.
70% of the 20 malls studied experienced an increase in occupancy, with Dana Mall in the Capital recording the largest increase thanks to recent store launches and the introduction of Epix Cinemas. Average set occupancy improved by 3.6 percentage points from H2 2022 to presently stand at 70%. The Avenues, City Center, and Dragon City have the greatest occupancy rates.
Even while the current occupancy rate is at its greatest level since the COVID-19 epidemic began, it is still about 10 percentage points lower than it was in 2019. Despite the general increased trend in average occupancy, all retail categories’ average rental rates have decreased by 4.0% as of June 2023.
The main cause of this in Bahrain has been excess retail stock. All market sectors, including super-regional, regional, community, and neighborhood retail, are still experiencing development activity. It is predicted that this increased supply will further dilute the market and put pressure on the minimum rental rates that can be charged.
Heather Longden, Director – Advisory & Transactions, at CBRE in Bahrain said: “CBRE has recorded an uptick in registered leases within our managed office properties and a minor reduction in vacancy rates to 26.3%.”
“All key performance indicators in the hospitality sector have shown signs of improvement year-on-year and according to the BTEA, Bahrain International Airport welcomed 4,098,582 passengers during the first six months of 2023, up 43.2% from the same period in 2022, “ stated Longden.
“While retail occupancy rates have improved marginally to reach 70%, average rental rates have dropped in the first half of 2023 as the supply of shopping center space continues to grow,” he added.