During the first quarter of 2023, residential transaction volumes in Bahrain increased by 13%, according to Knight Frank, a renowned international real estate consultant.
Knight Frank also discusses how the industrial warehousing sector is still expanding while retail rents are still under pressure in its most recent Bahrain Real Estate Market Review.
The logistics industry has continued to dominate Bahrain’s real estate market, following patterns in other GCC nations. This industry is particularly appealing because to strong demand and excellent gross yields. Compared to 5% for single-let villas, 6.5% for single-let apartments, and 7.5% for offices, gross warehouse yields are currently around 9%.
Demand for warehousing
Faisal Durrani, Partner, Head of Middle East Research, explained: “Like elsewhere in the world, the demand for high quality, internationally specified warehousing is on the rise. The global boom in online retailing has driven up requirements for last-mile logistics facilities, storage warehouses and dark-kitchens; a trend that is set to continue underpinning the strong rental growth recorded by the market.”
“Apartment prices have retreated by 3.5% in the last 12-months, while villa prices have risen by a marginal 1.5% over the same period, suggesting an affordability ceiling may have been reached.
“Indeed, we have noted a rise in demand for projects that are financed by the Mazaya Social Housing Programme as households shift their focus to more projects that are perceived to be more affordable.”
Knight Frank reports that office rents have decreased by 2.1% over the past 12 months in the office market, but landlords have reasons to remain upbeat.
Demand for office space
Stephen Flanagan, Partner, Head of Valuation and Advisory, Mena, added: “The government has implemented several initiatives to attract foreign investment, including the establishment of free zones, tax incentives, and streamlined business regulations. This has led to an influx of international companies looking to set up operations in Bahrain, driving up demand for office space.”
Leading retailers like Dragon City and The Avenue Malls have successfully adapted to new consumer trends on the retail front. These businesses have successfully maintained high occupancy and lease rates by masterfully fusing traditional retail offers with food and beverage, entertainment, and leisure experiences. Despite an overall 2.6% annual decline in average retail leasing rates, this accomplishment was made.