According to renowned real estate analyst Savills, Bahrain’s real estate market generally maintained its rising trend from 2022, but at a slower rate due to growing macroeconomic uncertainty worldwide.
According to Savills’ Q1 2023 Bahrain Property Market in Minutes report, villa developments maintained their popularity in the residential market in Q1 2023, with capital values throughout the mid-end sector climbing 5.2% year over year.
Rates have increased from BD573/sq m in Q1 2022 to BD603/sq m at this time. The demand for high-end/premium developments has been hampered by the rising cost of borrowing, with apartments being more affected than villas. Values of luxury apartments have decreased by 1.3% year over year.
Due to the current state of the world economy, there was a persistently high demand for low-end and mid-range villas on the rental market.
Although there hasn’t been any price growth in the low-end group this quarter, prices are currently 18.5% more than they were in Q1 2022 and are anticipated to be BD800/month due to the gradual rise in rent over the previous few quarters.
The supply/demand imbalance in the industry is causing downward pressure on the rental flat market, it was noted.
Due to significant levels of interest in mid and high-end office properties, rental values have climbed by 15% year over year, especially in the mid-range market.
90% of the Grade A stock studied by Savills in the high-end market saw steady rental values, but on average, rentals decreased by 1.5% on a quarterly comparison and 2.1% on an annual comparison.
Mid-end capital values saw y-o-y growth of 4.6%, reflecting the sentiment of the rental market in the sales market. This is primarily due to the sub-sectors decreased stock availability.
The establishment of the Golden Licence programme for both domestic and foreign enterprises, according to Hashim Kadhem, Head of Professional Services in Bahrain, is an example of a change in government policy that is going in the correct path.
“Incentives to investors such as priority in the 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.