CBRE, a commercial real estate and investment firm, said tenants in Bahrain, where villa and apartment rents have declined, continue to hold bargaining power over landlords.
In order to attract tenants and avoid having high vacancy rates, a lot of property owners are now offering incentives like reduced rates or rent-free periods. CBRE said in a report released on Wednesday that developers are enticing potential buyers with rent-to-own schemes, as well as attractive payment plans and guaranteed returns.
“Bahrain is increasingly a tenant-led market, with tenants having greater bargaining power and flexibility in negotiating with landlords,” the report said.
“Incentives seen more and more frequently include rental discounts and rent-free introductory offers.”
According to official data, the first quarter of this year saw 2.4 percent decrease in apartment rents compared to the previous quarter. According to property consultancy Savills, the decline was driven by a 2.7 percent drop in the mid-end apartment market.
Villa properties also experienced a decline in rent of 1.6 percent quarter-on-quarter. High-end properties in this segment declined significantly by 0.8 percent, while mid-range properties declined by 2.8 percent.
Despite the overall decline in rents, there has been an increase in demand for units with more outdoor space due to the remote working trend. Properties at affordable rents have also been popular.
“New builds with outdoor space and extensive facilities on-site are performing better than those without,” said CBRE.
“The affordable and social housing segments dominate demand [in Bahrain].”
According to CBRE, the residential market will remain the same for the rest of the year as in 2020.
“[Bahrain will continue to be a] tenant-led market as [the] market adjusts to increased supply levels. Landlords [are] expected to continue to offer lower rents to be competitive.”
The Government of Bahrain launched its Economic Vision 2030 in 2008 to diversify its economy. More than 70% of the population has been vaccinated by September 2021 after a successful vaccination drive was rolled out across the country.