Bahrain’s Housing Market Benefits from Economic Stability

The current economic stability in Bahrain has started to have an impact on its residential property market, stabilizing rates and encouraging tenants to turn their attention to high-quality housing options, claims international real estate consultant Cluttons.

According to Cluttons’ Winter 2014 Bahrain Residential Property Market Outlook, a greater emphasis on developments of higher quality will start to put pressure on rents at the top end of the market. The national stability is then expected to spread more widely throughout the Kingdom over the course of the following six months, resulting in more vigorous economic activity and, consequently, higher levels of job creation. As a result, it is anticipated that asking prices for such properties will begin to trend upward during this time.

According to Harry Goodson-Wickes, the CEO of Cluttons Bahrain, “Numerous excellent projects are already attracting more interest. For instance, semi-furnished four-bedroom villas are available for rent at the Kazerooni Homes development in Saar for about BD 1,800 per month. These types of top-tier developments attract tenants due to their perceived high-quality finishes and reasonably low rents.”

According to the report, families looking for housing within easy access of Manama’s main schools have been a particularly strong driver for the relocation of existing tenants. Although this pattern is widespread worldwide, it has returned in the Kingdom as stability and confidence have increased, with households increasingly focusing on school districts. This trend, which has been strengthened by the easing of localized disturbances in this region, has benefited Saar particularly.

The report also emphasizes how Bahrain’s economic diversification will attract a wider range of tenants. The slight increase in tenant demand from the legal, banking, and financial services sectors, many of whom are new to the Kingdom, suggests that the residential market’s dependence on the regular rotation of US Navy personnel is now beginning to be complimented.

Added Goodson-Wickes: “We anticipate an even broader range of tenancy requirements in the medium to long term as other economic sectors gradually resume growth, generating new jobs and, consequently, households. Bahrain’s non-oil sector expanded by 2.3% during the first quarter, and the government is still investing in infrastructure; funding for projects increased by 2.4% compared to the first quarter of 2013, which, in general, has resulted in higher levels of business activity. The real estate industry has benefited from this and continues to do so.”

Cluttons reports that throughout the year, rents in Manama remained stable, with no change seen in the first three quarters of 2014. Rents are actually only 0.8% higher than they were at this time last year, which is the slowest rate of annual growth since Q4 2011 when rents fell by -0.2%.

The report also reveals that during Q3, apartments in Al Seef continued to be among the most reasonably priced, with asking rental rates averaging around BD 700 per month, while villas on the Amwaj Islands remained the most expensive in the Kingdom, commanding average monthly rents of BD 1,275. Throughout the third quarter, one-bedroom apartments (BD 550 per month) in Al Juffair, Al Seef, Reef Island, and the Amwaj Islands continued to hold the title of the most affordable type of lodging.

In order to support and carry out the National Housing Plan, there is a clear need for the development of a more extensive and comprehensive affordable housing program in Bahrain, according to Goodson-Wickes’ conclusion.

“This is why we anticipate Eskan Properties’ Danat Al Madina development at Isa Town to be especially well-liked. In the future, we expect developers to show a lot of interest in this region.”