Bahrain’s property market stand to gain from a $2.7 bn fund it has allocated for infrastructure development.
The move is part of Bahrain’s diversification initiatives to boost its non-oil industries. The forecast was revealed in the Savills Q2 2023 Bahrain Property Market report.
Hashim Kadhem, head of Professional Services at Savills in Bahrain, said: “Bahrain’s residential and commercial property sectors have benefitted from a raft of positive policy measures, including the Economic Recovery Plan, the issuance of the Golden Licence, and the national jobs plan.”
Read: Reforms to help grow Bahrain real estate market in 2023
Residential sales and rentals
According to Savills, villas are now in demand more than apartments. In addition, inquiry levels and transactions for villas were concentrated across the mid-range segment.
Despite this preference for villas, the prices have remained at the same level during the second quarter. However, rates have increased by 2.3 percent on a year-on-year basis. Meanwhile, apartment prices in the low-end segment have remained stable on a quarterly basis. Prices of mid- and high-end segments have decreased marginally.
Meanwhile, rentals across Bahrain have remained mostly stable in Q2 2023. While rental values have not moved much on a quarterly basis, those for low-end and mid-end apartments have decreased by two to six percent compared to the same period last year. As of Q2 2023, low-end villa rental prices have risen by 10.3 percent.
Office sales and rentals
As a result of the ongoing relocation of corporate occupiers to premium developments, rental prices have increased by 1.6 percent on a quarterly basis across the high-end segment.
“This annual increase in rents signifies the scarcity of space across the high-quality developments as well as the ongoing demand from corporate occupiers to lease space across such projects,” said Swapnil Pillai, associate director – Research, Savills Middle East.
In addition, prices have remained stable across the office development compared to Q1 2023.
“There was also a noticeable uptick in demand for LEED-certified office spaces, demand for which is anticipated to see an increase moving forward as companies aim to meet their ESG goals and requirements,” Kadhem added.
Retail and industrial markets
On the other hand, Savills observed a downward pressure on retail rental rates over the past year. Prices fell by an average of seven percent. Malls recorded the biggest adjustment in rates, where prices fell 11 percent year-on-year.
Meanwhile, industrial rental rates remained stable as Bahrain’s Economic Development Board (EBD) has taken several measures to diversify the economy away from oil. As a result, Bahrain’s industrial sector has attracted more industrial tenants and operators into the kingdom.
Savills anticipates that the sector will continue to grow in the medium term as greater emphasis is placed on supply chain, food security, and onshore activities.
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