A continued rebound is likely in the Bahrain real estate market in 2023, driven by institutional reforms to attract investments.
Construction projects were rescheduled to make room for more emergency spending during the height of COVID-19 in April 2020.
But several projects stopped at the peak of COVID-19 have resumed, ASK Real Estate’s 2022 annual report stated.
The value of real estate transactions as of end-2022 was $2.8 billion (BD1.1 billion), according to the consultancy. The figure was 3.9 percent higher than $2.7 billion (BD1 billion) of transactions in 2021.
There were 21,603 transactions in 2022, compared to 21,444 in 2021. Last year’s figure marked a return to pre-pandemic transaction levels, which reached 21,398 in 2019 and 23,213 in 2018.
Growth factors
A deeper commitment to economic diversification away from oil revenues is supporting growth in the Bahrain real estate market.
The government introduced a five-pillar economic transformation program in November 2021. It includes labor market reforms; spending in priority sectors like logistics and tourism; regulatory overhauls; and efforts to improve fiscal balance, including the doubling of VAT to 10 percent.
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Also included is a plan aimed at catalyzing $30 billion in strategic project development and the creation of new industrial investment avenues.
The package of reforms, aligned with broader diversification goals, reiterates Manama’s commitment to creating favorable investment conditions.
“The tentacles of Economic Vision 2030 are spreading throughout the economy and business confidence is rising,” Faisal Durrani, partner, and head of Middle East Research at Knight Frank said at end-2022.
“This, coupled with sustained high oil prices and the government’s forward-thinking initiatives, such as the $30 billion set aside for real estate projects that encompass all sectors is starting to pay off as evidenced by rising prices and deal activity.”
Legal reforms
The Golden Visa residency scheme launched in 2022 marked a major overhaul to immigration laws in Bahrain.
The visa is available to property owners, residents, retirees, and highly talented individuals. The permit aims to attract greater investment to both the real estate market and the wider economy.
Reforms are also in place to resolve existing issues in the Bahrain real estate market. In February, Housing and Urban Planning Minister Amna Al Romaihi said plans are under development to resolve longstanding land and property disputes.
The Shura Council approved changes to the 1994 Land Division Law that includes guidelines to settle legal property disputes.
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Amendments decreed by HM King Hamad in 2022 will allow judges to deal with properties in inheritance portfolios, not just land plots.
Parliament and Shura Council Affairs Minister Ghanim Al Buainain, reportedly said: “Up to now, the judges based their verdicts on a given map ensuring equal division. But the division wasn’t based on a full picture that could have seen someone inheriting a part with no value as it was land-locked with no entrances or exits to the main road network.
“So now it is a much fairer approach and the judge is fully aware of all the associated factors before issuing a verdict.”
Outlook
Business confidence continues to improve in Bahrain amid legal reforms and wider government commitments to improve fiscal balance.
Stronger oil prices have also contributed to improved sentiment about longer-term prospects. The eventual monetization of 80 billion barrels of new oil stock discovered in 2018, too, will help state finances.
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The Bahrain real estate market has the fundamentals needed to unlock further growth in 2023.
Developers will hope these ingredients help further improve transaction volumes and values this year.
