Bahrain’s real estate market continued to grow in Q1 2023, but at a slower pace than in 2022, according to new research, which attributes the downturn to increasing global economic uncertainties.
In the residential market, villa developments were more popular than apartments, finds the Savills Q1 2023 Bahrain Property Market in Minutes report.
Capital values for mid-range villas rose by 5.2 per cent year-on-year (y-o-y), with rates now estimated at BD603/sqm compared to BD573/sqm in Q1 2022, it adds.
However, the increased cost of credit has impacted demand for high-end/premium developments, with apartments feeling the impact more than villas. High-end apartment values have dropped by 1.3pc quarter-on-quarter.
In the rental market, demand for low-end and mid-end villas remained strong as end-users limited their expenses owing to the current global economic landscape.
Whilst there has not been any price growth across the low-end segment during the current quarter, the gradual increase in rents over the past few quarters has meant that prices are now 18.5pc higher compared to Q1 2022 and are estimated at BD800/month.
Meanwhile, the apartment rental market continues to face downward pressure as the sector battles with the supply/demand imbalance.
In the office space, enquiry levels were strong across mid-end and high-end properties due to which rental values, particularly across the mid-end segment, have increased by 15pc y-o-y.
Across the high-end segment, rental values remained stable across 90pc of the Grade A stock tracked by Savills, but on average, rents dropped by 1.5pc on a quarterly comparison and 2.1pc on an annual comparison.
The sales market reflected the sentiment of the rental market with mid-end capital values experiencing y-o-y growth of 4.6pc. This is largely attributed to reduced available stock in the sub-sector.
According to Hashim Kadhem, Bahrain head of professional services at Savills, “Government policy changes such as the introduction of the golden licence scheme for foreign and local businesses are a step in the right direction. Incentives to investors such as priority in 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.”
Talking about Bahrain’s economic indicators, Savills Middle East associate director for research Swapnil Pillai 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. The kingdom’s GDP grew by 4.9pc in 2022, the highest recorded in over five years, whilst Foreign Direct Investments (FDI) grew by 5.8pc y-o-y to 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 17pc y-o-y in Q1 2023 to BD243.1 million.”
avinash@gdnmedia.bh
&uuid=(email))