MANAMA: Capital values in Bahrain’s affordable housing segment have been far more resilient than high-end apartments, reveals new research.
Property consultant Savills’ Market in Minutes report on the kingdom’s property sector for Q3-2021, found that capital values across the apartment segment have remained largely stable, despite the increase in supply during the period from July to September.
Average capital values have remained stable across low and mid-end segment while they have dropped by an average of 1.4 per cent quarter-on-quarter (QoQ) across the high-end segment.
The supply of residential apartments continued during the quarter as 210 new units were introduced to the market across two projects, Address Residence and Marassi Vista, which are part of the Marassi Al Bahrain project by Eagle Hills.
However, capital value sentiments across the villa market have remained subdued.
Prices
Prices across the villa segment have dropped by an average of 1.7pc and 2pc across the mid and high-end sub-markets, respectively, compared to the previous quarter.
The increased supply largely drives this, particularly in the Northern Governorate, in addition to buyers being more cautious of their expenditure.
Talking of rental values, the Savills report says the third quarter usually experiences an uptick in demand due to an influx of residents, increasing rental values.
Encouragingly, despite the economic hardships, this has continued during the current review period, with strong demand in the high-end villa rental market leading to an average 2pc QoQ increase in rents.
The low and mid-end villa sub-markets remained stable with no price movement over the past quarter.
“We have also witnessed several landlords who were previously hesitant to negotiate and adjust their rental expectations to the market condition have aligned their quoted rents to the current market dynamics,” said Hashim Kadhem, head of professional services at Savills Bahrain.
This has resulted in some large compounds reaching near-full occupancy, he added.
A drop in capital values and a simultaneous increase in quoted rents has led to a marginal improvement in overall investment returns.
Contrary to the rental trends observed in the villa segment, rentals for apartments have witnessed a drop compared to the previous quarter.
The low and high-end apartment rental markets experienced a QoQ price contraction of 2.1pc and 1.3pc, respectively.
However, the mid-market apartments fared better with price growth of 0.6pc for the same period.
“We note older buildings in Saar and Janabiya are struggling to lease apartments as they are competing with new supply with better facilities,” said Mr Kadhem.
Analysing the commercial segment, the report notes that while capital values across the office segment have been stable for the third consecutive quarter, values across the low-end segment are still down by 7.2pc year-on-year (YoY), and values across the high-end properties are on an average down by 1.7pc (YoY).
On the other hand, the rental market has witnessed increased tenant churn over the past quarter, resulting in a decline of 5.5pc in the mid-market category.
The low-end market saw its first increase in four quarters with QoQ price growth of 1pc.
This is likely attributed to occupiers seeking more affordable options as businesses reassess their expenses in the current landscape.
In contrast, the high-end market observed the fourth successive quarter of no price change.
avinash@gdn.com.bh
&uuid=(email))