Although Bahrain may be a favoured destination for well-heeled tourists determined to push credit cards to the max while looking to experience the authentic delights of Old Arabia, this small and extremely wealthy Persian Gulf island state, measuring only some 34 miles in length and 11 miles in width, is also a property investment hotspot.
And according to the latest research by international real estate consultancy Cluttons, Bahrain’s persisting stability and improving economic conditions are continuing to underpin national growth and fuel resilience in its residential and industrial property markets.
The positive assessment comes courtesy of Cluttons’ recently-published report, Winter 2013 Property Market Update, which paints the Bahraini government’s wide-ranging investments in infrastructure as the catalyst for the continuing growth. This, says the report, is leading to increased job creation as well as rising confidence levels amongst builders.
The report highlights areas such as Al Seef which has seen work resume on a small but growing number of previously stalled residential schemes. Freehold projects such as The Breeze and The Breaker are projected to deliver 154 units to the market by the end of 2014, although Marina West on Bahrain’s north coast remains on hold.
The report findings also point to positive movements in the Bahrain government’s housing sector, with schemes receiving a boost through the GCC Support Programme. Work is progressing at sites in Sitra, Samaheej, Galali and Northern Town that are expected to deliver in excess of 1,500 units, but this still falls short of the 54,000 requests for government-built homes.
The $2 billion Social Housing Finance Fund, set up to tackle the shortage through a joint venture between the Housing Ministry and a consortium of private banks, and which offers alternative routes to home ownership, is expected to inject fresh impetus into the private residential sector and aid the completion of some schemes. However, says Cluttons, it’s still too early to assess the full impact of the scheme.
The report’s tone is more downbeat with regard to the island’s lettings market which it describes as “mute”. Rental values remained unchanged during Q3, following growth of 0.4% in Q2, leaving average monthly rents at around $2,300 in Bahrain’s expatriate dominated sub-markets, a 2% increase on this time last year. Juffair was the best performing market for apartments (4.9%) whilst Saar recorded the strongest growth in villa rental rates (8.1%).
Cluttons’ Head of Bahrain, Harry Goodson-Wickes, said, “Employment opportunities across the border in the neighbouring Saudi Arabia, at the vast oil and gas installations in Dahran, are providing a continuous second stream of residents that view Bahrain as a more favourable location to live.”
The island’s office market continues to remain very subdued, says Cluttons, with rents still falling and activity mainly driven by office upgrades. Average rentals remain historically low with average rents for both fitted out and shell and core space unchanged during Q3.
With the financial and banking services sector still experiencing decline, Bahrain’s industrial sector remains resilient with government projections indicating the sector could soon become the most important component of the island’s economy.
The report highlights incentives such as tax breaks and 100% freehold land ownership, coupled with large scale infrastructure projects in nearby Qatar and Saudi Arabia, as catalysing the growth of this sector across Bahrain. Check out more from Cluttons here.