Bahrain residential property market seeing increased demand
|Wednesday, 24 April 2013|
National uncertainty has taken a toll on Bahrain but the kingdom is now entering a period of relative calm and the Bahrain Central Bank has made a positive growth projection of 4% in 2013.
That along with the planned US$1 billion GCC aid will also contribute towards the nation’s social and infrastructure development programme and in the coming months the residential lettings market is expected to experience a surge in supply.
Cluttons, the real estate specialist which has been operating in the Middle East since 1976, says that several major residential developments will be brought to market over the next six months, including those being built under the government’s housing programme.
Despite perceptions that the sharp upturn in residential supply may place downward pressure on prevailing rents, analysis suggests that rents will remain stable. This is due to there being sufficient domestic demand to absorb the new residential units, coming predominantly from the US Navy, which continues to relocate personnel to the island.
The firm also says that the residential sales sector is seeing a spike in foreign investment from the GCC, which perceives the market to have ‘bottomed out.’ This renewed interest in investing in property in Bahrain has created a window of opportunity for some landlords to exit investments made at the peak of the market, with manageable losses.
Following a low level of activity in the final quarter of 2012 in the commercial sector, 2013 has got off to a significantly better start, with an increase in occupier enquiries, predominantly from companies expanding and requiring new space, rather than new entrants to the market.
In 2012, a combination of improved economic outlook, coupled with a slowdown in the number of new occupiers in the market helped minimise rental increases, whilst fostering an environment for the expansion of existing businesses.
Landlords remain under pressure to remain flexible on the lengths of rent free and fit out periods given the oversupply in the office market, therefore Cluttons is not anticipating any significant upturn in office rental rates in the medium to long term.
However, post Arab Spring, the UAE and Qatar continue to attract the lion’s share of new companies entering the region. A stabilisation in national tensions is likely to translate into a slow, but steady upturn in the number of GCC tourist arrivals, which will help lift demand for retail space over the course of the year.
Cluttons says that Bahrain City Centre remains the primary hub of retail activity, but with limited vacancy, retailers are turning their attention to smaller retail malls. Seef Corner, opposite Bahrain City Centre, which is let by Cluttons, has benefitted tremendously from over spill from the City Centre. Some75% of the available retail units were let within two months of coming to market.
Due to the limited number of vacant prime retail units in Bahrain City Centre, there has been a rise in asking rental rates in surrounding submarkets, which are now hovering around the BD12 per square meter mark, a level not recorded outside Bahrain City Centre for over two years.
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