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A 25% drop in property prices predicted in Bahrain

R Lakshmanan, chief executive of Sakana Holistic Housing Solutions, a joint venture between The Bank of Bahrain & Kuwait (BBK) and Shamil Bank said it is difficult to predict what will happen in 2009 because transaction have slowed almost to zero.

'Depending on the area, we are already talking about adjustments of 10 to 15%. Prices could drop as much as 25% if current market conditions persist,' he said.

'It's very difficult to put a percentage on the decline because hardly any transactions are happening,' he added.

Some Bahraini companies have started to lay off staff as a result of the global financial crisis. 'But it's still not at the level that we're hearing about from Dubai,' Lakshmanan said.

In October, Sakana cut its loan to value ratio to 80% from 90%. Lakshmanan said property prices may start to rebound as soon as liquidity returns to the market and oil prices start to pick up.

The company was recently awarded Best Islamic Mortgage Provider of the Middle East at the International Real Estate Finance Summit 2008 in London.

Unlike Dubai, the vast majority of Bahrain's real estate investors are from oil rich countries in the GCC.

A limited amount of space to build on has underpinned price gains in the Kingdom, where a number of high end developments are being built on reclaimed land.

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