Analysts gloomy on outlook for Bahrain real estate market as lack of finance and confidence dips
Bahrain’s real estate market will continue to see downward pressure until the end of this year as a lack of finance and investor apathy affects confidence, according to analysts.
The kingdom’s freehold market will continue to see very low transaction volumes, with demand shifting away from speculative investors, believes Martin Cooper, consulting head of DTZ Middle East.
'This is likely to continue as lack of finance, investor apathy and oversupply continue to have a negative effect on the market,’ he explained.
In the office sector rents will continue to decline due to ‘large volumes of supply continue to increase total stock and levels of occupier demand remain low,’ Cooper said. While the industrial sector has seen a fall in demand due to a general decline in trade after the impact of the global financial crisis, he added.
But analysts at property consultants Knight Frank point out that the slowdown in Bahrain's property market has seen rental prices tumble in some sectors, however prices at the lower end of the market are increasing as a result of a higher demand for cheaper accommodation.
Rental prices have fallen by as much as 20%for high end apartments over the last 14 months and a similar downward trend has been witnessed in rented accommodation in the mid-market sector, with apartments previously rented out for BD600 a month now going for between BD500 and BD475.
However, this has spelt bad news for lower- income families. The knock on effect of this slide at the mid to top end of the market is that prices at the lower end of the market have been pushed higher as a result of increased demand for cheaper accommodation.
Many professionals laid off during the economic slowdown, or those simply trying to reduce costs, are down sizing their household budgets, it is reported. This is leading to an increased demand at the lower end of the property market.
According to Gulshan properties, there has been a 25% increase in rent costs for such accommodation. A two bedroom apartment that would have been rented out for BD200 a month two years ago, is now on the market for between BD250 and BD300.
‘It is very difficult now to find an unfurnished apartment for BD200. Most of these properties are going for at least BD250,’ said a spokesman for Gulshan.