Bahrain’s real estate market has seen a significant growth in the last decade, thanks to its low investment and transaction costs compared to other GCC states, according to a report.
The flourishing market of Bahrain made it more resilient while facing the economic turbulences hitting GCC markets due to the oil price plunge as the total value of property deals remained stable at BD1 billion ($2.63 billion) in 2015 compared to the previous year.
Despite the cautious market performance after the oil prices fall, the kingdom’s real estate sector remained solid as deal values soared along with the sales and rental prices in the prime areas, it added.
Besides the buying and selling, the construction activity too picked up steam thus reflecting the companies’ confidence in Bahrain’s real estate market. Construction sector in Bahrain achieved a growth of seven per cent in the start of 2015.
The discovery of oil represents a turning point in Bahrain’s economic history. The annual budget of Bahrain, since the first discovery, totally depends on hydrocarbons product.
The second transformation in Bahrain economy started by the first oil crisis when the leadership realised that establishing a firm economy requires diversifying national resources instead of relying on oil incomes, said the Weetas in the report.
The government focused on developing different economic sectors including tourism and real estate by holding a number of partnerships with domestic, regional, and international entities.
Bahrain shifted focus to property development nearly 10 years ago to make it a major source of national income almost equivalent to the oil sector.
Under its new development strategy, the kingdom first passed a freehold law which enabled foreigners to purchase properties in specific locations across the kingdom.
It started with a limited number of areas such as Seef, Juffair, Durrat Al Bahrain, and Amwaj, then expanded over the years to cover more areas, it stated.
Investors interest in purchasing in the promising market of Bahrain has risen especially in the last two years when property deal values soared to greater heights.
Many real estate investment and development companies entered Bahrain market to take advantage of the available propitious investment opportunities and participate in the real estate boom.
This interest has invigorated supply and demand rates and boosted properties prices by 400 per cent during the last 10 years in certain areas.
Another star attraction for overseas investors is the low investment costs in Bahrain (the average price of apartments’ sq m is $2,072 in the kingdom compared to $5,073 in the UAE).
Also the transactions costs in Bahrain are lower than the neighboring countries which puts its real estate market in a privileged position offering high investment yields and capital growth.
Added to all this is the ease of doing business in Bahrain for property investors and the country’s relatively low cost of living for both citizens and expats.
The kingdom is considered one of the most convenient locations worldwide for expats due to its low rental and living prices. All these factors contributed in stimulating the market’s activity.
Over the last few years, Bahrain has been witnessing a number of new developments such as the $2.5-billion Bahrain Bay project which lies in the north of the kingdom.
The real estate development at the project is being carried out by a number of prominent domestic and regional companies like Bin Faqeeh, according to the report.
Several other projects are on track for completion this year in Bahrain Bay such as the United Tower.
High investment yields, high rental yields, market stability, and strict framework, were some of the vital factors that have drawn foreign investors and companies to Bahrain.
A number of projects are under way in Bahrain such as Marassi which was officially launched last year, said the property management firm in its statement.
A key project which represents a qualitative leap in Bahrain’s urban reality, Marassi is being executed by the UAE-based Eagle Hills.
In light of the ample prospects and the robust economic performance, the market is projected to witness even better growth rates in the coming years which will qualify it to be a real traction point for real estate investors despite its small area, it added.
Source: Trade Arabia
