Strong local demand, relaxed foreign ownership regulations and improved home financing options are expected to help fuel Bahrain's property sector in the next three years, according to a report by the property consultancy firm DTZ. With property in Bahrain being sold for less than in neighbouring markets such as the UAE, the sector's turnover for this year is estimated at Dh21.2bn (US$5.7bn).
Freehold sale prices for homes in Bahrain's major developments such as Amwaj Islands, Durrat Al Bahrain, Reef Island, Marina West and Bahrain Bay range between Dh643 and Dh1,448 per square foot. The report found that 90 per cent of homebuyers were from Bahrain, with the majority of foreign investors coming from nearby Saudi Arabia. "The Bahrain residential market still represents an excellent opportunity for investors," said Robert Addison, DTZ's country manager of Bahrain.
"With a number of high-end mega-projects currently in development, those looking to buy a luxury property can still do so in Bahrain at a fraction of the price currently being recorded in other markets such as the UAE." Although the report predicts strong growth in Bahrain's retail property, it warns of an oversupply in the sector. There are more than 18 shopping malls in the country, with a total gross leasable area of 280,000 square metres. This figure is set to more than double in the next five years, with more than 370,000 square metres in the pipeline.
But the report said that such growth could not be sustained with a consumer base of Bahrain's 800,000 residents alone. The country is expected to look to foreign visitors, such as visitors from Saudi Arabia, to sustain growth. "As new schemes enter the market, competition will intensify to attract consumers," said Mr Addison. "We predict that older malls, and those which are not best configured to appeal to retail customers, will find it increasingly difficult to occupy units and command prime rents. For some, this may mean redevelopment or a change in focus."
Mr Addison also said that with customers becoming more discerning, only well designed and well targeted retail projects would be successful in the medium to long term. The report predicts that the amount of office space in Bahrain will double to 1,000,000 square metres by 2012. "Despite this, we predict that developers will phase development in a way which avoids a glut, and we expect to see a rent increase in the short term, at least as Bahrain's economic growth exceeds available space," said Mr Addison.
agiuffrida@thenational.ae
