Bahrain's housing market holds up well

Dubai: While the world waits with bated breath to see what the future holds for the housing market, the small island nation of Bahrain is weathering the global slowdown and offering investors with cash to spare value for money.

Sale prices for property in Bahrain have certainly dipped with lower transaction values apparent, but, according to industry experts, this is good news for prospective buyers.

In 2008, Bahrain's residential property market enjoyed a record year of expansion with growth fuelled by strong indigenous demand, a relaxation of foreign ownership regulations in certain areas of the country, strong levels of liquidity in the regional market and improved financial options.

Statistics from the Bahraini ministry of information suggest that more than 90 per cent of real estate purchases in the country are by Bahrainis but the number of non-national investors has been on the rise for the past five years.

Foreign buyers have almost exclusively been drawn from GCC countries, in particular Saudi Arabia, with other significant investors coming from Kuwait, Qatar and Oman.

For a long time contractors complained that Bahrain was slow to take advantage of the booming housing market that the rest of the Gulf enjoyed.

However, now with so many projects coming online, Bahrain's developers will have to pull out all the stops when it comes to attracting buyers.

Residential developments launched for sale in the last quarter of 2008 alone included Raffles City in Bahrain Bay, Difaaf, Mina Dar Al Salam, Venice Apartments at Reef Island, Aya Tower, Amwaj Waves and Delmar.

Property agents in Bahrain are agreed that the country seems to be coping with the housing downturn better than many other markets and it seems that maintaining a low profile and adopting a sensible development approach has certainly helped.

Steve Mayes, manager of CB Richard Ellis in Bahrain, believes there are a number of reasons why the country's residential market remains in good shape in spite of the downturn affecting global markets.

Mayes believes one of the chief reasons is Bahrain's low profile in the housing market.

"Bahrain's estate market has remained below the radar and has not become overheated as a result," he says. Acording to him, while returns may have not looked as spectacular, compared with other GCC markets, this means that the correction now being experienced by all is not so dramatic.

"Bahrain is not immune to external influences, positive or negative, but it remains well insulated, partly due to the policies pursued by the government and business leaders and also partly due to chance."

Bob Addison, DTZ's director and country manager for Bahrain, agrees. He believes that despite some speculative buyers looking to sell or lease units once completed, Bahrain's residential market still offers considerable opportunities for GCC and international investors with high-end, luxurious residential properties at a significant discount to the prices being recorded elsewhere in the Gulf.

Addison says the Bahrain housing market has held up extremely well given the worldwide recession.

"The market has been supported by continued demand from people who work in the Eastern Province and who commute from Bahrain," he says.

"Rent levels are stable and occupancy rates are high. The freehold market is going through an evolutionary stage whereby investors who hoped to sell their properties are now looking to lease them due to potential purchasers' lack of confidence generally and the high cost of construction materials and we are now seeing a return to value," he says.

But does this provide a good opportunity for investment?

Andrew Chambers, managing director of Asteco, certainly thinks so. He says that a big plus point for would-be investors is Bahrain's commitment to the future as outlined in its 2007 National Plan.

The plan is the first comprehensive land-use strategy to assess the nation's planning requirements for the next two decades.

Chambers believes that Bahrain is well positioned to overcome the current economic downturn with market corrections together with an ongoing dedication to development set to encourage property investment in the country.

He says: "The conditions are now perfectly suited to the genuine, long-term investor and Bahrain's vision and plans for ongoing development, as outlined in its National Plan, will result in a continued stake being placed in the island's residential property market."

The author is a freelance writer based in Dubai.