Bahrain, Manama – CBRE Middle East, the global leader in commercial real estate services and investments, released its latest edition of the Bahrain Real Estate Market Review for the first half of 2024.

Looking at Bahrain’s Residential Sector, sales rates of villas increased by 7.8% on a square metre basis compared to 2023 rates, while apartment sales remained consistent during the same period, following a period of growth since 2021. Bahrain’s villa market is driven predominantly by local demand, with citizens largely seeking affordable units while international buyers represent the main offering for midto-high-end apartments in foreign investment zones. Currently, CBRE estimate tracked freehold apartment stock open to international investors, to total approximately 19,356 units, with a further estimated 1,361 units due to be introduced to the market by year end. It is anticipated that without a substantial increase in demand, the downward pressure will cause apartment rates to stagnate or result in more subdued absorption rates, ultimately leading to reduced sales rates.

The Retail Market continues to see new openings, despite challenges in the sector. Average occupancy across CBRE’s tracked properties fell by 2.0 percentage points, to 68.9%, following a period of continuous, yet marginal, occupancy growth since H1 2022. This drop in occupancy however factors in the addition of Marassi Galleria to the pool of surveyed properties. High occupancy rates were only recorded within Bahrain’s larger malls run by regional operators. The relative success of these malls could be seen as being at the detriment of smaller properties that lack the demand drivers to be able to attract international occupiers and in turn footfall. Monthly rental rates for in-line units at prime, market leading shopping centres average at BD21.500 per square metre. This rate, however, is not applicable across the market, with average rates across the board sitting at approximately BD11.500 for in-line units. There is a trend towards a more innovative tenant mix in Bahrain’s competitive retail market, even within the leading malls, as operators provide more entertainment and experiential family activities.

In Bahrain’s Office Sector, rental rates continued to decline in both prime and non-prime properties. In H1 2024, average rental rates declined by 2.9% compared to 2023, continuing the trend that has been ongoing for over a decade due to excess supply levels outpacing demand in the market. There is an ongoing trend of flight to quality, with affordable rates in Prime and Grade A segments. The disparity between Grade A and Grade B space in Bahrain is relatively negligible when compared to other business hubs in the region. Landlords operating in this competitive market are driven to offer incentives to attract the limited demand with activity in this sector predominantly led by relocating firms already established in Bahrain, with limited new market entrants seeking significant space. CBRE continue to record greater demand for CAT-A or CAT-B space, providing semi-fitted or turnkey solutions as opposed to shell & core space.

Growth continued in Bahrain’s Hospitality Sector in the number of international arrivals where visitation has in 2023 sat above pre-pandemic levels. Inbound tourism via land, air, and sea marked an increase of 24.7% year-on-year, with the vast majority of arrivals entering via the King Fahad Causeway from Saudi Arabia. Hotel KPIs have improved in line with the growth in visitation, where in the year-todate to June average hotel occupancy have increased by 7.0%, or 3.6 percentage points, compared to the same period in 2023. Additionally, average ADRs have increased by 2.6% and average RevPARs increased by 9.8%.

Heather Longden, Director – Advisory & Transactions in Bahrain, comments: “While the number of recorded transactions declined in H1 2024 when compared with the same period in the previous year, the overall value increased, which suggests an increase on average in individual transaction values.

While the commercial office and retail market continue to face challenges in terms of take up, due to increasing supply and limited growth in demand, there are segments of the market and stand out developments providing competitive products that are managing to buck the trend.”

Samantha Schiffman, Senior Analyst – Strategic Advisory in Bahrain, comments “Residential market performance has been mixed in H1, with villas sales rates increasing while apartment sales rates have remained stagnant, consistent with the significant existing and pipeline supply in the market. Hospitality sector KPIs saw encouraging improvement across the board in the first half of the year, following a significant increase in tourist arrivals in 2023.”

-Ends-

Contact:
Inci Gecekusu
inci.gecekusu@cbre.com