Bahrain's property market sees mixed performance

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Bahrain’s property market experienced a mixed performance in the first half of 2024, according to a new report by CBRE Middle East.

The latest edition of the firm’s Bahrain Real Estate Market Review for the first half of 2024 shows sales rates of villas increased by 7.8 per cent on a square metre basis compared to 2023 rates, whereas the apartment sector has stalled after a period of growth.

The villa market saw a modest rise in sales prices. The villa market is driven predominantly by local demand, with citizens largely seeking affordable units while international buyers represent the main offering for mid-to-high-end apartments in foreign investment zones.

Currently, CBRE estimates 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 the 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 report further notes that Bahrain’s retail sector is facing headwinds despite new store openings, with average occupancy rates falling two percentage points to 68.9 percent in the first half of 2024.

The decline was partly due to the inclusion of the Marassi Galleria mall in the data. While large malls operated by regional players maintained high occupancy, smaller properties struggled to attract tenants and customers.

Average monthly rental rates for prime retail space reached BD21,500 per square metre, but this was skewed by top-tier malls, with the overall average standing at BD11,500. Retailers are increasingly offering entertainment and experiences to compete.

The office sector also faced challenges, with rental rates falling 2.9pc year-on-year due to oversupply. Demand was focused on high-quality, ready-to-use spaces rather than empty units.

However, the hospitality sector thrived, with international arrivals surpassing pre-pandemic levels and increasing 24.7pc year-on-year. Hotel occupancy, average daily rates, and revenue per available room all rose.

Heather Longden, director for advisory and transactions at CBRE in Bahrain, commented: “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.”

Adding to the comments, Samantha Schiffman, senior analyst for strategic advisory in Bahrain, said: “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.”