Bahrain’s real estate sector continued to grow in Q2 2023, with similar increases in residential sales, rents, and office spaces, states a new report.

The Q2 2023 Bahrain Property Market in Minutes update by Savills found that the industrial warehousing sector also saw greater stability in rents, as government efforts to diversify the economy paid off.

However, retail rental rates have been under intense downward pressure over the past year, with prices falling by an average of 7 per cent, the report adds.

The demand for villas exceeded the apartment sector, and the inquiry levels and transactions were concentrated across the mid-range segment.

Despite this preference for villas, the capital values have remained at the same level during the second quarter, and rates are estimated at BD603 per sqm.

However, values on a year-on-year basis have increased by 2.3pc.

The average capital values across the high-end villa developments have decreased by 1.2pc on a quarterly basis to BD600 per sqm. Apartment values in the low-end segment have remained stable on a quarterly basis whilst the mid-end and high-end segments have decreased marginally.

Retail rental rates have been under intense downward pressure over the past year, with prices falling by an average of 7pc to BD10 per sqm against the backdrop of the sector’s ongoing recovery from the effects of the Covid-19 pandemic as well as a sizable supply and demand imbalance.

The biggest adjustment has been in malls, where prices are down 11pc year over year and average BD12 per sqm, down from BD14 last year.

In the industrial warehousing sector, the average monthly rent for medium units is currently at BD2.8 per sqm, and BD2.7 per sqm for large units.

Savills anticipates that the sector will continue to grow in the medium term as greater emphasis is placed on supply chain, food security, and onshore activities.

The demand for rentals across Bahrain has remained mostly stable in Q2 2023. Whilst rental values haven’t moved much on a quarterly basis, those for low-end and mid-end apartments have decreased by 2pc to 6pc when compared to Q2-2022.

According to Hashim Kadhem, head of professional services at Savills in Bahrain, the kingdom’s residential and commercial property sectors have benefited from a raft of positive policy measures, including the Economic Recovery Plan, the issuance of the Golden Licence, and the national jobs plan.

However, Mr Kadhem adds that with recent estimates suggesting that the GDP will likely taper this year due to a drop in oil production and prices and a slowdown in the non-oil sector, which may also impact the property market to some extent, albeit with a lag. Savills has noticed that the capital values remained stable across the office development compared to Q1-2023.

“There was also a noticeable uptick in demand for LEED-certified office spaces, demand for which is anticipated to see an increase moving forward as companies aim to meet their ESG goals and requirements,” Mr Kadhem added.

 

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