Real estate market ‘on steady recovery path’ in Bahrain

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Bahrain’s real estate deal-making continued to improve through 2022, says CBRE, attributing the revival to strong GDP growth, high oil prices and new fiscal reforms.

The commercial real estate services and investment firm’s Bahrain Real Estate Market Review Q4-2022 shows the kingdom saw 5,659 transactions in Q4 ending the year with a total of 21,603, marking a 0.7 per cent year-on-year increase from 2021, and a jump of 3.2pc from Q3-2022.

Looking at Bahrain’s office sector, CBRE data shows that Grade A and B office rental rates stabilised in 2022, at a monthly average of BD5.250 per square metre, having recorded a decline in the previous year.

With supply continuing to outpace demand and key pipeline projects becoming operational in the next 12 months, it is anticipated that rental rates will continue to face downward pressure.

Amongst the projects introduced at Cityscape Bahrain, key commercial developments included the office component of Onyx Skyview, which is set to provide 40 offices.

There are limited strata title products available in the office sector and this project marks the first in Bahrain Bay.

In the residential sector, average quoted apartment rental rates fell marginally in Q4 2022, down 0.4pc from the previous quarter.

In terms of sales, average rates declined by 1.3pc in the fourth quarter, following a brief increase in Q3-2022.

Average quoted villa rental rates slightly increased in Q4-2022, with rates increasing by 1.5pc from the previous quarter, while quoted sales rates fell by 0.8pc over the same period.

Overall for 2022, villa rental rates averaged BD923 per month across all villa types and governorates in the mid- to high-income market segment.

Within the hospitality sector, data shows that hotel occupancy in Manama increased by 6.8 percentage points compared to 2021, and one percentage point compared to Q3 2022.

Whilst ADRs increased year-on-year by 22.1pc compared to 2021, they fell by 1.2pc compared to Q3 2022.

As a result, revenue per available room (RevPAR) increased by 41.2pc compared to 2021 and 2.4pc compared to Q3 2022.

The average daily rate is a measure of the average rental revenue earned for an occupied room per day while RevPAR is another key performance metric in the hospitality industry.

In the retail sector, CBRE has noted positive average occupancy growth in H2 2022 across its set of tracked malls in Bahrain.

The average occupancy rate has increased by an average of 2.9 percentage points compared to H1 2022, now sitting at 66pc.

Overall, occupancy rates increased in a majority of the tracked shopping centres.

Positive occupancy growth is backed by current shopping trends, with CBRE witnessing an increase in preference for in-store shopping compared to e-commerce options.

Data shows that more than 66pc of people now prefer to shop in-store, compared to 61pc in 2021, the report highlights, attributing it to the lifting of pandemic restrictions and a subsequent desire for in-person experiences.

Additionally, while online shopping options in Bahrain have increased in recent years, such as for groceries, the Bahraini market remains underserved in terms of online shopping platforms.

Heather Longden, director of advisory and transactions at CBRE in Bahrain, commented: “Bahrain concluded 2022 recording steady recovery in real estate transaction volumes. Performance across asset classes was consistent, with the commercial office sector rental rates remaining stable but facing further pressure, as a number of new landmark developments are scheduled to add to the existing stock in the next 12 months. In the retail sector, average headline rental rates have also seen no change year-on-year, and we’ve tracked a marginal increase in occupancy rates across shopping centres surveyed by CBRE.”