Bahrain Properties Market have shown over the past 20-30 years ups and downs, however, the overall view shows that there has been a dramatic increase in all areas reaching over 400%. The property market in Bahrain is influenced by different factors, some of those factors are below:
1) Locals demand and supply
There are two segments of local customers in Bahrain real estate market. The first segment includes those looking for accommodation who seek different types of units. The demand in this segment is supported by the housing program offered by the Bahraini housing ministry. The demand is powered by the ministry cash program for the citizens. Bahrainis who pass the requirements of this program are awarded 60000 Dinars and may get a loan of up to another 60000 dinars from a local bank.
The other local segment is citizens who don’t seek the housing ministry program. Those locals normally prefer bigger units, seek bigger lands and build their own houses.
The second market is slower than the first. As a result, most of the developers are targeting the first segment and try to provide units ranging from 60-70k dinars. Despite the demand, many major developers are not fulfilling this need due to the low-profit margin of this sector even though the market is almost having a guaranteed demand no matter of any political or economic factor as long as the program is running by the government.
2) GCC investors
Bahrain is one of the safest markets in the GCC as it has a small land compared to other countries in the region and high density and it is easily accessible from Kuwait, Qatar, and Saudi. All of the previous factors push the demand high in different areas of Bahrain. No doubt some areas attract more investors than others, we may mention them in the inside pages.
3) Expatriate investors
This type of investors increases and decreases in the market due to the economy and some other legislations by the government mainly related to the residency visa. Expats find Bahrain open for them, it’s also a hub where they can live and work. Many expats develop new projects and sell the projects to their network in other GCC countries mainly. Lately many of them have gained properties in Bahrain.
Density in Bahrain is comparatively high if compared to the other countries around the Arabian Gulf. Secondly, lands in Bahrain for residential use are not enough for the ratio of growth. The two mentioned factors will always push the demand high and will support the price hike. Even though the market prices may drop for short periods due to the global economy and other factors but overall it keeps hiking.
5) Bahrain Central bank
Real Estate in Bahrain gets affected directly by the laws and regulations of the central bank. As we previously mentioned since Bahrain is a small country, the regulations by the central bank will affect the property market almost immediately. Once the central bank eases the lending regulations, many areas will flourish and demand will increase.
Bahrainis normally live and prefer quieter areas than the freehold areas. Those areas normally are not in the freehold zone so once the lending gets easier, the price will increase substantially in a short time while the freehold areas will not get affected as much as the other areas because the money comes by other nationals from their countries.
Bahrain is relatively a very calm and peaceful country. Rarely locals hear about terrorism and other political issues, even though the government is working very hard to make Bahrain a safe haven and a business-friendly place. Since 2011, the country is getting safer and safer every day. This has affected the real estate investments directly as the demand kept increasing till the end of 2014 and since then the market slowed down due to the global economy and decrease of oil price globally.
As of the first quarter of 2016, it’s noticeable that demand slowed down while supply is increasing in most of the freehold areas. Meanwhile, the non-freehold areas seem to be more stable boasting more consistent supply and stable demand.
Developers working in freehold areas seem to be more aggressive in competing on price based on the current low demand and higher supply.
While some developers launch for example a one bedroom for an amount of money, another developer will launch two bedrooms for the same amount.
The competition is getting fiercer and more projects are launching every month. Most of the major developers now launch more than two projects a year.