Bahrain declared its independence from the United Kingdom in 1971 and became a Kingdom in 2002. In the short time since, the third smallest nation in Asia has claimed a spot amongst the world’s most prosperous nations. It is home to the first post-oil economy in the Arabian Gulf. Banking and tourism kicked off in the late 20th century, and has not stopped growing since. Government endorsement, local and international investments, and Bahrain Vision 2030 have all had a role in this exponential growth.
Real estate in Bahrain has seen a surge in the last decade, quickly changing the face of the country and opening it up to ripe investment opportunities. In 2014, it was ranked the 5th best location to live in the world. Bahrain has the fastest growing economy in Asia and the freest economy in the Middle East.
It is expected that the next 5-10 years will see even more change in Bahrain’s skyline. Local and international investors are flocking to take part and assist in the on-going national transformation.
A significant turn in economy
Between 2013 and 2014, real estate development leaped by 80%, proving that Bahrain is relentless. Furthermore, in 2014, financial loans for real estate and construction companies reached 20.1% of total bank lending in the country.
Bahrain’s real estate market has seen a mammoth growth in just one decade. Total stock increased from 200,000 square meters in 2000 to 536,000 square meters in 2010. This is mainly due to population growth, increased domestic disposable income, and a growing demand from neighbouring GCC countries.
Government actions are directed towards maintaining that status and granting the country a unified objective that sets it ahead through focusing on an economy that thrives on its human population. Accordingly, Bahrainis have become the driving force behind an unyielding growth. Moreover, the Bahraini government continues to foster a culture of internal productivity and progress.
Lease laws were amended and rectified to better suit the country’s changing environment. Rent increases, rights, and renewal terms have all been properly addressed in the new law that came into effect in 2015. Developers are now required to obtain a license from the relevant authorities and open an Escrow account.
Private investors have had a large influence in bringing internationally acclaimed projects that complement the nation’s advanced communication and transport facilities. Developments that highlight the country’s strong economic standing and compelling geographic location are drawing in even more investors.
Recently, several key developments have been shaping up across Bahrain, further enhancing the real estate scene and carrying promises of an even brighter future. These include Bahrain Bay, Diyar Al Muharraq, Bahrain Financial Harbour, Al Areen, Durrat Al Bahrain, and Amwaj Islands.
Each one of these developments carries an array of residential, commercial, retail, and business opportunities. They are slowly but surely transforming the country from a pure oil-economy to one that is more diversified and spread across several sectors.
Investors were not alone, however, being fully backed up and supported by the Bahraini government. In 2012, the government announced it would invest $5.59 billion (BHD2.1 billion) to construct 50,000 houses in 5 years. The private sector will be constructing 30% of those.
In order to ensure the ease of the progress of development projects, the construction sector has also been growing. It increased 7.3% in just one year, from 2013 to 2014. This growth is seen as a result of the government’s effort to prioritize infrastructure and housing projects across the Kingdom.
Bahrain Vision 2030 aims to shape the vision of the government, society and economy around sustainability, fairness, and competitiveness. Along the way of implementing the vision, the economy is expected to grow to $2 trillion by 2020.
Despite the positive figures afore mentioned and the good prospects the kingdom holds to investors, the development track wasn’t quite easy though, the kingdom had to pass through tough times in order to achieve its current stability.
The first crisis to test the development process and put the whole system under pressure was the global housing crisis which hit the global markets starting from 2008.
Bahrain at that time was just checking its first steps towards expanding the real estate market by opening the door for foreigners’ freehold of properties.
The timing couldn’t have been worse for the Kingdom, however, the banking system of Bahrain remained sound and stable, same as the real estate sector except for a number of projects where development works have stalled for a period of time.
The kingdom henceforward took a number of decisions to recover from the crisis impact including the formation of cabinet committee for settling the problem of stalled projects. The government issued also a set of regulation to prevent the recurrence of such problems and to set a strict framework for the real estate market.
The second crisis was during the Arab Spring in 2011 when masses of demonstrators took to the streets. The rallies, which lasted for months, had the effect of an electric shock to Bahrain’s economy as it paralyzed the production cycle and hurt the development process.
Unlike many other Arab Spring States, the demonstrations in Bahrain didn’t last for long as the government took a lot of actions to deal with it either by responding to some of the calls for reforms, or by applying the law on outlaws and saboteurs who infiltrated the demonstrations.
Now the development activity is trying to gain pace again despite the low oil prices and the negative sentiment, especially in GCC region. Government is taking serious steps towards cooperating with the private sector for building new urban societies and residential projects in many areas around the Kingdom as per the directives of His Highness the King of Bahrain.
The domestic real estate market has shown a lot of resilience during the past oil prices crisis. Unlike GCC’s top property markets like Dubai, Abu Dhabi, and Jeddah, properties prices in Bahrain remained stable over the course of the last year and a half.
This distinguishable performance gave more confidence to current major developers in Bahrain, attracted more investments and spurred even more demand on certain sectors like retail, hotel, and residential units.
Bahrain holds many factors that enable it from overcoming the current market situation such as its vital location in the heart of GCC and its vibrant tourism sector.
By the turn of gas prices and alteration of investors’ sentiment towards positivity, Bahrain is expected to witness a remarkable boost in growth rates and see poignant developments on all scales, including real estate.
This date doesn’t seem to be so far since many economic experts are predicting gas prices to gain momentum by the end of the current year.