According to a recent report by Savills, Bahrain's real estate sector experienced steady growth in the second quarter of 2023, with positive developments seen in residential sales, rents, and
office spaces.
The Q2 2023 Bahrain Property Market in Minutes update highlighted the industrial warehousing sector's increased stability in rents, which was a result of the government's successful efforts to diversify the economy.
However, the retail rental segment faced significant downward pressure, with prices dropping by an average of 7% over the past year. The ongoing recovery from the Covid-19 pandemic and a surplus in supply and demand contributed to this decline, particularly evident in malls, where prices fell by 11% year-on-year.
The demand for villas outpaced that of apartments, with most inquiries and transactions concentrated in the mid-range villa segment. Capital values for villas remained steady during the second quarter, estimated at BD603 per sqm, but they experienced a 2.3% increase on a year-on-year basis.
High-end villa developments saw a slight decrease of 1.2% in average capital values to BD600 per sqm on a quarterly basis. Meanwhile, low-end and mid-end apartment segments experienced marginal declines.
In the industrial warehousing sector, medium-sized units had an average monthly rent of BD2.8 per sqm, while large units rented at an average of BD2.7 per sqm. The report anticipates continued growth in this sector due to increasing emphasis on supply chain, food security, and onshore activities.
The overall rental market in Bahrain remained relatively stable in Q2 2023. While rental values saw little change on a quarterly basis, low-end and mid-end apartments experienced a decline of 2% to 6% compared to Q2 2022.
Hashim Kadhem, head of professional services at Savills in Bahrain, attributed the positive performance in the residential and commercial property sectors to favorable policy measures, such as the Economic Recovery Plan, the issuance of the Golden License, and the national jobs plan.
However, Kadhem also acknowledged potential challenges ahead, including a projected drop in GDP due to decreased oil production and prices, which might impact the property market with a lag. Despite this, office developments remained stable during Q2 2023, with a noticeable increase in demand for LEED-certified office spaces as companies strive to meet their environmental, social, and governance (ESG) goals.
