Despite an economic slowdown and rising inflation, Bahrain’s property market has witnessed stability across most real estate sectors in the second half, which is expected to continue into 2017, according to international real estate consultancy Cluttons.
While the Gulf state’s residential markets have outperformed expectations due to resilient rental budgets, its office and retail markets have largely seen no change in rents in the first nine months of 2016, the firm said in a recent research report. .
The report said rents in this sector are expected to hold steady for another six to twelve months.
The stabilisation in rents across Bahrain’s real estate sector reflects weak underlying fundamentals in the market, Head of Cluttons Bahrain and Saudi Arabia Harry Goodson-Wickes said.
He added economic fragility and the ongoing impact of low oil prices have cut job creation levels and will continue to hamper the country’s property market during the fourth quarter continuing into next year
However, Goodson-Wickes said the few exceptions where there has been growth include developments such as Amwaj Islands for the residential market, Financial Harbour for the office market and Isa Town for the retail market.
While Amwaj Islands saw a marginal $133 (BD50) per month rise in rents for four-bedroom villas, no other submarket registered a change in rents during the third quarter, the Cluttons research showed.
Office rents across Bahrain’s key submarkets remained largely unchanged during the first nine months of the year with the only exceptions being in Financial Harbour (BD8 per square metre) and (BD 550 psm) in Amwaj Islands for fitted office space.
Retail rents were also slow in the third quarter for the sixth consecutive quarter, with Isa Town being the only exception. Rents nudged up by BD0.50 psm to BD7 psm over the summer before stabilising. Al Seef (BD12.5 psm) and Amwaj Islands (BD12 psm) remain the kingdom’s most expensive and highly sought-after locations, which has helped to sustain rents.
Cluttons head of research Faisal Durrani said he had previously expected to see rents decline by 5 percent on average through the course of the year.
“…We have now revised up our forecasts for the residential rental market, with little to no declines now anticipated as we head toward the end of 2016,” he said.