The Kingdom’s buzzing property market offers great potential for investors who are clued-up, writes Dana El-Baltaji
If it’s a real-estate frenzy you want, Bahrain can oblige. What began in a measured manner has snowballed into property mania, transforming the Kingdom into a genuine investment prospect for those with the cash and foresight.
In just a few years, a once sleepy haven off Saudi Arabia’s coast has morphed into an exciting opportunity for those looking to spend their strengthened euros and pounds. Like other nations in the region, Bahrain is fighting to attract and retain foreign interest in its property industry. To that end, the Kingdom passed a law in 2003 allowing non-GCC nationals to purchase property in designated freehold areas. Foreigners can buy homes on reclaimed land, as well as in Hoora, Juffair, Bu Ghazal and the Seef district.
Across the GCC, states are diversifying their economies to protect their finances when the oil dries up. Alongside exploding population growth in the region, this has created huge demand for property. To meet this, excess liquidity from the private and public sectors is being poured into development of the infrastructure, as well as residential and commercial properties.
Yet, despite numerous developments in the Gulf promising elite living, Bahrain distinguishes itself as a stable investment choice. According to Jassim Al-Jowder, CEO of the Kingdom’s most expensive project, Durrat Al-Bahrain, all the indications are for a rise in prices for investors. “Rental prices for residential and commercial properties have increased in Bahrain over the past five years or so, as has the value of property and land,” he says. “Limited supply has pushed up rental and property prices across the country.”
“The master-planning of the entire country will alleviate some of the supply issues, but, for the medium term, prices will probably [continue the] trend upwards,” he continued. “Inflation in Bahrain is running at just over two per cent, so we haven’t faced the same kind of issues as Dubai is experiencing.”
Developments such as the Amwaj Islands, the first project in Bahrain to allow expats to own their property freehold, have their own zoning laws and integrated infrastructure. Properties bought for US$185,000 off-plan sell on the secondary market for at least double that and each developer claims to have sold about 90 per cent of projects near completion.
Until such developments are complete, however, Bahrain’s residents will have to contend with rising costs of living blamed, mostly, on the booming property market. Rents have risen because of the anticipation of mega-developments and the lifestyles they promise, while the struggle to secure a home in a kingdom short of housing units has hiked up both rent and sale prices.
Depending on who you ask, rents and sale prices in Bah-rain have risen by between 30 and 100 per cent in the past year. Naturally, this increase has caused considerable strain on the local economy; but – for the eager investor – the hike means there is potential for greater and faster returns on investments in the nation, especially off-plan.
But when the current batch of mega-developments is complete, Bahrain’s shift from a flourishing construction site to a mature commercial, financial and entertainment hub will be obvious, even to most shortsighted of investors. And, if the Government has its way, the Kingdom’s reputation as a regional powerhouse will swell along with the early investments made in the building blocks of these luxury communities. Now, who wouldn’t want a piece of that? |
