Property in Bahrain - Go or No Go?

To invest in property in Bahrain or not to invest, that is the question – for whether ‘tis nobler in the mind’s eye to believe without question the positive economic data flowing from the nation or to take action against a sea of opaqueness and question the validity of investment at this current time…aye there’s the rub and that is what we shall now explore with this article…

Basically the problem with property in Bahrain as an investment commodity is this – on paper everything looks fantastic, the climate appears to be ripe for commitment and the government are doing all they can to attract foreign direct investment - but on the other hand there are some reports of growing ethnic tension in Bahrain that could erupt into violence, there have been comments made by 4 Muharraq MPs competing for parliamentary seats that not all is as transparent as it should be in terms of the economy and the reporting of its development and progress, and finally there is a lack of transparency in the property market and the financial market that could be down to immaturity of policies or it could be down to something more sinister…

So let’s look at the facts to help investors decide whether investing in property in Bahrain is a go or a no go at this time.

On the Positive Side

Everyone in government and in a position of power and influence in Bahrain seems determined to promote the nation in as positive a light as possible.  In fact, the president of the Bahrain Export Development Society recently went so far as to say that it is the responsibility of all Bahraini citizens and representatives to promote the positive aspects of the nation internationally and at all times.

And there is much to promote it seems – the United Nations Development Programme’s Human Development Index ranked Bahrain as a nation where there is high human development and high income and in fact Bahrain now is enjoying its highest ever levels of per capita income.  Furthermore, the nation’s GDP is set to grow by in excess of 7% this year and literacy and education levels in Bahrain are exceptionally high and improving all the time.

Foreigners who wish to invest or establish a business in Bahrain can do so and retain full ownership rights, the nation has a US Free Trade Agreement in place proving that it is accepted on many important levels by the world’s leading economy, Bahrain is developing a healthy tourism market and is about to set up an independent tourism board to further develop this sector, it already has a healthy business environment and there exists growing demand from many angles for both residential and commercial property stock presenting an investor with an immediate focus for investment and an immediate potential to reap positive returns…

On the Negative Side

Middle East Newsline has reported that there is growing religious tension in Bahrain between the ruling Sunni class and the majority Shi’ites and that this tension could erupt into violence at any time…we cannot substantiate this claim but those wishing to learn more about the issue can read the original Middle East Newsline report here. Naturally enough this creates concern in an investor’s mind about the stability of the nation at this current time.

Added to this concern are the issues raised at a recent debate on the economy of Bahrain attended by MPs Othman Al Rayes, Abdulrahman Al Nuaimi, Isa Sayyar and Ayoob Amrallah who are all competing for seats in the Bahraini parliament.  All four representatives highlighted concerns that they have relating to the government’s inability to substantiate claims about the nation’s economic success with hard facts.  There were suggestions made that there is financial irregularity in Bahrain and that the true development of the nation’s economy is being stifled by clashes of interest and a lack of a financial integrity law which will prevent high levels of foreign direct investment from even touching the nation.

On top of all of this you have concerns raised internally about the fact that the distribution of wealth in the nation is unfair, that female workers struggle to command even a third of the salary taken home by their male compatriots and that Bahrain has a long way to go if it is to become a country considered stable enough for direct investment in many sectors.

In Conclusion

The outstanding question seems to be – despite the significant progress made by Bahrain to date, is it currently significantly committed enough to make the necessary social, legal and policy transparency developments so as to become viable for property investment consideration?  We don’t know…but then again consider this - Bahrain is an emerging market and there are always more risks associated with directly investing into an emerging market but there is also the potential to benefit from more dramatic growth patterns – so it is up to the appetite of the individual investor.

All we can say as a final point is that the Bahrain authorities are certainly determined to develop a nation that is attractive to foreign investment as it rightly sees this as the only way forward for sustainable growth…

Special Reports: Property News for Bahrain

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