Bahrain’s Property Market Prospects for 2007

Bahrain is quite possibly the perfect embodiment of an ‘emerging’ nation – while historically the known story of Bahrain is at least five thousand years old, the country has recently entered into a significant period of development, growth, change and transition.  It is as a direct result of the emergence of a new Bahrain that there exists significant potential in the country’s property market right now, but at the same time this period of multi-layer transition has resulted in increasing tensions and issues that an investor needs to be well aware of before they make any sort of firm decision about buying property in Bahrain.

Bahrain’s property market prospects for 2007 are mainly very positive indeed, but there are certain underlying problems that could undermine the short or medium term attractiveness of the country’s real estate sector and in this guide we will cover both the positive and negative factors that investors should make themselves aware of.

The current king of Bahrain is Sheikh Hamad bin Isa Al Khalifa and since he came to power in 1999 the nation has made incredible progress…

Politically speaking the king has transformed Bahrain into a constitutional monarchy, he has managed to improve his country’s relationship with the general Shia community and also with the likes of America and Britain, he has ensured all citizens understand the importance of using their right to vote and he has been active in the encouragement of women standing for election in both the municipal council and the national parliament with recent elections seeing the first ever female parliamentarian in any Arab Gulf country being elected into office. 

Economically speaking the king has also been fundamental in the transition of his nation away from its economic over-dependence on the oil industry and today Bahrain has a strong economy with a very positive annual GDP growth rate. 

In working to secure Bahrain’s economic future the government has kick started a property market revolution that has been fuelled and funded largely by international interest.  As Bahrain is geographically positioned in a location of strategic importance in the Gulf and has taken the approach of positively exploiting its position, so it has attracted large numbers of international and multinational corporations to its shores who each require a base in the Gulf region. 

Legislation to allow for the establishment of these non-domiciled companies in Bahrain has been honed to make it as attractive a country as possible to set up operation in.  Naturally this has seen an incredibly strong inward migration of professional expatriates who have now been given the right to own freehold commercial and residential real estate in many areas of Bahrain.  Demand for properties is currently outstripping supply which has resulted in increasing rental rates, property prices and unfortunately tension with many local Bahrainis priced out of the market and forced to buy or rent in less attractive areas.

In addition to the numbers of expatriates moving to live and work in Bahrain and demanding more and more real estate, because the country is far more liberalized than neighbouring Saudi Arabia it has also become the preferred home location for many Western expatriates who have contracts and positions in Saudi.  These people are increasing in number and they are also buying and renting property in Bahrain and then commuting around 25 km to work along the King Fahd Causeway that links Bahrain and Saudi Arabia.

So, on the one hand all of these factors mean that there is strong and increasing demand for commercial and residential property for sale and rent in Bahrain among an affluent international community which creates a perfect environment for an investor to exploit; but on the other hand there is an underlying but mounting tension among those who cannot continue to afford the rising real estate prices. 

This tension is largely being ignored at the moment.  In fact, recent residential and commercial developments undertaken in Bahrain have even being almost exclusively marketed directly to the foreign market - the Diplomat Trade Centre is just one example of an ambitious and luxury development, in this case a commercial development, that has been actively targeting overseas and international buyers living locally.

Some say that Bahrain has moved too fast in developing new areas of its economy and in allowing multinational companies to set up operations in the country.  These multinationals have been accused of largely employing expatriate staff in a country where, especially among the Bahraini youth, there are significant unemployment issues and also minimum wage issues.

So, while international demand for rental and resale, off plan and new property in Bahrain is high, strong, increasing and unlikely to subside in 2007 creating a healthy environment for increasing yields and underlying property prices – increasing land and construction costs and a growing division between local affordability and real estate prices is creating a very real environment of disquiet that should not go overlooked by an investor determining whether the risks of market entry outweigh the prospects for property market profit.

Over the long term we are confident that the Bahraini government will address these issues and work to create a sustainable property market economy that remains attractive for foreign buyers whilst becoming more accessible for local demand, after all lending criteria and the availability of mortgages and loans has improved in Bahrain already.  All in all Bahrain’s property market prospects for 2007 are positive…but for a potential investor to completely ignore certain essential issues that could undermine the attractiveness of Bahrain and its property market would be very unwise.

Special Reports: Property News for Bahrain

Bahrain for Property Buyers
Country guide to Bahrain for real estate investors, focusing on the emerging property market and investment opportunities in Bahrain.

Bahrain Investment Property Buying Guide
Foreign freehold ownership of property in Bahrain is a new concept and one being embraced by international investors

Bahrain Property Investment Guide
Current opportunities for property investment in Bahrain offer incredibly exciting potential for sustained growth in both residential and commercial sectors.