Rents in Bahrain drop further as supply exceeds demand

Published April 20th, 2017 - 11:04 GMT
Villas on Amwaj Islands are currently considered the most expensive in the kingdom, though residential values held steady in other parts of the country, remaining unchanged for six consecutive quarters. (Shutterstock)
Villas on Amwaj Islands are currently considered the most expensive in the kingdom, though residential values held steady in other parts of the country, remaining unchanged for six consecutive quarters. (Shutterstock)

Prices in Bahrain’s residential market will continue to drop this year as a result of weakening economic conditions and an increase in real estate supply, a new report reveals.

Read more: Bahrain To Grant IDs To GCC Residents In Investment Push

The Cluttons Bahrain Spring 2017 Property Market Outlook says that a positive outcome of these conditions include historically-low prices and a strong selection of facilities, in what it calls a ‘Golden Age’ for tenants in the gulf kingdom.

There was a marked change in conditions with rents retreating across the board during the three months to the end of March.

Apartments experienced a sharper rate of rent corrections at -8.3% than villas with -6.9%. However, both segments of the residential rental market experienced the fastest rate of decline since 2009 during Q1.

Read more: Oversupply Of Retail Space In Abu Dhabi Pushes Rental Prices Down 58 Percent: Report

Faisal Durrani, Head of Research for Cluttons commented, “Weaker economic conditions alone are not to blame for the correction now underway in the rental market in Bahrain.

“There has been a surge in the number of new residential developments being sold in the market, most of which are being acquired by Bahraini, or other Gulf investors.

“A significant amount of this stock is filtering through to the rental market which is pushing supply ahead of demand– albeit with a significant upside for renters and occupiers.”

Read more: Abu Dhabi's Middle-income Residents Can Rejoice: Aldar Is Bringing Affordable Rents To Reem Island

The report notes that the extent of this burgeoning supply surge is reflected by the fact that over 4,100 units are slated for completion in the upper end of the market within the next two years.

More than 7,100 units are expected to be added to the existing residential supply this year, contributing to the continued fall in prices.

Apartments on Reef Island and villas on Amwaj Islands are the most expensive in the kingdom, though residential values held steady in other parts of the country, remaining unchanged for six consecutive quarters.

By Jumana Abdel-Razzaq

 

© 2019 ITP Business Publishing Ltd. All Rights Reserved.

You may also like