RAMEX Real Estate
The real estate sector in Bahrain has had it tough during the pandemic. It suffered a dual blow from weak oil prices and the restrictions brought on by the COVID-19 pandemic. However, the Kingdom has been quick to respond and has done so efficiently, announcing relief measures to help individuals and SMEs like us tide over the health crisis and continue on the path to recovery both in 2020 and 2021.
From personal experience, as a relatively smaller real estate company we have been able to see the effect of the pandemic, tightening economic situation and the depressed job market first hand and have witnessed several trends that emerged during the pandemic.
Fluctuations in the rents in the residential sector
There was a downward trend observed in rentals of the residential sectors. Affluent and premium areas like Juffair and Seef were affected the most. Rents in the residential sector were corrected to reflect the realities of the market; this meant that residential property rents decreased by 20-30 percent in the last year.
There were several contributing factors including the economic slowdown due to the pandemic and the lockdowns, the contraction of the job market with several SMEs being severely impacted and the decimation of the tourism and hospitality industry.
The tourism and hospitality sectors were especially affected and the impact was felt across many other sectors. One example is the luxury service apartments with daily or weekly rentals in premium locations, which had to rethink their entire business strategy and turn to the domestic market to cover costs. And this added to the already existing oversupply issue which further depressed the residential property prices and rents in Bahrain.
However, even as the first half of 2020 looked shaky for real estate in Bahrain with several construction projects being rescheduled, in the second half the sector eventually picked up as according to reports, real estate deals in Bahrain rose by an average 17 percent and real estate transactions reached a total value of USD 1.9 billion in 2020.
2021 has seen a resurgence and in Q1; there already has been an uptick in property transactions which have seen a rise of 36 percent. According to the EDB, about 3000 properties with a total value of USD 600 million have been sold. That is a 51 percent growth from the last Q1.
So, there is a lot to look forward to and be optimistic about in Bahrain’s real estate sectors. First is the government’s National Real Estate plan for 2021- 2024, this is thanks to the foresight and the vision of Bahrain’s leadership especially Crown Prince Prime Minister HRH Shaikh Salman bin Hamad Al Khalifa. The plan builds on the Bahraini government’s vision of increasing the economic contribution of real estate through diversification. The plan also includes regulatory boosters, long-term plans and operational initiatives.
Apart from this, the sector expects a shot in the arm from the resurgence in tourism as the vaccination drive and other safety measures create a positive environment. Eventually, 2021 is expected to be a year of recovery and hope for the real estate sector as well as Bahrain’s economy.
This article was published as part of the sixth edition of Property Finder Bahrain’s Trends Report.