Bahraini.TV

The appetite for affordable freehold property remains extremely strong in Bahrain with as many as 47,000 Bahrainis currently on the waiting list for a government home, a report said.

The developer who is able to provide a product that meets the needs of this market in terms of price and design is likely to deliver a tremendously well received project, said the report by Knight Frank, a leading independent global residential and commercial property consultancy.

With over 60 percent of Bahrainis currently under the age of 30, demand for accommodation from this demographic will continue to accelerate in the short to medium term, it said.

The expatriate population also continues to increase in size, although at a reduced annual rate over the last two years, with the total population for the country forecast to reach 1.2 million by the end of 2010.

During the property boom years of 2004 to 2008, the majority of developers built high-end luxury apartments even though research shows us that affordable villa accommodation is what was and continues to be sought after by the market, the report said.

With the introduction of the freehold ownership law in 2004, pent-up-demand for prime residential property from Bahrainis, expatriates and GCC nationals was satisfied relatively quickly and the market has been experiencing an over supply ever since, it said.

As an additional 5,000 apartments are currently in the development pipeline the situation is only likely to worsen, as when completed, Bahrain’s overall stock will increase significantly by 37 percent within two years.

Mid to high quality apartments available for rent around Manama are now in high supply in comparison to demand and the tenant now holds the power of negotiation, the report said.

With occupancy levels dropping in properties more than two years old, landlords are at the moment refusing to reduce rents to attract
tenants, hoping that demand will increase in the short term rather than medium to long term, it said.

However, vacancy rates in the gated villa compounds of the Northern Governorate, home to the many middle and high income expatriate families, have risen slightly in recent months but on the whole remain low at between 5 and 10 percent as supply has not kept pace with demand in this sub-sector.

Villa rents have subsequently remained relatively constant during the last two years with a typical new build four bedroom, twostorey
detached villa commanding a rent of BD1,600 per month (US$4,249).

Sales of freehold villas and apartments have been almost non-existent in Bahrain over the last two years. This is indicative of the fact that investors are wary in these uncertain economic times and owner occupier demand for luxury property appears to have been satisfied at least in the short term, the report said.

As many of the mixed use schemes are experiencing construction delays, investors looking to generate rental returns on completed projects are also staying away.

Asking prices for high-end apartments range from BD1,000 to BD1,500 per sq m ($2,652 to $3,978) down approximately 20 percent on 2009 rates and villas on master planned schemes range from BD700 to BD1,000 per sq m ($1,857 to $2,652), it said.