Bahrain's residential property market shows signs of slowing

Compounding the economic factors for developers, is the large number of residential construction projects that have recently become available offering buyers a wide product range. Residential developments launched for sale in the last quarter of 2008 alone included Raffles City at Bahrain Bay, Difaaf, Mina Dar Al Salam, Venice Apartments at Reef Island, Aya Tower, Amwaj Waves and Delmar.

According to property services company, Asteco's fourth quarter research report, these developments recorded average sales prices ranging from BD 950 to BD 1,800 per square metre, with Raffles City at Bahrain Bay commanding the highest sales prices because of its prime waterfront location.

Sales of office space in Bahrain continued to grow with the launch of new commercial towers including West End in Seef, Signal One in Amwaj Tower and Times Square in the Diplomatic area. Sale prices of these towers range between BD1,500 to BD1,800 per square metre. Main reasons driving demand is the shortage of quality office space, especially in the Seef District, where several multinational and banking groups are located.

Developers are likely to face tough competition in 2009 for sales transactions amidst the current economic climate and a move towards more flexible payment plans is thought to be inevitable. This will be another advantage for potential buyers, as will the expected future delivery of higher-quality residential and commercial projects from developers to attract property investors.

Andrew Chambers, Managing Director of Asteco, believes that the market in Bahrain is now providing a prime opportunity for investors to purchase good value, quality projects in the country.

"The current economic climate has undoubtedly affected markets in the GCC region because of the tightening of credit availability," he said. "As a result, sales transactions have stabilised as investors are proving hesitant to enter the property market during these challenging times. However, Bahrain is well-positioned to overcome the current economic downturn and this scenario should be regarded positively as a good time for a market correction to take place," he added.

One significant attraction for would-be investors in Bahrain is its commitment to achieving a prosperous and sustainable future, as outlined in its 2007 National Plan. The blue-print is the first comprehensive land-use strategy to assess the nation's planning requirements for the next two decades and has been formulated with the overall aim of transforming the Gulf state into one of the world's most highly regarded island nations.

Future developments encompassed within the National Plan include Durrat Marina; a 21 square kilometre master-planned development that will span three islands and comprise a total land mass of 600,000 square metres.

"The combination of the current economic climate and Bahrain's commitment to ongoing development is one that we anticipate will encourage property investment in the country," said Chambers. "The conditions are now perfectly suited to the genuine or long-term investor and Bahrain's vision and plans for ongoing development as outlined in its National Plan will result in a continued stake being placed in the island's residential property market," he added.

Compiled and updated quarterly, Asteco's research reports include the survey and compilation of residential and commercial rental analysis for the UAE, Qatar and Bahrain.

Founded in Dubai in 1985, Asteco is the UAE's largest property services company and has expanded its regional presence in the GCC with fully established offices presently in Qatar, Bahrain and Jordan. Its services include retail, commercial and residential sales and leasing; strategic consultancy; property management and marketing; feasibility studies and valuations; and research and investment.