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.
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.
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.”
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.