Bahrain – A growing number of new residential developments is driving down the costs of rent in Bahrain, according to two new reports.
Kuwait-based Kamco said average monthly rents in Bahrain had declined by 0.2 per cent since the fourth quarter of last year, reaching BD4.60 a month per square metre in the second quarter of this year, using data supplied by REMI Global.
Average apartment rents in Bahrain declined by 0.2 per cent from Q4 2018 to BD4.60 per sqm monthly in Q2 2019
Vacancy rates in the residential sector are around 28pc, with additional pressure expected on rents due to construction of new properties.
The office market was said to have a vacancy rate of more than 22pc, which has driven down average monthly rents by 0.5pc since the fourth quarter of last year to reach BD6.45 per square metre.
Meanwhile, demand for residential apartments in Bahrain remains highest in Juffair, Amwaj Islands, Seef, Reef Island and Manama, according to property consultancy Cavendish Maxwell.
Juffair, Amwaj Islands, Seef, Reef Island and Manama remain the most popular locations to buy or lease a residential apartment in Bahrain. Right, Amwaj Islands, Saar, Riffa and Janabiya are the favourite locations for villas
Amwaj Islands, Saar, Riffa and Janabiya are the favourite locations for villas.
Cavendish Maxwell chief economist Julian Roche recommended creating distinct identities for different neighbourhoods to drive demand, as supply increases.
“Everything points to the importance of differentiation between areas becoming more important for investors,” he said.
“In coming years, new names such as Dilmunia, Bilaj Al Jazayer and Sa’ada will join existing locations such as Amwaj Islands, Saar, Riffa and Janabiya.”
The Cavendish Maxwell report focused on the performance of the country’s residential, retail, office, industrial and hospitality sectors between 2018 and the middle of 2019.
It found that in addition to new projects, reform of the property sector and the delicate geopolitical situation in the region had driven down prices – resulting in a general decline in residential property prices and rentals across all four governorates.
The company observed that office market activity had been subdued as a result of oversupply and weak demand.
Lacklustre demand was also found to continue for commercial space in the main business districts of Seef and Manama, with interest mainly for small, fitted units requiring minimum investment from tenants.
On the other hand, tourism has helped the retail sector continue to attract investment – evident in capacity growth over the last decade.
The region’s healthy tourism industry is also driving growth in the hospitality and entertainment space, with increasing demand for four- and five-star hotels and serviced apartments, as well as high-quality and mid-range three-star accommodation.