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Saudi investments account for 80% of Gulf property businesses in Bahrain

-Bahrain’s property market safe haven for real estate developers, investors

-Competitive environment, robust growth despite local, regional, global pressures

Despite local, regional and global business pressures investment promotion efforts in Bahrain are forging ahead, exceeding expectations, creating good business opportunities and consolidating the Bahraini real estate sector in a way that has helped the economy survive heavy losses and avoid an exodus of local and multinational investments, according to Al Mazaya Holding Weekly Real Estate Report.

The report attributed the competitive edge enjoyed by the Bahraini real estate market to the robust legislation enacted by the government, including a resilient freehold system and the self-sponsorship permit which is governed by rules and regulations according to the Bahraini Law. Such flexible regulations have encouraged investors to have smooth access to the Bahraini market, with the government showing full commitment to ensuring a business environment that is considered the most flexible and agile across the GCC region, on account of the several privileges provided, including a tax-free environment for private companies and capital profits along with free transfer of profits and capital.

In the meantime, the decline in rental costs of office spaces and industrial plots besides the 100 per cent foreign ownership of trade and property assets are additional factors that stimulate investments in Bahrain, with statistics indicating that property investment returns hit around 10-12 per cent for rentals and 40 per cent for sales. The report attributed the improved returns to the recent efforts made by the government to amend and update its legislation in a way that meets the industry requirements and ensure the rights of all parties concerned. Now more focus is being laid on developing additional legislation that addresses ailing real estate businesses, which is estimated at BHD473 million.

The report noted that the Bahraini property market posted satisfactory performance during the Q1, 2017 in terms of deals and sales done as well as property in supply, which reflects the fact that supply outpaces demand in various parts of the Kingdom and consequently leads to further decline in rentals. Such a condition will create more competition among developers and owners to supply high-quality products at competitive prices, said the report.

Potential tenants are now provided with a plethora of options, with current data indicating that apartment rates declined by 8 per cent and villas by 7 per cent, with rental rates projected to further plummet over the coming period while office space rates remained stable till the end of the Q1.

The report mentioned that the Bahraini property market is generating promising investment opportunities as compared to other neighbouring economies with the Kingdom classified among the best investment-conducive environments in the region.

The report highlighted the multi-purpose enterprises provided in Bahrain which meet different economic needs and reflect the considerable cash levels available, with data showing that the total value of property transactions conducted during the first quarter of the year surged to around BHD 290 million.

It added that the Kingdom of Bahrain is in the same time-making tangible efforts to develop tourism and retail trade, with infrastructure investments enjoying official support from the government, primarily those developments closely related to construction of roads, bridges and airports which are considered among the key economic enablers in line with medium and long-term development plans.

The report also highlighted the negative impact of the falling global oil prices and the consequent plummet in revenues and returns, which in return necessitated the development of new spending priorities by the regional countries and have had their own negative bearing on all economic sectors, including the real estate platform. However, the Bahraini market, added the report, has proved its ability to survive challenges and to continue to grow on the back of a setof catalysts, primarily a plenty of Gulf investments in the kingdom, particularly Saudi investments which account for 80 per cent of Gulf real estate business in Bahrain.

The latest developments in the region are likely to fuel risk all over the region and create more challenges which are expected to be utilised by the Bahraini market to attract more investment inflows thanks to its exceptional business environment and robust growth levels.

Concluding, the report said that ailing real estate developments are still within a limited level thanks to the robust legislation enacted by the Bahrain government to protect the rights of all parties concerned. Bahrain is considered among the first countries that applied efficient policies to ensure economic freedom, and its efficient policies and regulations have made the Kingdom a safe haven for real estate investors and development companies.