Bahrain real estate prices 'to fall up to 25% in 2009'

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PRICE PREDICTION: Cities like Manama could see a property price fall of up to 25 percent. (Getty Images)

Bahraini real estate prices could fall by as much as 25 percent, according to the chief executive of one of the kingdom’s Islamic mortgage lenders.

“Depending on the area, we are already talking about adjustments of 10 to 15 percent,” said R Lakshmanan, chief executive of Sakana Holistic Housing Solutions, a joint venture between The Bank of Bahrain & Kuwait (BBK) and Shamil Bank.

Prices could drop as much as 25 percent if current market conditions persist, he said.

“It’s very difficult to put a percentage [on the decline] because hardly any transactions are happening.”

Some Bahraini companies have started to lay off staff as a result of the global financial crisis. “But it’s still not at the level that we’re hearing about from Dubai,” Lakshmanan said.

In October, Sakana cut its loan to value ratio to 80 percent from 90 percent.

Lakshmanan said property prices may start to rebound as soon as liquidity returns to the market and oil prices start to pick up.

Unlike Dubai, the vast majority of Bahrain’s real estate investors are from oil rich countries in the GCC.

A limited amount of space to build on has underpinned price gains in the Kingdom, where a number of high end developments are being built on reclaimed land.

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READERS' COMMENTS

Is it just 25% or ?
Posted by Cautious On looker, Bahrain, Bahrain on Thursday 25 December 2008 at 09:33 UAE time


If we compare the Q1-2007 prices of some of the major developements to the Q-3 2008 prices - the rise is almost 100%. So I guess there is room for the prices to slide back even beyond 25% - may be even upto 50% taking it to the 2007 price levels. Also if you look at the prices of basic raw materials such as Steel and cement the prices have already slid to the 2007 price levels.
So Investors beware!

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