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

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,” Lakshmanansaid.

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

Lakshmanansaid 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.