Investors look to safe-haven markets as hostilities continue to simmer in kingdom
Rental rates in Bahrain slumped by a quarter in the first half of 2011 as the political unrest deterred foreign investors and companies, said property broker Knight Frank in a report.
The average rental rate was BD1,200 ($3,183), a decline of 25 percent on the same period a year-earlier, the report said. The decline was reflected among sale values, with average pricing for apartments in the Gulf kingdom at BD790 ($2,095) per sq m during the six-month period.
Villa rates fell to BD625 ($1.658) per sq m, the report said.
Social unrest has also squeezed Bahrain’s fledgling luxury property sales, with bigger spenders moving choosing to invest in safe-haven markets.
“The luxury housing market was relatively small in terms of demand even before the political unrest, but it has understandably had an effect, as those investors who were showing modest interest have now looked to more secure markets in which to place their money,” said Jim Lynn, head of research in Knight Frank's Bahrain office.
Protesters took to the kingdom’s streets in February to demand more representation and access to better jobs and benefits. At least 30 people were killed, hundreds wounded and more than 1,000 detained in a government crackdown backed by troops brought in from Saudi Arabia and the UAE. Martial law was declared at the height of the unrest, but was lifted in July.
In April, a report by property consultancy CB Richard Ellis found expatriate families in Bahrain were relocating from central areas to quieter neighbourhoods, in a bid to escape future unrest.
Regions that were among those most affect by the uprisings include Saar and Budaiya in the north west, which were previously popular destinations for upper-income migrant families.
“Many expatriates, especially those with families, have found the recent problems, which were very audible in this area, to be deeply troubling, and as a result there is likely to be some movement to quieter locations not so visibly or audibly affected by political differences,” the report said.
Office rents in the kingdom have also seen a sharp decline in value, Knight Frank said. Prime rates were down by 11 percent in the first half of 2011, reaching a monthly rate of BD9 ($23.86) per sq m, similar to rents seen in the pre-boom years of 2005 to 2006.