Study says market in Seef and Juffair will take two years to recover due to “oversaturation”
Real estate values in two of Bahrain’s biggest business hubs, Seef and Juffair, have fallen by 50 percent since unrest in the kingdom began nearly two years ago, according to a report from a local government official.
According to Gulf Daily News, the report, which was written by Manama Municipal Council vice chairman Mohammed Mansoor, said that it would take two years for the market to recover fully due to a lack of demand.
The research stated that the value of land and property set aside for investment in the two areas has slumped to BHD100 (US$265) per sqft since the start of unrest in February 2011, while only a few investors had pushed ahead with development projects.
"Many are not willing to start investment plans on their plots because they are worried that they may not get their money's worth in future as Bahrain's market is already oversaturated and can't withstand an unnecessary influx," Mansoor said in the report.
"Millions are at stake and investors can't wait for seven to ten years to get their funds back or register profitability.
"The market has shown recovery that has brought the investment rate to 50 percent from the potential expected, but the remaining 50 percent is still an issue that needs addressing."
The study, which was designed to help local councils solve the impasse in the property market, suggested that more relaxed regulations would help the development of emerging areas of Bahrain.
"We assure people that we will not allow multistorey buildings in residential areas, but there are commercial districts that are good for multimillion dinar investments that we could allow to be utilised, especially in areas that are good investment hubs," Mansoor said in the report.
"Tubli and Muharraq, for example, are emerging areas that are showing good signs, but require a relaxing of classification rules to have more investments in them.”
In October, local property consultant Cluttons warned that while the office market had stabilised due to more leases being signed towards the end of the third quarter of 2012.
“However, rents are not expected to rise in the short to medium term due to increased supply coming to the market. It is also likely that occupancy rates will continue to fall towards the end of the year.”