Residential rents in Bahrain are showing signs of stabilising after falling at the start of this year, according to real estate consultancy Cluttons.
The Bahrain Winter 2017/18 Property Market Outlook said that average rental values firmed during the third quarter of 2017 but are still more than 16 percent lower than Q3 2016.
They are also 8 percent down on values seen at the start of this year, the report added.
In general, villas have outperformed apartments, however rents have dipped by 11 peercent over the last 12 months. On the apartment front, rental rates in Juffair have experienced some of the sharpest corrections, Cluttons noted.
Harry Goodson-Wickes, head of Cluttons Bahrain and Saudi Arabia, said: “For more than 18 months now, we have highlighted the risk of oversupply of apartments in Juffair and we appear to have reached a tipping point, where supply has exceeded demand.
"That said, with roughly 5,000 units being completed each year, there may be the potential for these units to be absorbed by domestic buyers, provided they are priced under BD120,000 in order to qualify for a social housing loan."
He said the Ministry of Housing has a social housing waiting list of approximately 55,000, so demand appears as though it may exceed supply.
"However, many of the schemes currently under development are geared towards the luxury end of the price spectrum. Oversupply remains an area of concern and something we continue to monitor closely,” he added.
Cluttons said the residential rental market in Bahrain is likely to remain stable for the remainder of 2017 and to continue this stability into 2018.
However, the report added that this is predicated on the residential market being exempt from any form of VAT, something that has not yet been announced in Bahrain.
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