By Andy Sambidge
New Knight Frank report says freehold sales of apartments, villas 'almost non-existent'.
Asking prices of high-end apartments in Bahrain have seen declines of about 20 percent in 2010 compared to last year, Knight Frank said on Wednesday in a new research paper.
Current prices for the best apartments range from BD1,000 ($2,652) to BD1,500 per sq m, down a fifth on 2009 prices, it said.
The report added that sales of freehold villas and apartments have been "almost non-existent" in Bahrain over the last two years.
"This is indicative of the fact that investors are wary in these uncertain economic times and owner occupier demand for luxury property appears to have been satisfied at least in the short term," said Jim Lynn, head of research and consultancy for Knight Frank.
Knight Frank also said that tenants now "held the power of negotiation" in the rental market, adding that mid to high quality apartments in and around Manama were in high supply compared to demand.
It added that villa rents have remained constant, with vacancy rates in the main expat communities rising only slightly and still remaining low at 5-10 percent.
Regarding future demand in Bahrain's real estate market, Knight Frank said the appetite for affordable homes remained "extremely strong" with 47,000 Bahraini families currently on the waiting list for a government home.
But Lynn added that the market still suffered from oversupply of homes and that this trend was likely to continue.
"As an additional 5,000 apartments are currently in the development pipeline the situation is only likely to worsen.
"Due to a severe lack of transactions, more and more developers are making the decision to offer freehold properties on the rental market after experiencing a prolonged period of poor sales."For all the latest Bahrain news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
Some of this report is true. As for rental being buoyant, that is also true as far as hiked rents are concerned, but as for movement, then the story becomes false as that is near zero. Although, I imagine 90% of us looking and waiting for Bahraini landlords to get real! We thought they would by middle of last year but there is absolutely no sign of it yet, because I guess they believe their own hype. Property sales are at a standstill because so many people bought during the frenzy at grossly inflated prices, (Including me) and nobody is paying the desperate asking prices. Boom time in quick buck construction has led so many thousands of empty apartments here, Blocks and blocks of them, just look around, it is blatantly obvious, so this company to report as they do, is not accurate and they are just pontificating, perhaps appeasing their existence for this area because negative reporting is just not kosher. Just as the press daily announce 'hundreds of foreign investors gagging to get to Bahrain', claiming there is a property shortage. Ho ho ho! Talking to some pretty important people yesterday, the hard cold reality of the credit squeeze is anything but healthy and I was told in no uncertain terms; 'Take no notice off all that BS'. The truth is, at present rents are totally unsustainable for most expatriates and they are the majority of takers, so most are in fear as to how this is all going to pan out, because landlords aint budging. Some landlords are still increasing annual rents with gay abandon and all this talk of no more recession is just that; talk! The greed mentality in Bahrain is very different to Dubai more commerce like approach and investment in industry is just not part of that mentality. Property property property - All since 9-11 when external investment was monitored. The distasteful reality is that the local rich have no faith in their own, so will not invest in Industry to create employment, not even a recycling plant. There is one, but it is German or something like that. However, like most of the people I know, we have no idea where these so-called polsters and survey gurus get their facts and figures from. Like all company manifestos and media content, it brags, claims, deceives with impunity. Make it all up on the spot, put it out to the local press and they will print it. Jobs are near impossible to find so most out of work folk turn to becoming estate agents and in doing so, consequently create more hype which ends in trouble, because not one of them will tell you the truth; instead with considerable zest try to persuade you to buy now as they claim prices are going up and many people are after this particular prize - blah blah blah. In fact, a recent press report told of plans to reign in the tens of thousands masquerading as real estate agents in Bahrain. It does appear that there are rather a lot of them too.
Excellent comment by Jane. It appears that Bahrain has way too much capacity to be used up. Similar to Dubai, this great correction will gradually do it's work. The fixers & meddlers will tell you that the property market is about to turn and everything will be onwards & upwards. My guess is in their desperation to convince, they have forgotten basic skills like being able to add & subtract! When you keep on consuming more than you produce & spending more than you earn, eventually it's going to end in tears.... either for the spender or the lender! A higher % of property is purchased for cash in this region and this added to the inexperience of landlords is delaying the free market from lowering rental rates. But time will correct these errors and eventually the landlords will get exactly what they deserve...
Whatâ€™s ever gone up must come down
I've been keeping an eye on a 2bedroom villa in Amwaj floating city ... few months back it was going for 160k (BD) and now I've just seen it go up for 199k !!!! Amwaj has 2 main roads to go in and out and the road from the new bridge is so dark. People get so excited riding the wave too quickly and inflate everything without thinking. Also expats aren't allowed to purchase properties on the island anywhere they choose which limits choices when considering buying a property. These non-expat villas come with a lower / better price tag and larger land space and I'm sure anyone would rather pay 200k to purchase a land / villa rather than a high rise apartment living. The housing market is a joke in Bahrain !!!