By Shane McGinley
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
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.
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.