Bahrainis snub apartments in risk to social housing push

Preference among locals for villas may hurt government push to offer affordable homes
Bahrainis snub apartments in risk to social housing push
A construction site in Bahrains capital Manama. The Gulf state has a 40,000 shortage of low-cost homes
By Shane McGinley
Mon 09 Jan 2012 11:24 AM

Bahrain’s plan to build thousands of low-cost homes for its citizens
may be sidelined by Bahrainis refusal to live in apartments, property analysts
have warned.

The Gulf kingdom last week unveiled a scheme to build more
than 4,000 low-cost units
in a bid to address its chronic affordable housing
shortage
, but nationals have proved reluctant to live in properties other than
villas, said real estate consultancy CBRE.

“Even when developers build housing units at prices that
meet market expectations in the form of apartments, sales profiles remain weak
due to a general resistance to apartment living by Bahraini nationals,” analysts
wrote.

The protest-hit kingdom has one of the largest shortfalls of
affordable housing in the GCC, lacking an estimated 40,000 homes for its
population. More than 86 percent of Bahraini households qualify as low-income, according
to Jones Lang LaSalle. The country has more than 55,000 citizens on a waiting list for social housing.

Martin Cooper, head of consulting for the Middle East at property
consultancy DTZ, said many Bahranis would struggle to afford to live in villas.

“It’s the aspiration among most potential [Bahraini]
homeowners because that is what they have grown up in,” he said. “But if you
look at average wages, disposable incomes and the price of villas, the reality
is that a large part of the market is going to have to look at apartment
living.”

Bahrain’s residential real estate market has struggled in
the wake of widespread protests in the Gulf state, which saw thousands take to
the streets to demand curbs on the ruling family’s power.

Compound communities have been particularly affected,
including those in the Saar Budaiya area used by workers who commute across the
border to Saudi Arabia, CBRE said.

The developments are close to Shia neighbourhoods that have
been the focal point of the unrest.

“This has resulted in an unsettling environment for those
with young families and there has been a gradual migration out of the area,” analysts
wrote. “Consequently, both rents and occupancy have tumbled in compounds to
varying degrees throughout the year.

"At worst, rents and occupancy have dropped
by around 30 percent but many compounds have been able to sustain occupancy
through rent reductions.”

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