We noticed you're blocking ads.

Keep supporting great journalism by turning off your ad blocker.

Questions about why you are seeing this? Contact us

Font Size

- Aa +

Mon 3 Mar 2008 04:00 AM

Font Size

- Aa +

Key to the kingdom

Investors, expats and residents are capitalising on Bahrain's booming real estate. We report on the major developments.

Investors, expats and residents are all capitalising on Bahrain's booming real estate market. Dominic Ellis reports on the major developments happening on and off shore in the Kingdom.

You know, we're nothing like Dubai." It's a common refrain you hear when talking to Bahrain property managers. Indeed, with its Saudi-linking Causeway, financial services history, F1 racetrack and strong Arabian culture, Bahrain is unique regionally. When it comes to real estate, however, a plethora of projects are now coming up on and offshore, indicating a Dubai-like penchant for development.

These are undoubtedly boom times for Bahrain's real estate scene and its skyline and waterline are changing irrevocably, with billions now pouring into residential and commercial projects.

Its retail real estate market continues to grow and will account for 7% of the Gulf's Gross Leasable Area (GLA) by 2010, according to Colliers International. Bahrain has 278,000 sq m of GLA in shopping centres in Manama, with an additional 600,000 sq m under construction.

But it is in the residential sphere where the market has been most dynamic, five years after foreigners were first given the green light to freehold ownership. Asteco reported an "overwhelming response" to the launch of its most recent project, the 45-floor Sukoon Tower, with 118 of the 592 apartments selling out in one day.

Managing director Andrew Chambers says it demonstrates the huge interest among the international community in Bahrain's real estate industry. "With Bahrain having sound legislation governing freehold property, international investors are confident of achieving better returns on their investments," he said.

Prices for freehold one-bed apartments in the Abraj Al Lulu Silver Tower start from a reasonable US$177,964 rising to US$231,072 and US$339,968 for a two and three-bed respectively. The top end ‘villa in the sky' costs US$850,000.

The freehold market is being driven by four key factors; GCC and international investors looking to make a quick-fire premium; Saudi-based expats, who want a base in Bahrain and the added perk of receiving life residence with their purchase; medium to long-term Bahrain expats looking to put down roots; and local Bahrainis.

As with Dubai, more residents are considering buying in the face of escalating rents, which shot up 50% on average last year.

But despite the freehold buzz, housing shortages remain a big problem. A key campaign was recently launched to house Bahraini families, with the government wiping out the 40,000-strong waiting list for homes, land, loans and other housing services within three years, under orders from His Majesty King Hamad.

Under the scheme around 8,000 villas and apartments would be distributed to people this year and around 30,000 before 2010.

The rental market is just as hot. Real estate company Abdul Latif Sulalman Al-Nsair recorded 25% growth last year and is planning to invest around US$27-40m in new apartments and villas in the next two years.

"Villa rental sales are growing fastest, particularly in compounds," says general manager Salah Al Nasser. "Prices will depend on the quality and on the location and services, but the trend is upwards. Villas used to cost US$797/US$1,062 a month a few years ago, now the average is US$1,060. Luxury villas start at US$4,000 and go up to US$6,640 for top-end properties.

The biggest issue to tackle is runaway prices, adds Mr Al Nasser. "Some of the developers are releasing freehold sales in blocks - knowing that three months later, they can increase the prices for the same project by another 25%.

Bahrain property lawFreehold property owners enjoy a self sponsorship Residence Permit for life, renewable every five years. This Residence Permit allows the property owner to sponsor a Residence Permit for his spouse, and children under 18 provided that she does not engage in any kind of paid employment.

The Residence Permit allows both the property owner and his wife to enter and leave the country without having to procure a return visa.

I know of one major development where units have changed hands four times and it's still not built.

This was a similar trend during the nascent stages of Dubai's property boom, but then the market stabilised as it grew and appealed to a broader range of investors; in all likelihood, Bahrain will go the same way.

Given its 716 sq km geography, the focus on major offshore developments is as much an imperative as a reflection of ambition, with land already at a premium on the island-scattered state.

But that's not to say more land developments aren't forthcoming.

Among the eye-catching ones coming up are Riffa Views, with the first villas due to be handed over in June. The project is slated for total completion by June 2009.

Riffa Views is residential development which will feature 900 homes built around a championship golf course designed by the golfer Colin Montgomerie.

It will include three neighbourhood clusters, lagoons and waterways and all homes will have open views of the golf fairways.

Some of the most significant developments commercially evolve around Bahrain Financial Harbour, with European major Dexia Private Bank recently signing up to occupy the 23rd floor.

"Bahrain is without doubt the most promising financial hub in the Middle East region and we strongly believe that Bahrain Financial Harbour is the focal point and a perfect platform for all financial sector firms wanting to establish their presence in the region," said Markus Hermanek, Senior Vice-President, Head of the Middle East Branch in Bahrain, Dexia Private Bank (Switzerland).

Property-related financial deals remain in full swing, reflecting the ongoing growth in the market.

Summary of bahrain’s megaprojects• Durrat Al Bahrain features 11 islands of luxury residential villas, gardens and beaches. The Kingdom's largest planned residential, leisure and tourist resort has completed land reclamation on the 12 islands (five Petal Islands, six Atoll Islands and a stand-alone island formation).

• Amwaj Islands comprises four man-made islands which are connected to the mainland by a three-kilometre highway. Located in the south-eastern region, Al Marsa will be a housing development spread across 83,000 sq m - effectively a floating city with waterfront villas, chalets and flats intertwined with a series of canals.

• The Two Seas freehold residential development, coming up on a man-made island to the northeast of Bahrain, is being developed by Gulf Finance House and Dala Development Properties Management.

• Positioned off the north-east shore of Manama, Bahrain Bay is a landmark US$2.5bn waterfront development designed around vibrant neighbourhoods of residential, commercial and retail spaces. The community is anchored by three key developments; a Four Seasons Hotel; CapitaLand's first GCC development, Raffles City Bahrain; and the new HQ building for Arcapita. project is expected to take between five and seven years to complete.

Venture Capital Bank will invest US$1bn in the Middle East and North Africa by the end of this year with more than 25% of the investment channelled into Bahrain.

REALCapita, which saw its income rise by 80% last year as the firm moved into the European and Saudi markets, plans a new US$500m project in the near future in a move that will push the company's value beyond the US$1bn mark.

The company claims to have pioneered the concept of ‘green buildings', with its US$200m Amwaj Gateway (three 20-storey towers) being the first project in the Kingdom to obtain a Green Building certificate through adopting the ‘Leadership in Energy and Environment Design' criteria for new builds.

The Porta Reef Fund was oversubscribed on closure late December.

The US$34m fund was launched to source financing for Abu Dhabi Investment House's landmark residential project on Bahrain's US$1.2bn Reef Island. More than two-thirds of total units in the towers have been sold since they were launched in October.

Bahrain's Reef-Real Estate Finance Company and Calyon Crédit Agricole CIB have launched "a groundbreaking transaction" in real estate finance.

Through an Islamic warehousing facility to be refinanced by an international mortgage-back securitisation, the first of its type in the Kingdom, US$150m will be raised to help provide competitive financing for Bahrain property purchases.

With so much activity, it's clear that Bahrain is now unlocking its real estate potential and adding another dimension to the unit-hungry GCC.

Market updates• Real Gardens, which went on sale in December, consists of 47 luxury villas in Spanish, Moroccan, Tunisian, and Tuscan designs spread over 258,000 sq ft in the northwest region. Construction is expected to take 21 months.

• Bahrain Financial Harbour Holding Company has signed a tenancy agreement with Dubai-based Signature Clubs International, which will establish the Capital Club on the two top floors of the East Tower (levels 51 & 52), covering an area of 1,580 sq m.

• Bahrain Bay Development has signed a land purchase agreement with Kuwaiti developer Salhia Real Estate Company to develop a commercial and retail tower with an expected value in excess of US$125m.

• The 45-floor Sukoon Tower, launched in January, is a freehold luxury residential tower being developed by Tashyeed Properties and located in the Juffair area. The development is due for completion in 30 months and consists of 592 apartments, ranging from studios to three-bedrooms.

• Pearl Development and Real Estate Company (PDREC), a consortium of GCC investors, have launched its second project in the Kingdom, the US$66.4m Platinum Tower. It will be located in Seef, the commercial hub of Bahrain, and will be an exclusive private sector freehold commercial development.

• The Reef Island marketing tent, a reduced-to-scale replica of the island, enables prospective buyers to view every detail of the project's architecture and designs. The project on the northern shores of Manama comprises 39 residential buildings, 65 villas, 49 beach villas, a 250 room five-star hotel, open areas and parks.

• Durrat Al Bahrain launched its new brand under an "urban living, island style"

Arabian Business: why we're going behind a paywall