As property rents continue to hit record highs in the UK,
London tenants may well envy those in Bahrain, where rents have begun to fall
in the last six months. Why? Because the perception of Bahrain property as a "renters
market" has prompted many determined tenants to negotiate for lower rates,
according to Cluttons' latest report.
Current tenant demand is focussing on modern developments
providing additional facilities and amenities, with attention to quality
fittings. This is can be seen in the Juffair where new developments such as
Fontana Towers are sparking a renewed interest in the area, with enquiries for
residential accommodation showing a marked increase over the past three months.
The strengthening villa rental prices in areas such as Adilya and the Amwaj
Islands is a sign that the market is nearing the bottom of the rental cycle.
The rental market has also seen the emergence of a new
micro-market with the continued influx of expatriates from Saudi Arabia as many
companies relocate to the Eastern Province, while their employees are choosing
to live in Bahrain. Several self-contained developments have, or are being,
developed to meet this new demand with asking rates higher than elsewhere,
ranging from BD 1,400 to BD 2,000 per month which is significantly above the
market norm.
The residential sales market, meanwhile, has seen a
significant rise in properties for sale as homeowners have failed to receive
their anticipated return on investment in the past few years. This has created
an oversupply that is driving sale cost down across the Island. Demand and
activity in the residential sales market remain extremely low from expatriates
and investors due largely to concerns about the impacts of the ongoing
socio-political situation, but this may change over the coming months as
reduced asking prices are known to attract purchasers into the market.
The development of residential projects aimed at the
Bahraini middle-income sector remains busy. An example of this is Manara
Developments, which recently announced the launch of Phase 2 of its Wahat Al
Muharraq residential development. The first phase provided 47 villas while the
second phase will provide an additional 180 villas priced from BD 98,600.
Cluttons predicts continued on-going activity and interest
in the residential market in Bahrain over the next six months. But with
increased supply hitting the market in the form of large residential
developments and tenants staying resolute, it is likely that rental values will
continue to soften for the foreseeable future.