Mixed-use developments to surge in Bahrain
Stefan Burch, director of professional services for Knight Frank’s Bahrain and Saudi Arabia operations tells Big Project ME about the current state of the Bahrain property market
Which sector currently dominates the real estate market in Bahrain?
The Bahrain real estate market isn’t dominated by any one sector in particular. However, there is definitely a large supply of commercial projects and structures in the market largely because they are an integral part of the master-plans loaned out for development. In my view, Bahrain’s commercial property segment is very elastic in its supply and potential supply, and it is a risk in my opinion.
What appears to be the future of the country’s property market?
Mixed use developments appear to be the next big offering in Bahrain. Reef Island and Amwaj Islands are gaining traction in terms of attracting attention from buyers and investors. Historically, Bahrain’s problem has been the lack of people and residents. But areas like Reef and Amwaj have responded very well to the demand from existing and new buyers; they provide more than just a place to live in. Bahrain has traditionally been a single-use development driven market, but developers are now realising that potential residents need to be offered ancillary developments and retail support as well.
What is the role of pricing in the market?
Cost matters to every target market and it unquestionably places a crucial role here too. In the past three years, rental rates have reduced significantly to make developments such as Reef more affordable to buyers. I don’t think there is more value for money in any mixed-use development across the GCC than there is for Reef. Even the commercial sector in Bahrain is considerably lower than its counterparts in Doha or Dubai. Developers have reduced the rate of construction, however, and that is contributing to reduced rental rates since the past six months.
When compared with its GCC counterparts, how competitive is the Bahrain property market?
The boom of 2008/2009 was a pan-GCC phenomenon that impacted all countries in the region. Anecdotally, Bahrain has taken longer to recover the positivity, but it is doing so. The GCC region in itself is a highly competitive one, so developers have to compete with not only the developments within their country, but also across other cities in say, Qatar, the UAE or Kuwait, which are really a couple hours’ drive away from their location. So competition is, no doubt, high in Bahrain too, because it belongs to a region where planning efficiency and land availability make for a very strong combination.
What is the unique selling point (USP) offered by the Bahrain property market?
It would be great if an event like the Fifa World Cup 2022 Qatar or Expo 2020 Dubai (UAE) were to reach Bahrain. That said, it must be established that the Dubai market was a highly mature one even before the Expo win was announced. It has managed to make residents from its investors instead of making them transiting buyers, which is a positive sign for a real estate market. Bahrain is yet to figure out a clear USP, perhaps, but if the activity on developments like Amwaj and Reef is any indicator, then then Bahrain is set to grow into a mature market too. The growth of interest and activity in the mixed-use sector is great news to me.
