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Villas trumped apartment demand and the office sector bounced back last year as Bahrain’s real estate sector continued its recovery following the pandemic, it has emerged.
According to the Savills Q4 2022 Bahrain Market in Minutes report, growth was differently paced across segments in the residential real estate space.
The preferred asset type was villas with an average year-on-year (YoY) increase of 2pc across developments and the strong demand levels continued to push prices upwards.
Meanwhile, capital value growth across apartments gradually slowed over the last four quarters, the report said.
The price correction was more prominent across mid to low-end developments, which have seen a 2pc-4pc drop in values YoY.
Average capital values across mid-end apartments are estimated at BD647/sqm, whilst across low-end apartments, it is estimated at BD465/sqm.
The rental market largely mirrored the sales market, with rental values in villas continuing their strong growth with YoY price increases of 4.5pc, which equates to an average rental value of BD1,139/month.
“This appreciation occurred largely due to an increase in rental values across low-end villa products, which have risen by 20pc YoY. We attribute this to several low-end compounds reaching full occupancy over the past year causing limited availability, and also with some landlords carrying out refurbishment work,” said Hashim Kadhem, head of professional services at Savills Bahrain.
Average apartment rents, meanwhile, have been consistently stable over the past year with no price movement.
According to the firm’s Bahrain-based Middle East associate director for research Swapnil Pillai, the kingdom has benefited from not only an oil-price boost, which helped GDP grow by 5.9pc in 2022 but also by efforts to attract investments and diversify its economy.
“Non-oil revenues were 28pc higher on a yearly basis, reaching BD1.065bn in 2022. To drive future growth, Bahrain has announced a four-year strategy for the tourism sector that aims to attract 14.1m tourists by 2026,” he added.
In line with growing economic activities, demand for office real estate bounced back during 2022.
High demand levels were more prominently witnessed across Grade A assets, which have seen a healthy increase in occupancy levels throughout the year.
Rents across Grade B projects have seen the highest yearly increase as a result of spillover demand.
Average rental values across Grade A assets are currently estimated at BD6.5/sqm/month. Meanwhile, rents across Grade B assets were estimated at BD5.5/sqm/month, recording growth of 15pc YoY.
Despite the steady increase in demand levels for office properties, activity levels across Grade C assets have remained limited. It aligns with global and regional office trends where corporate occupier preference has shifted towards modern, energy-efficient and ESG-compliant space, features that are mostly available in higher grade offices.
Similar to rental value trends, capital values across Grade B assets saw a steady quarterly increase throughout 2022.
Average capital values across Grade B assets are currently estimated at BD905/sqm, an increase of 5pc YoY.
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