Bahrain’s Residential Market Sees Diverging Trends in First Half of 2024
In a tale of two markets, Bahrain’s residential sector saw villa prices surge by 7.8 percent annually, while apartment rates remained flat, according to a new report from CBRE Middle East.
Villa Prices Soar Due to Local Demand
The increase in villa prices per square meter was driven by strong local demand, with citizens seeking affordable units, the report noted. Meanwhile, international buyers dominate the mid-to-high-end apartment market in foreign investment zones.
Apartment Market Faces Stagnation Risk
Despite consistent apartment sales, CBRE warned that without a significant increase in demand, apartment rates could stagnate or see slower absorption levels, leading to reduced sales. The report estimated around 19,356 freehold apartments available to international investors, with more units expected by year-end.
Challenges and Opportunities in Retail Sector
The retail market continues to see new openings amidst challenges, with average occupancy across CBRE’s tracked properties dropping to 68.9 percent. Smaller properties struggle to attract tenants and foot traffic, while larger malls managed by regional operators maintain high occupancy rates.
Innovative Tenant Mix and Rental Rates in Retail Market
Monthly rental rates for prime shopping centers average 21,500 Bahraini dinars per square meter, with a trend towards introducing more entertainment and experiential family activities. The report highlighted a shift towards a more innovative tenant mix in Bahrain’s competitive retail market.
Decline in Office Rental Rates
Rental rates in prime and non-prime office properties declined in the first half of 2024, with average levels dropping by 2.9 percent compared to 2023. The market is seeing a growing preference for high-quality Prime and Grade A spaces, with landlords offering incentives to attract limited demand.
Hospitality Sector Sees Growth in International Arrivals
The hospitality sector experienced growth in international arrivals, surpassing pre-pandemic levels, with inbound tourism increasing by 24.7 percent year on year. Hotel performance indicators improved, with average hotel occupancy rising by 7 percent and revenue per available room (RevPAR) increasing by 9.8 percent in the first half of the year.
Positive Outlook Amidst Challenges
Despite challenges in the commercial office and retail markets, certain market segments and standout developments are showing resilience, according to Heather Longden, director of advisory and transactions in Bahrain. The overall value of transactions increased in the first half of 2024, indicating higher average transaction values.