Bahrain housing market likely to be static in Q4

Source : Business Times – 10 Nov 2009

Property prices, rents and transactions in Bahrain’s housing market were static in the third quarter, and are likely to remain so for the fourth quarter, CB Richard Ellis said yesterday.

‘The end of summer and Ramadan should bring some vibrancy to the market, but it remains to be seen whether Q4 will herald the return of significant levels of energy to the flagging market,’ the property services firm said in a report. Property prices across the board have fallen by as much as 15 per cent year-on-year, the firm’s senior director Mike Williams told Reuters.

Mortgage rates in the smallest Gulf Arab economy are prohibitive and will stunt the market until liquidity and appetite for mortgage business returns to the banking sector, the report said.

Villa compounds continue to see relatively high occupancy levels and rental rates have stabilised after two of three years of rapid rental rate increases, it said, adding that the significant delivery pipeline of apartments may cause a demand-supply imbalance for some time. ‘The return of job creation will be key to filling vacant units,’ it said.

In October, Mr Williams told Reuters there will be some 60,000 residential units delivered to the market up to 2013, out of which 38,000 will be government-sponsored low-income housing units.

Meanwhile, the rate of new lettings in the country’s office market dropped sharply between the first and third quarters.

‘Where previously medium and international sized corporates were seeking space predominantly in Seef District for a variety of reasons, they have been sitting on their hands during the summer months and enquiries have declined significantly.’

Office rates fell by as much as 20 per cent in 2009 with the greatest fall happening during the summer months and Ramadan, it said.

In September Dubai-based research firm Proleads said that Bahrain’s total construction sector projects are valued at more than US$36 billion with 148 in construction or bidding and 54 cancelled or on hold.