BAHRAIN REAL ESTATE MARKET REVIEW - AUTUMN 2023
Bahrain Real Estate
Market Review
Autumn 2023 knightfrank.com.ae/research
A biannual review of key trends and the performance of
Bahrain’s real eate market
BAHRAIN REAL ESTATE MARKET REVIEW - AUTUMN 2023 BAHRAIN REAL ESTATE MARKET REVIEW - AUTUMN 2023
Despite global economic uncertainties and a rise in
interest rates, Bahrain’s real estate market continues
to display moderate performance. The first nine
months of 2023 witnessed a notable 5.1% increase in
the number of real estate transactions, with a slight
uptick of 1.9% in the overall value of transactions
during the same period to BD 814 million.
The higher growth in transaction volumes relative
to transaction values highlights the ongoing decline
in prices. Villa developments have sustained their
popularity, with average sales prices in the mid-
end segments remaining constant over the past 12
months at BD 625 psm.
Residential Market
However, the increased cost of credit has
impacted the demand for premium developments,
particularly apartments, more than villas. As a
result, apartment prices declined by 2% to BD 665
psm over the same period.
Regarding property prices, Bahrain stands out as a
relatively affordable option compared to other Gulf
countries. The government has undertaken various
initiatives to foster foreign investment, such as
permitting foreigners to own property in designated
areas and providing tax incentives. These measures
serve to stimulate demand within the sector.
0
100
200
300
400
500
600
700
BD psm
800
900
615
510
Saar
850
795
Riffa Views
490
400
Barbar
3-bed 4-bed
Average Villa Sales Prices
665
Amwaj Islands
680
0
200
400
600
800
1,000
1,200
548
Juffair
560
460
Amwaj Islands
1,085
870
760
Reef Island
745
630
610
Al Seef
Average Apartment Sales Prices
1 -bed 2-bed 3-bed
580
563
571
BD psm
• The average prices for villas remained able on yearly basis at BD 625 psm.
• The average prices for apartments declined by 2% year-on-year, to BD 665 psm.
Source: Knight Frank
Source: Knight Frank
BAHRAIN REAL ESTATE MARKET REVIEW - AUTUMN 2023 BAHRAIN REAL ESTATE MARKET REVIEW - AUTUMN 2023
• Over the la 12 months, average villa rents fell by 1% and and at BD 1,085 per month.
• Average apartment rents declined by 2.2% over the la 12 months, reaching BD 525 per month.
Source: Knight Frank
Source: Knight Frank
Expatriates comprise a substantial portion of
the population (estimated at 52.6% of the total
population by 2022) and hold a commanding
presence in Bahrain’s rental market. As a result,
there is almost always a pronounced level of
demand for rental properties, notably in sought-
after expat-friendly locales like Juffair, Amwaj
Islands, and Al Seef. Additionally, a well-entrenched
trend towards luxury and serviced apartments
persists, particularly among expatriates seeking
upscale amenities and convenience.
That said, there has also been sustained and robust
demand for low-end and mid-end villas in the rental
market.
Residential Market
The performance of the rental market in Bahrain
has remained subdued over the last 12-months,
with both villas and apartments continuing to face
downward pressure as the sector battles with an
apparent supply-demand imbalance. Average villa
rents decreased marginally by 1% in Q3 across the
major neighbourhoods, while average apartment
rents fell by 2.2% over the same period. However,
newly delivered quality assets are achieving higher
rates in the likes of Diyar Al Muharraq, Dilmunia
and Riffa.
3-bed
915
910
925
1,250
1,215
1300
0
200
400
600
800
1,000
BD/month
1,200
1,400
Saar Adliya Amwaj Islands
Average Villa Lease Rates
4-bed
345
335
420
410
420
440
540
560
500
540
825
925
0
100
200
300
400
500
600
700
800
900
1,000
Juffair Amwaj Islands Al Seef Reef
BD/month
Average Apartment Lease Rates
1-bed 2-bed 3-bed
BAHRAIN REAL ESTATE MARKET REVIEW - AUTUMN 2023 BAHRAIN REAL ESTATE MARKET REVIEW - AUTUMN 2023
Bahrain’s GDP growth for 2023 is forecast at 2.7%,
surpassing its earlier projection of 2.1%. The IMF’s
July 2023 World Economic Outlook underscores a
rising confidence in economic resilience, even amid
elevated interest rates. Furthermore, government
policy changes, notably the introduction of the
Golden Licence Scheme, which benefits foreign
and local businesses, are likely to boost business
activity, foster job creation, attract foreign direct
investment, and contribute to increased demand
and rental rates in the office market.
Due to the sustained movement of corporate
occupants to high-quality Grade A developments,
the demand for office space in upscale buildings has
remained strong throughout the past 12 months.
Despite this trend, rental values have remained
stable at BD 58 psm in Q3 2023.
The retail sector’s performance has remained
subdued in the last 12 months. Average lease rates
across all retail categories saw a 5% decline. This
decline is primarily attributed to an excess of
retail inventory in Bahrain. Despite the prevailing
mismatch between the offered retail types and the
residual demand, development activities persist
across various market segments, including super-
regional, regional, community, and neighbourhood
retail. This additional pipeline supply is anticipated
to dilute the market further, placing extra
downward pressure on achievable rents.
Bahrain is actively advancing economic
diversification through innovation and multi-sector
development. Investment in infrastructure and
job creation are driving economic activity. Investor
incentives, including priority land allocation,
streamlined business licensing, and expedited
building permit approvals, are set to stimulate the
economy and will likely benefit the office market in
the medium to long-term.
Like elsewhere in the world, the pandemic has
driven a permanent shift to online retailing. In
response to consumers changing habits, the retail
industry is constantly evolving to meet the demands
of consumers who are looking for more than just
a place to shop by creating shopping destinations
that are centred on experiences. This shift in
consumer behaviour has led to a rise in demand
for destination retail and mixed-use developments
that incorporate the public realm, F&B, and
entertainment; however, there is a very real risk
of an oversupply in this segment of the real estate
market.
Commercial Market
Ofce Market Retail Market
BD psm (p.a.)
66
72
54
58
0
10
20
30
40
50
60
70
80
Al Seef Financial Harbour Diplomatic Area Riffa
Office Rental Rates
• Average oce lease rates remained able in the la 12 months and and at BD 58 psm per annum. • Average retail lease rates decreased by 5% on yearly basis to BD 162 psm per annum.
Source: Knight Frank Source: Knight Frank
166
151
162
168
140
145
150
155
160
165
170
Al Seef Diyar Al Muharraq Bahrain Bay Riffa
BD psm (p.a.)
Retail Rental Rates
BAHRAIN REAL ESTATE MARKET REVIEW - AUTUMN 2023 BAHRAIN REAL ESTATE MARKET REVIEW - AUTUMN 2023
Commercial Market
Warehouse lease rates grew by 5.3% over the last
12-months, underpinned by a demand-supply
imbalance. The average lease rate for warehouses
now stands at BD 37 psm per annum.
Demand has been supported by the industries that
are still reassessing and adjusting their supply chain
strategies to bolster resilience and reduce disruption
in the wake of the pandemic. In response to this,
the Bahraini government has implemented several
initiatives aimed at promoting the industrial sector,
attracting investment and fostering innovation.
In pursuit of economic diversification, Bahrain
initiated a comprehensive plan in 2021, unveiling
a five-year tourism strategy in 2022. The ambitious
objective is to welcome 14.1 million visitors annually
by 2026, aiming to elevate the tourism sector’s
contribution to the country’s GDP to 11.4 percent by
the same year. In 2022, Bahrain attracted 9.9 million
visitors, according to Bahrain’s National Portal.
The recent initiative between Saudi Arabia
and Bahrain to promote the two countries as
one regional and global tourist destination has
established a framework to collaborate to market
tourism programs and activities in both countries.
One notable measure involves the creation of
special economic zones designed to lure industrial
investment. These zones commonly provide
incentives such as tax breaks and streamlined
regulations, incentivising businesses to establish
their operations.
Furthermore, the recently announced GCC-wide
tourist visa, similar to the EU’s Schengen scheme,
is expected to be a game changer for tourism in the
region, once the new system is activated in 2024.
In addition, the revenue projections in the travel
and tourism market reflect a positive outlook. It
is expected to reach US$140 million in 2023. The
sector is expected to exhibit an annual growth
rate (CAGR 2023–2027) of 6.3%. These figures
underscore Bahrain’s rising prominence as a
dynamic player in the regional tourism landscape.
Industrial Market Hospitality Market
• The average warehouse lease rates grew by 5.3% year-on-year, to BD 37 per sqm per annum
Industrial Rental Rates
40
36
38
34
38
30
31
32
33
34
35
36
37
BD psm (p.a.)
38
39
40
41
Hidd BIW Salmabad Sitra Ras Zuwayed Tubli
Hospitality Market Performance
0.0 % I BD 65 4.9 % I 50.5% 4.5 % I BD 33
ADR: y/y % change OCCUPANCY: y/y % change REVPAR: y/y % change
YTD Sep - 2023
Source: Knight Frank Source: Knight Frank, STR Global
Stephen Flanagan
Partner - Head of Valuation & Advisory, MENA
[email protected]
+971 50 813 3402
Mohd Firdaus Idris
Senior Manager - Valuation & Advisory, Bahrain
[email protected]
+973 321 53106
Ayman Albahhari
Graduate Surveyor
Valuation & Advisory
+973 3701 3717
Shehzad Jamal
Partner - Strategy & Consultancy, MEA
[email protected]ank.com
+971 56 410 1298
Faisal Durrani
Partner - Head of Research, MENA
faisal.[email protected]
+44 7885 997888
Amar Hussain
Associate Partner - Research, ME
amar[email protected]
+966 55 232 3036
Important Notice
© Knight Frank 2023 - This report is published for general information only and not to be relied upon in any way. Although high standards have
been used in the preparation of the information, analysis, views and projections presented in this report, no responsibility or liability whatsoever
can be accepted by Knight Frank for any loss or damage resultant from any use of, reliance on or reference to the contents of this document.
As a general report, this material does not necessarily represent the view of Knight Frank in relation to particular properties or projects.
Reproduction of this report in whole or in part is not allowed without prior written approval of Knight Frank to the form and content within which
it appears.
Kingdom of Bahrain
Office No. 2132, Building No. 2648 Road No. 5720, Block No. 257, The Lagoon Island, Muharraq.
The Saudi Report - 2023
RECENT PUBLICATIONS
Destination Qatar - 2023 (Y)OUR SPACE - Middle East
Focus - 2023
Destination Dubai - 2023
@MENAKnightFrank @KnightFrankMENA
@KnightFrankMENA @KnightFrankMENA
@KnightFrankMENA