Bahrain's real estate transactional activity increases amidst continued pandemic uncertainty
Real estate market transactional activity in Bahrain has continued to increase over the last quarter of 2021 amidst ongoing pandemic uncertainty, according to research by CBRE. The value of Bahrain’s real estate transactions rose by 46% year-on year in 2021 to BHD1bn ($2.8bn), as reported by the Survey and Land Registration Bureau (SLRB).
Looking at Bahrain’s office sector figures, visitation to the workplace began to recover noticeably in Q4 2021, surpassing its pre-pandemic baseline. In 2021, we have seen the quantum of vacant office space reach approximately 339,000m², accounting for 28% of total supply. Prime rental rates remained stable in 2021, whereas average rental rates for Grade A & B offices declined. Performance in this segment of the market has continued to trend downwards on the back of the excess supply levels.
Heather Longden, Director - Advisory & Transactions, at CBRE in Bahrain comments: “Affordable rental rates and surplus supply continue to underpin flight to quality. We see that properties with modern facilities are faring better than some more dated properties, with Bahrain Bay emerging as a key business destination for instance, while Seef District continues to be popular with tenants.”
The decline in quoted sales prices for freehold residential apartments slowed in 2021, to 0.2%, down from 1.6% in 2020. In Q4 2021, average quoted sales rates for two-bedroom apartments were recorded at BD831 per sqm for mid-to-high end properties across Bahrain. Currently, we estimate freehold apartment stock, open to international investors, to total 16,000 units, with a further 7,500 units scheduled for development by 2024.
Bahrain’s retail sector began to see a marked increase in activity levels in the latter months of 2021, with visitation surpassing its pre-pandemic baseline for the entirety of December and majority of November 2021. The improvement of the sector in terms of visitation is yet to be reflected in trading occupancy levels. Average occupancy fell an additional 0.8% year-on-year in Q4 2021, in the super regional and regional mall set surveyed. This does, however, show that occupancy levels are falling at a substantially slower rate. The pandemic has furthered the trend by consumers towards convenience and experience.
With an uptick in international arrivals and a pipeline of hotel projects under development, the Bahrain hospitality sector is one of the key segments expected to improve in 2022, as the tourism industry recovers from the impact of the pandemic. Bahrain’s Hospitality Key Performance Indicators (KPIs) have concurrently improved in 2021. In the year-to-date to December 2021, the average occupancy rate for hotels rose 14.3 percentage points compared to the previous year. The average ADR increased by 0.7% and we saw average RevPAR increase by 50.6%. However, over this period, compared to the same period in 2019, Bahrain’s KPIs are still materially below their 2019 levels. Whilst we have seen increased levels of occupancy in the market, in most cases hotels are finding it difficult to increase ADRs.
