75,000 more houses needed in 2017: Report

Manama : Bahrain’s residential sector continues to remain undersupplied with the year 2017 witnessing a shortage of approximately 75,000 housing units, according to a new report by CBRE Bahrain. 

The report also reveals that the majority of the shortage is in the low-to-middle income segment.

Citing population statistics and typical household sizes, the report by CBRE Bahrain, a wholly owned branch of the real estate firm CBRE, estimates the current housing demand in the Kingdom as 290,000 units, “while there are only 216,000 completed units across all property types in the market.”

CBRE, however, states that an intensive government-led strategy is underway to close the supply/demand gap with 40,000 units to be introduced under the housing plan by 2020.

Popular residential areas 

Juffair, Seef, Amwaj and Reef Island are the most popular residential areas for both apartment rental and sales among expatriates, according to the H1 2017 Bahrain MarketView developed by CBRE. 

“One of the most active districts for new residential development is Juffair, where there are a number of large scale residential tower projects under construction and planned for completion in 2017 and 2018,” said James Lynn, Director, CBRE Bahrain. 

This, according to Lynn, will lead to a significant increase in the Freehold supply over the next 2 years in Juffair.

“In 2016, the micro market comprised of 2,800 freehold units and this is expected to rise to over 5,000 units by 2018 which is almost 79 per cent growth within a short 2-year period,” he added.  

Rentals high in Seef 

Residential rents are found to be highest in the Seef District, including Reef Island, thanks to its close proximity to shopping malls, offices and other services and entertainment options, according to the report. 

The report, however, warns that the rising cost of power and water utilities for expatriates has started to impact on key rental decisions.

“Consideration of home sizes, room layouts and general energy efficiencies within properties are now key factors in the home selection process, more than ever before,” said Lynn. 

The report, quoting Survey and Land Registration Bureau, also finds that around 85 per cent of the total real estate transactions in 2016 was completed by Bahraini nationals with a further 10pc completed by Gulf Nationals. GCC buyers are predominantly from either Kuwait or Saudi Arabia. 

Hospitality poised to grow

The report, citing Bahrain Economic Development Board, sees a rosy future for the hospitality sector. 

With a combined investment of more than US$10 billion, fifteen 4 and 5-star hotels and beachfront resorts are scheduled to open in the next five years. 

This, according to CBRE, will add to the kingdom’s existing supply of more than 190 hotels and resorts. This includes 18 five-star hotels, 48 four-star hotels, 35 three-star hotels, 81 serviced apartments and 11 resorts. 

The current average hotel occupancy for the region in 2016 to date is 60pc in comparison to 53pc for Manama.

Looking ahead, Heather Longden, Associate Director, CBRE Bahrain said that there are an additional 5,100 rooms planned to be introduced by 2021 in the 5-Star category which will further advance the standard of property in the Bahrain market

Office rent BD7/sqm 

CBRE reports a vacancy rate of 33 per cent in the Bahrain’s office market; with total Grade A and Grade B stock in the market are approximately 1.2 million square metres in the capital. 

“Prime average monthly rates are now as low as BD7 per square metre and this provides affordable opportunities for occupiers. Seef Area has a considerably higher occupancy rate and despite some tenant’s deciding to move from the area, demand remains steady,” said Lynn. 

The report also reveals that newer towers with services on site for office workers and attractive initial commercial terms are drawing major occupiers from older or less suitable buildings.

Investment choices

The CBRE report sees Retail and food & beverage developments as the popular investment choices in
Bahrain. 

“Retail and leisure are seen as the main drivers of tourism for the country and international retail operators,” said Longden. 

CBRE also finds e-commerce sphere in Bahrain getting more competitive with the entry of Amazon Web Services.