Rents for homes in Bahrain are dropping as tenants negotiate hard for lower prices as property supply outstrips demand.
Expats may drive a hard bargain for rents, but they are also cashing in on higher prices for homes bought on the island, according to international consultants Cluttons.
Fred Brown of global property portal Property International says “Demand for residential property is best in neighbourhoods with modern developments with quality finishes and offering added extras.
Juffair is point in case, with the Fontana Towers project triggering a flurry of interest over the past three months”
Villa rentals are also showing a rise in Adilya and Amqaj Islands, which Cluttons interprets as the rental market bottoming out.
Saudis trigger market
Rentals have also seen a mini-market created as expats arrive from Saudi Arabia as several companies have relocated to the eastern province, but employees prefer to move to Bahrain and commute.
Developers are working on several self-contained projects aimed specifically at this market, and demanding higher than normal rents of BD1,400 to BD2,000 a month.
House prices are giving less of a return. More houses are on sale, leading to a market oversupply driving down prices, but still giving expats a return on their investments.
Prices are also suffering from the effects of recent social unrest following the Arab Spring uprisings across North Africa. Uncertainty is leading expats to rent rather than buy.
Building homes for middle income Bahrainis is busy with Manara Developments recently announcing the second phase of the Wahat Al Muharraq development. The first phase comprised 47 villas, while the second phase will provide an additional 180 villas priced from BD 98,600.
“We predict continued on-going activity and interest in the residential market in Bahrain over the next six months,” said the firm’s Nicola Milton. “However, with increased supply hitting the market in the form of large residential developments, it is likely that rental values will continue to soften for the foreseeable future.”
Dubai demand
Meanwhile, Cluttons also disclosed demand for property in Dubai from foreign investors spending £4.7 billion surged by 36% in the first six months of the year.
The property market in Dubai is generally positive, says the firm, highlighting a trend for the popularity of homes close to metro stations.
Cluttons suggest property prices “will remain relatively stable over the next 12 months” as 24,000 new homes are expected to come to the market in the second half of the year.
