Bahrain Real Estate: Surge in Transaction Volume, but Value Declines in Q2; Analysis of Office, Retail, and Hospitality Sectors
Introduction
The real estate market in Bahrain experienced a significant increase in transaction volume during the fourth quarter of 2023. However, the total value of these transactions witnessed a slight decline. In this blog post, we will delve into the details of Bahrain’s real estate market, focusing on the office, retail, and hospitality sectors. We will also explore the implications of these trends on the overall real estate landscape in Bahrain.
Increase in Transaction Volume
According to data from the Survey and Land Registration Bureau (SLRB), there were 9,362 real estate transactions in Bahrain during Q4 2023, representing a substantial year-on-year increase of 65.4%. Comparing it to the previous quarter (Q3 2023), there was an impressive 82% quarter-on-quarter growth. Despite the surge in transaction volume, the total value of these transactions amounted to BD1.07 billion ($2.8 billion), reflecting a slight decrease of 1.2% compared to the same period in the previous year.
Office Sector Analysis
The office sector in Bahrain maintained stable rental rates throughout 2023, with Grade A rents averaging BHD5.98 per square meter per month. Vacancy rates stabilized and even improved slightly due to workforce growth and limited new Grade A properties entering the market. Notable office buildings, such as Sayacorp Tower and Seef Boulevard, are scheduled to open in 2024. If these openings proceed as planned, the total supply of office space in Bahrain will increase by 1.1% this year.
Residential Market Insights
In the residential sector, average apartment sales rates across Bahrain experienced a growth of 2.5% from 2022 to 2023. However, villa sales rates, based on title deed area, marginally declined by 0.44% year-on-year in 2023. In the rental market, mid- to high-end apartment rates fell by 1.7% during the year leading up to Q4 2023. Meanwhile, mid- to high-end villa rates remained relatively stable, with a marginal decline of 0.1%.
Hospitality Sector Performance
The hospitality sector in Bahrain showed positive signs in terms of key performance indicators. STR Global’s data revealed a 5.1% increase in average hotel occupancy in Manama compared to 2022. Although Manama’s average daily rate (ADR) experienced a 2.7% decline, resulting in an average of BHD61, the revenue per available room (RevPAR) increased by 1.9%. Bahrain as a whole also witnessed an increase in occupancy rates by 4.4%, while ADRs fell by 2.2%, leading to a 2.1% rise in RevPAR.
Retail Sector Analysis
CBRE’s biannual retail occupancy survey for the second half of 2023 indicated marginal growth in Bahrain’s retail sector for the third consecutive period. Across CBRE’s tracked 20 malls in Bahrain, the average occupancy rate increased by 1 percentage point. However, the average rental rates experienced a decline of over 4% in 2023. With increasing supply in various segments, ranging from neighborhood plazas to destination malls, landlords are expected to face pressure to provide more competitive commercial terms in the near future.
Conclusion
Bahrain’s real estate market witnessed a significant increase in transaction volume during Q4 2023. Despite a slight decline in the total value of transactions, the market showed positive signs in various sectors. Stable rental rates in the office sector, growth in average apartment sales rates, improved hotel performance, and marginal growth in the retail sector were observed. As the market evolves, challenges are anticipated in the office and retail sectors, while opportunities exist for landlords providing quality products and services with competitive terms. The real estate landscape in Bahrain continues to offer potential for investors and developers alike.
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Bahrain Real Estate: Surge in Transaction Volume, but Value Declines in Q2; Analysis of Office, Retail, and Hospitality Sectors
Introduction
The real estate market in Bahrain experienced a significant increase in transaction volume during the fourth quarter of 2023. However, the total value of these transactions witnessed a slight decline. In this blog post, we will delve into the details of Bahrain’s real estate market, focusing on the office, retail, and hospitality sectors. We will also explore the implications of these trends on the overall real estate landscape in Bahrain.
According to data from the Survey and Land Registration Bureau (SLRB), there were 9,362 real estate transactions in Bahrain during Q4 2023, representing a substantial year-on-year increase of 65.4%. Comparing it to the previous quarter (Q3 2023), there was an impressive 82% quarter-on-quarter growth. Despite the surge in transaction volume, the total value of these transactions amounted to BD1.07 billion ($2.8 billion), reflecting a slight decrease of 1.2% compared to the same period in the previous year.
Office Sector Analysis
The office sector in Bahrain maintained stable rental rates throughout 2023, with Grade A rents averaging BHD5.98 per square meter per month. Vacancy rates stabilized and even improved slightly due to workforce growth and limited new Grade A properties entering the market. Notable office buildings, such as Sayacorp Tower and Seef Boulevard, are scheduled to open in 2024. If these openings proceed as planned, the total supply of office space in Bahrain will increase by 1.1% this year.
Residential Market Insights
In the residential sector, average apartment sales rates across Bahrain experienced a growth of 2.5% from 2022 to 2023. However, villa sales rates, based on title deed area, marginally declined by 0.44% year-on-year in 2023. In the rental market, mid- to high-end apartment rates fell by 1.7% during the year leading up to Q4 2023. Meanwhile, mid- to high-end villa rates remained relatively stable, with a marginal decline of 0.1%.
Hospitality Sector Performance
The hospitality sector in Bahrain showed positive signs in terms of key performance indicators. STR Global’s data revealed a 5.1% increase in average hotel occupancy in Manama compared to 2022. Although Manama’s average daily rate (ADR) experienced a 2.7% decline, resulting in an average of BHD61, the revenue per available room (RevPAR) increased by 1.9%. Bahrain as a whole also witnessed an increase in occupancy rates by 4.4%, while ADRs fell by 2.2%, leading to a 2.1% rise in RevPAR.
Retail Sector Analysis
CBRE’s biannual retail occupancy survey for the second half of 2023 indicated marginal growth in Bahrain’s retail sector for the third consecutive period. Across CBRE’s tracked 20 malls in Bahrain, the average occupancy rate increased by 1 percentage point. However, the average rental rates experienced a decline of over 4% in 2023. With increasing supply in various segments, ranging from neighborhood plazas to destination malls, landlords are expected to face pressure to provide more competitive commercial terms in the near future.
Conclusion
Bahrain’s real estate market witnessed a significant increase in transaction volume during Q4 2023. Despite a slight decline in the total value of transactions, the market showed positive signs in various sectors. Stable rental rates in the office sector, growth in average apartment sales rates, improved hotel performance, and marginal growth in the retail sector were observed. As the market evolves, challenges are anticipated in the office and retail sectors, while opportunities exist for landlords providing quality products and services with competitive terms. The real estate landscape in Bahrain continues to offer potential for investors and developers alike.