Though the Bahraini property rental market is subdued, apartment sales are increasing

With the smallest geographic area and smallest population within the MENA region, Bahrain possesses a unique set of real estate market fundamentals. The kingdom has one of the GCC’s highest population densities, with the majority of its 1.2m citizens living in Manama and Muharraq, meaning obtaining land for new buildings can be a challenge. At the same time, income distribution is significantly more disparate within Bahrain compared to other GCC nations, and many Bahrainis fall into the medium- and low-income segments, putting villa ownership out of reach. The apartment market is expected to become one of the fastest-growing segments in the sector over the medium term.


Although apartment rentals have shown low growth in recent years, stakeholders are predicting an uptick in both rentals and sales moving into 2015. While a short-term market turnaround is unlikely, the tenant base is expected to expand and diversify as new infrastructure and hydrocarbons projects roll out. Cluttons Bahrain reported in its “Spring 2014 Residential Market Outlook” that residential rental prices rose by 2.4% in 2013, despite negligible growth during the final quarter of the year. Residential rents expanded by 0.8% in the first quarter of 2014, led by 1.5% growth in villas, which outperformed flat growth for apartments. Apartment rents stood at an average of BD710 ($1881.50) per month as of April 2014, with Seef, Amwaj Islands and Juffair retaining their position as Manama’s priciest submarkets. Even in these markets, villas outpace apartments, with three- and four-bedroom homes on the Amwaj Islands commanding rents of up to BD1450 ($3842.) Rentals are projected to remain flat into 2015, due in part to accommodation budget cuts by the US Navy, whose personnel represent a significant proportion of the rental market in Bahrain.


Mounting challenges in obtaining plots and villas, coupled with the growing economic realities of property ownership in the kingdom, have led both the public and private sectors to shift their attention to apartment builds. A number of the government’s social and affordable housing schemes include apartment units, which are considerably more affordable than villas. Indeed, apartment developments are expected to add an additional 876 units under the government’s social housing plan, and are also included in the government’s 2800-unit housing public-private partnership (PPP) project with developer Naseej. “There is now more of an acceptance that apartment living is the only economical option,” Harry Goodson-Wickes, head of Bahrain for Cluttons, told OBG. Under its PPP with the government, Naseej will offer 202 affordable apartment units on the open market, priced between BD44,000 ($116,600) and BD84,000 ($222,600), compared to between BD96,000 ($254,400) and BD109,000 ($288,850) for its 165 planned affordable villas and townhouses. Private developers are also moving to capitalise on anticipated demand for lower-cost housing, with a number of large schemes launched or completed in recent years. “The big thing going on at the moment is sales of apartments. Schemes in Juffair and Seef have reported fantastic sales figures, so there’s a good amount of demand. Developers are starting to see a favourable market, and they want to be the first movers,” said Goodson-Wickes.


Juffair and Seef have both seen significant investment as a result of growing demand; developments at The Breeze and The Breaker in Seef added an additional 154 units to the market by the end of 2013, while heavy investment in Juffair will see significant apartment expansion in the coming years.

Following earlier success with its 400-unit Fontana Towers development, launched in Juffair in 2006, The Developers marked its return to the Bahraini market in February 2014 with the launch of its 405-unit Fontana Gardens building, which was reported to be 100% sold as of May 2014. The Developers moved to capitalise on these successes, announcing the launch of the Fontana Suites project in May 2014, the construction of which is set to finish in 2016. The BD30m ($79.5m) development comprises 378 “affordable luxury” suites.

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The Report: Bahrain 2015

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