Interview: Ahmed Alammadi, CEO, Diyar Al Muharraq
Which factors are driving the recent growth in Bahrain’s residential property market?
AHMED ALAMMADI: Bahrain’s real estate sector benefits from its competitive advantages and supply, leading to substantial demand. The sector has demonstrated consistent growth, with a steady increase in the number of real estate transactions observed each year. Notably, in the fourth quarter of 2022 there was year-on-year growth of 0.7%.
Given its size and limited space, it is important that Bahrain maximises the potential of its available land. The National Real Estate Plan 2021-24 (NREP) from the Real Estate Regulatory Authority highlights the importance of creating smart, environmentally friendly cities that foster social sustainability. The sector’s growth has been steady and linear, supported by both domestic and international interest. While the majority of buyers are locals, there are also opportunities for foreigners to invest – not only in Bahrain, but also in regional markets, especially considering recent projects in Saudi Arabia and the UAE. Attractive features such as waterfront properties, as well as the increasing demand for affordable and middle-class housing, create a diverse market with steady growth potential.
What types of risk does the real estate sector face in the short to medium term?
ALAMMADI: Risk is an inherent aspect of investing in any sector, including real estate. However, risks can be managed by assessing the supply and demand for different properties, being responsive to changes in the demand for them, finding creative solutions to construction and payment options, and strategically designing properties that meet the evolving needs of end users.
Developers are shifting their focus in accordance with changes in market preference. There is still appetite for larger properties such as villas, single-family homes and warehouses because of the Covid-19 pandemic. The pandemic changed the behaviour of end users, who now prioritise having their own backyard, home office and study areas for children. In order to meet these changing requirements, developers should focus on building properties that provide these features.
A hike in benchmark interest rates in step with the US Federal Reserve poses a potential risk, but creative construction, payment and real estate options can help lessen this likelihood.
How can the sector support the economy and help deliver Bahrain Economic Vision 2030?
ALAMMADI: We have seen a significant rise in the non-oil sector’s contribution to GDP, including from real estate and tourism. This is in line with Bahrain Economic Vision 2030, as real estate companies play a role in contributing to non-oil GDP and the overall economy. Moreover, the NREP adds value for local and foreign developers, as well as investors and end users. These regulations provide a sense of security and ease for all parties involved.
In what ways does Bahrain’s residential real estate segment offer distinct opportunities for international investors interested in the GCC?
ALAMMADI: Everyone has easy access to government representatives, including developers, vendors, customers and investors. Developers and investors, in particular, benefit from the government regulations that have been set in place, while the highly skilled workforce helps ensure the success of the investment. Moreover, the community is eager to assist visitors from the moment they arrive at the airport; this is exemplified by the enthusiasm that surrounds the Formula 1 race that has been held in Bahrain annually since 2004. Taken together, these elements create a favourable investment climate.
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