In the space of a generation Bahrain has been transformed beyond recognition. A bustling ferry jetty that was once the only way to reach Saudi Arabia has been transformed into a financial harbour, while the five-star Gulf Hotel, built to overlook the beach in 1969, now markets itself as a downtown destination. Land reclamation offers opportunities for development stretching from the man-made islands of the $6bn Durrat Al Bahrain community in the south of the island to the $90m biscuit factory being built at Bahrain International Investment Park.

There are signs of progress across the kingdom, as Gulf Development Programme funds are used for housing, highways and infrastructure projects. Although the renewed sense of confidence is tempered by concerns that the global fall in oil prices may lead to curbs on government spending by Bahrain’s wealthy GCC neighbours, in the short term, increased spending by record numbers of Saudi visitors is helping to fuel property investment tied to hospitality and retail, while Gulf Development Programme funds are also driving the real estate sector forward.

“The challenges which exist in Dubai or Saudi do not exist in Bahrain. I am referring to a legislative, regulatory, liquidity and end user perspective,” Gagan Suri, CEO of Bahrain Bay Development, told the press. “All of these factors should be taken into account, these markets are different. So you really have to dissect each of the markets separately to come up with what are the challenges in each separately.”

Economic Impact

The real estate sector is the second largest contributor to GDP (after financial services) from the non-oil sectors. According to data from the Central Informatics Organisation, the real estate sector contributed BD453.2m ($1.19bn) to GDP at constant prices in 2014, a 3.2% increase on the 2013 total of BD439.3m ($1.16bn). It represented 4% of GDP, a figure that has fallen every year from 2009 when real estate accounted for 4.7% of total GDP at constant prices. Meanwhile, data from the Bahrain Economic Development Board shows that real estate and business activity grew 4.7% in 2014. Provisional data for the first quarter of 2015 show a modest year-on-year (y-o-y) rise of 2.3% with the sector contributing BD114.9m ($302.7m) to GDP during the period.


The rapid expansion of the country’s built area has been managed by a number of government agencies and organisations, some of which are also charged with meeting the housing needs of Bahraini citizens. The responsibility for meeting the pent-up demand for housing that is both affordable and in keeping with traditional Bahrain home life lies with the Ministry of Housing (MoH).

Foreign Ownership Of Property

Bahrain is very different from many of its GCC neighbours in its rules on foreign ownership of property. “Bahrain has always been an attractive country for investors from other Gulf countries, because you do not have to be Bahraini to purchase freehold property and there is no limit set on how much land you can buy,” Hassan Ebrahim Kamal, chairman of the properties committee at the Bahrain Chamber of Commerce and Industry, told OBG. Although the transactions may be limited to certain zones, a new law passed in 2013 set a flat 2% fee on all property sales, regardless of purchase price. “In addition, all of the documentation is very clear and transparent with property purchases,” Kamal told OBG. “You receive a signed document, with the Royal seal on the front and official stamps inside, which shows the exact location of the property on a map, the names of the vendor and buyer and the names of the owners of the other properties in the area. This is one of the clearest property documents you will see anywhere in the world.”

Sales Figures

Although the final agreed sale price for individual properties is not published, the Survey and Land Registration Bureau (SLRB) does give details of the overall volume of sales in the market, and shows how much property has been purchased by Bahrainis, citizens from Gulf states and other international buyers. SLRB data comparing the first half of 2015 with the same period in 2014 shows a fall in real estate transactions from BD722.7m ($1.9bn) to BD687.3m ($1.8bn). The drop was most pronounced among buyers from the Gulf, which saw a 31% decrease y-o-y. They bought BD46m ($121.2m) worth of property in 2015, compared to BD67m ($176.5m) in 2014, while buyers from other countries spent BD29.9m ($78.8m) in 2015, compared to BD36m ($94.8m) in 2014. Bahrainis accounted for 89% of the market in 2015, spending BD611.3m ($1.61bn), compared to BD619.7m ($1.63bn) in 2014.

SLRB officials suggested the earlier start of Ramadan in 2015 could have had some impact on sales for the period. The figures also follow a pronounced expansion in 2014, with total property sales for the year up by 50% compared to 2013, climbing from BD862m ($2.3bn) to BD1.3bn ($3.4bn). Property purchases by GCC citizens doubled over the period, from BD53.4m ($140.7m) to BD108.1m ($284.8m), while there was a 29% increase in sales to international buyers, up from BD50.8m ($133.8m) to BD65.5m ($172.6m). Bahrainis bought 87% of the property sold in 2014, investing more than a billion dinars in their home market, representing a 48% increase from BD757.7m ($2bn) in 2013 to over BD1.1bn ($2.9bn). The very fact that Bahrainis spent that much in their own property market sends a positive message to the wider investment community.

Educational Efforts

Meanwhile, in order to fill the gaps in property development education, Bahrain Polytechnic is currently developing the first property development degree in the kingdom with Bahrain Mumtalakat Holding Company. The programme will provide students with the skills required to further develop their careers in the real estate industry.

Stalled Projects

Another factor that has dampened investment in real estate in Bahrain is the legacy of the 2009 property bubble. The sight of unfinished building projects, including Villamar, has presented encourage inward investment in recent years. In 2014 a new law was passed showing the government was trying to push some of these projects to completion. A judicial committee consisting of two industry experts and three judges has been formed to review ways of moving forward schemes (see analysis). The new legislation stipulates that 20% of funding for any new private development must be placed in an escrow account until the construction is completed. Developers caught selling off-plan without explicit permission can face up to 12 months in prison and a BD10,000 ($26,300) fine. As of January 2016 the new regulations had not yet been implemented.

Homes For Citizens

King Hamad bin Isa Al Khalifa has issued a directive to build 40,000 homes, and the MoH has committed to ensuring 25,000 homes are provided within five years. However, based on ongoing projects, high demand for housing will remain.

In June 2015 Sheikh Salman bin Hamad Al Khalifa, the crown prince, laid the foundation stone of the East Sitra housing project, which will provide 5000 housing units as well as other community amenities. The project has been the beneficiary of funding from the UAE under the Gulf Development Programme.

Another ongoing project under the fund is in East Hidd, where Kuwait is financing the work. Atkins Group is the master planner for the scheme, which includes homes, apartment blocks, schools, mosques and a petrol station. The first units are under construction. The homes are being built by Nass Contracting. “We are building 483 villas in East Hidd,” David Anthony, general manager of Nass Contracting, told OBG. “The project has been built with finance from the Kuwait Fund, and when members of the fund visited in August 2015 they were very impressed by the quality of the work and the speed of progress.”

In March 2015 the MoH signed an agreement with the private developer of the Diyar Al Muharraq housing scheme to buy 3100 residential units for BD276m ($727.1m) under the Social Housing Programme. A further public-private partnership signed with the development company Naseej will see 2800 affordable and social units constructed.

Another developer building affordable homes with a maximum market value of BD120,000 ($316,000) is Manara Developments. “Wahat Al Muharraq is a social housing scheme of ours consisting of 210 villas,” Mohammed Abdulaziz Ali, director of sales and marketing at the company, told OBG. “We have already handed 50 properties over and the rest have been sold. We also have the Jubilee Gardens development of 90-100 villas, which is sold out. A typical property of this sort might be 160 sq metres with three beds, plus a maid’s room, and two parking spaces.”

A BD750m ($2bn) Social Housing Finance Fund was created in 2013 as a joint venture between the MoH and a consortium of banks, including Eskan Bank, Ahli United Bank, Bahrain Islamic Bank, Kuwait Finance House and Al Salam Bank. This allows qualifying middle- to low-income citizens to borrow up to BD81,000 ($213,000) from participating banks towards the value of a BD90,000 ($237,000) property, with monthly repayments capped at 25% of the buyer’s total monthly income. The remainder is covered by government subsidies, which are reduced as the buyer’s salary increases. State-owned Eskan Bank acts as the MoH’s financial facilitator for affordable housing. For its projects, the bank offers a scheme, which guarantees buy-back options to purchasers, allowing them to sell their apartments in 7-10 years at market prices less a 10% discount and move up to more enhanced residences such as villas.

Flats Or Villas

Traditionally, Bahraini villas were designed for multiple generations or branches of a family around a central courtyard. But the space to allow this pattern of house building is running out. “Bahrainis have always chosen to live in villas instead of apartments because villas allowed them to expand their living quarters as their families grew and provided them the privacy that they require,” Mark Haikal, head of investments at Naseej, told OBG. “This reduced demand for apartments also constrained the secondary market for these units. Developers here need to find more creative solutions to living requirements and to find ways of adapting living spaces to the requirements of Bahraini families; ideas such as duplexes with private entrances.”

Manara Developments is building two apartment blocks, a three-storey development in Muharraq and a four-storey block in Seef, in the hope that younger Bahrainis may be tempted to buy. “We are trying to persuade younger people to live in apartments,” Ali told OBG. Meanwhile, Kamal is confident a change in attitude will come. “I believe younger generations of Bahrainis will move from villas to flats,” Kamal told OBG. “It is a good idea, because in a flat you have lower running costs and a young man and his wife who are both working can afford so much more if they live in this kind of accommodation. I think that we should help people to make this move.”

Residential Trends

Government support for these affordable housing schemes has helped to breathe new life into the residential housing market.

While estate agency Cluttons “Spring 2015 Property Outlook” for Bahrain suggests falling oil prices may subdue expatriate demand, CBRE’s “Bahrain Market View” for the first and second quarters of 2015 is more upbeat. CBRE reported that the fourth tower of Dar Al Salam Port, a Bin Faqeeh development, was completed with approximately 70% occupancy in early 2015 with a mixture of owner-occupiers and tenants, while Spring Hills, a Royal Ambassador property in Juffair, had achieved 80% occupancy at the end of the first quarter. Stronger demand from GCC nationals looking for family homes was thought to be behind the success of apartment and villa developments at Durrat Marina, with 80% sold to Bahrainis.

Cluttons reported that residential rental prices across Manama had risen by 2.2% in 2014, and CBRE’s quarterly reports say occupancy levels in popular residential compound areas to the north-west of Manama have remained high, though rents have remained steady, both there and in areas such as Juffair, Seef, Reef Island and Amwaj Islands.

Retail Sector

Bayside shopping malls in Manama and Muharraq are among the developments currently under way in the retail sector. In the first quarter of 2015 the 77,000-sq-metre Muharraq Seef Mall opened on Arad Corniche, with a gross leasable area (GLA) of 30,000 sq metres and anchored by a Geant supermarket. The Avenues is taking shape along the Manama Corniche by Bahrain Bay and will be a single-storey covered shopping street opening onto seaside parks that will be served by water taxis. With GLA of 55,000 sq metres, the Dragon City Mall on Diyar Al Muharraq focuses on Chinese goods and brands. The mall,opened in December 2015 (see Retail chapter).


Another sector aiming to capitalise on visitors is hospitality, with the hotels and restaurants sector reporting annual growth of 9.9% in 2014, according to the Economic Development Board (see Tourism chapter). Many of the hotels are aiming at the luxury end of the market. The ART Rotana opened on Amwaj Islands in early 2015 and another Rotana hotel in downtown Manama due to be open for business from March 2016. The Four Seasons in the heart of Bahrain Bay opened its doors at the start of 2015, while work continues on the 180-room One&Only Royal Mirage, along the shore from the Ritz Carlton. Emaar Hospitality Group is working with Eagle Hills to bring The Address and Vida chains to Bahrain. Continued development of five-star hotels has created a gap in the mid-range segment. “Hospitality is leading the real estate sector, and there is still room for more decent three- and four-star hotels in Bahrain,” Sheikh Mohammed bin Abdulrahman Al Khalifa, chairman of International Trading & Investment Company, said.

Industrial & Warehousing

New projects are also under way in the industrial sector. Manara Developments is constructing a 610,000-sq-metres business park called Investment Gateway Bahrain on land it has reclaimed from the sea at a cost of $200m. “The land is being parcelled up and sold for B3 commercial development, commercial showrooms and light industry,” Manama Development Company’s Ali said. “It is freehold and so buyers will not have to make community payments. We have sold about 75% of the plots and it will be fully sold by the end of 2016. Most of the buyers are from Bahrain, but we have had some from Saudi Arabia and also one Indian company.”

Office Space

Office rents have remained flat and the sector has become fragmented. CBRE reports that grade-A office developments with high-end facilities such as the World Trade Centre and Almoayyed Tower are enjoying reasonable occupancy levels. Bahrain is not alone in seeing a decline in asking prices for office space. When compared to other parts of the GCC, the availability and price of commercial space are compelling selling points for Bahrain for any service company looking for office accommodation in the region. This is underlined when data from CBRE’s “Marketview Q2 2015” for Bahrain is compared to UAE figures from Asteco’s “UAE Property Review”.

With monthly rents per sq metre converted into Bahraini dinar, office space in Dubai International Finance Centre (DIFC) costs approximately BD22 ($58), while prime fitted space in Abu Dhabi costs BD13 ($34). The average prime rate in Seef comes in significantly lower at BD8 ($21). DIFC’s asking prices have declined 55% since 2008, while Abu Dhabi’s are down 41%, according to Asteco. Seef’s rental prices have fallen by 38% since 2009, as per CBRE figures.

Regional Comparison

When it comes to residential accommodation for staff, another concern for external companies looking for a regional base, Bahrain is likewise a comparatively affordable option. A two-bed flat in Juffair costs BD700 ($1840) per month, compared to BD1142 ($3010) in Dubai’s Jumeirah Lake Towers and BD1250 ($3290) in Abu Dhabi centre, while a four-bed villa in Sar or Janabiya can be had for BD800 ($2100) per month compared to BD1840 ($4800) at Dubai’s Arabian Ranches.

“Bahrain is not Dubai and in some ways we should not worry about competing with it,” said Mona Y Almoayyed, managing director of Y K Almoayyed and Sons. “If companies settle here, their employees can enjoy a quieter life and cheaper housing. We are ideally placed for companies who are interested in selling into Saudi Arabia.” Bahrain also offers a higher standard of living and lifestyle based on the HSBC “Expat Explorer Report” in 2015.


The projects in both hospitality and retail bode well for real estate in Bahrain, and indicate that the sector is picking up speed. New legislation has created more robust rules and the establishment of a committee to kick-start stalled projects should help boost confidence. Meanwhile, the government’s support for affordable housing schemes is bringing increased activity into the residential housing market.