Bahrain is mounting a coordinated cross-government response to help revitalise the economy in the wake of the Covid-19 pandemic which has positive implications for the county’s real estate sector.
In October 2021 the kingdom announced an Economic Recovery Plan comprising a series of five-year strategies targeting industry, logistics, tourism, financial services, the digital economy and other strategic projects of interest to real estate investors. The goal is to enable $30bn of investment and attract $2.5bn in foreign direct investment (FDI) by 2023, underpinned by annual growth of 5% in non-oil sectors in 2022.
The plans are supported by regulatory reforms, including a new 10-year Golden Residency Visa, to attract foreign investment and in-demand skills. Previously, foreign workers were subject to precarious two-year residency terms, save those who hold shares in local companies or property in designated zones.
Foreigners are also eligible for a five-year self-sponsored visa which can be renewed if they purchase a freehold property in one of 10 designated areas, including Ahmed Al Fateh, Hoora, Bu Ghazal, Seef, Northern Manama, Durrat Al Bahrain, Amwaj Islands and Dannat Hawar, irrespective of whether they are residents of Bahrain or live overseas. New districts are expected to be added to the list as the country pursues the goals of Bahrain Economic Vision 2030.
New Visa Features
To qualify for the Golden Visa, applicants must have resided in Bahrain for over five years and earned a monthly base salary of at least BD2000 ($5320). Owners of properties valued at more than BD200,000 ($532,000) in total, retirees with a monthly income of more than BD4000 ($10,600), and highly skilled individuals such as academics, artists, athletes, entrepreneurs, health care workers and scientists are also eligible to apply.
The property ownership threshold is relatively low and will likely tempt those with existing assets valued less than the required total to consider broadening their holdings. The potential to purchase freehold properties in designated areas allows both existing and new market participants to benefit.
The Golden Visa is therefore likely to have a broadbased impact on real estate investment in the kingdom. It would offer an extra level of assurance to a wider talent pool of foreign nationals who are considering a permanent move to Bahrain. Additionally, a more extensive base of wealthy individuals, including retirees, may decide to invest in commercial, residential and industrial projects which are in the pipeline.
Digital skills, in particular, will be in high demand as the government continues a push towards paperless operations. The government launched a digital residency service in March 2020 which allows easy viewing of residency data via a QR code and can be downloaded on a mobile phone or saved as an email.
Opening Doors
Government agencies, including accredited business incubators, are responsible for approving talent-based Golden Visa applicants. The visa also grants holders the right to reside and work in Bahrain, hire domestic assistance and obtain visas for dependents. Renewals will occur every 10 years provided candidates meet the requirements and have spent at least 90 days in Bahrain in a 12-month period.
The visa guarantees foreign nationals’ right to work and sponsor visas for immediate family members. This feature could be attractive to retirees and other existing long-term visa holders who were previously ineligible for work authorisation or the ability to sponsor visas for dependents. This provision is expected to increase the number of wealthy individuals seeking primary or secondary residence in Bahrain when they reach the end of their careers.
The programme launch comes at an opportune moment after visa renewals plummeted in 2020-2021 due to the pandemic. Some 531,447 foreign nationals were working in Bahrain as of the first quarter of 2021, accounting for more than three-quarters of the workforce. Nonetheless, the percentage of this population eligible to qualify for the visa will be substantially lower given the high proportion of workers employed in low-wage construction roles.
Regional Race
There is a high degree of competition across the region to attract highly skilled foreign workers and the necessary investment to diversify GCC countries’ economies away from reliance on fossil fuels.
Qatar, the UAE, Saudi Arabia and Oman have all announced similar investment-related residency pathways. However, those visas’ eligibility criteria are often more onerous. Qatar’s version enables permanent residence; however, it carries a quota, requires 20 years of consecutive residency and fluency in Arabic.
The Saudi version costs $26,700 per year, or more than $200,000 for a permanent stay, while the application fee for Bahrain’s Golden Visa is less than $1000. Oman’s investment residency programme is more explicitly tied to applicants making specific investments in the economy. In keeping with its history as a relatively open economy, Bahrain has positioned its new visa scheme as a viable alternative.
Bahrain’s ongoing efforts to diversify its trade partners and economic drivers should also help to make it an attractive market for prospective residents and investors. Finance and insurance contributed more to GDP in the first quarter of 2022 than oil and gas, while hotels, restaurants, transport, communication and the finance industry were the fastest-growing sectors. Bahrain remains highly competitive for fastgrowth opportunities in manufacturing, health care, and creative and technology industries such as cloud computing, equipment development and gaming.
Notably, Bahrain permits 100% foreign ownership in most sectors, without needing a local partner. In 2020 Bahrain ranked first in the GCC for inward FDI stock relative to GDP, at 91.3%, following a compound annual FDI growth rate of 4% from 2016 to 2020. Though Golden Visa holders would no longer be classified as foreign, the FDI influx suggests a keen interest in and familiarity with Bahrain that could yield a steady pipeline of residency applicants.
The visa’s objective of attracting highly skilled talent also dovetails with Bahrain’s recently launched National Real Estate Plan (NREP) 2021-24. The first pillar of the plan aims to raise the sector’s innovation quotient, focusing on related digital technologies. This presents a pathway for developers and professional teams with a focus on high-tech operations to enter Bahrain and share skills with their domestic counterparts. The fourth pillar of the NREP is linked to sustainability, particularly in integrated urban developments, which will require expertise in fields such as architecture, construction, engineering and materials science, among other areas.
Competitive Advantages
The Golden Visa should establish Bahrain as a centre for regional real estate services. The programme provides the country with a talent-led edge for capabilities in property management, digitalisation, valuation and transaction advisory services, project management and general funding.
As a case in point, Bahrain’s Real Estate Regulatory Authority (RERA) and Bahrain Fintech Bay, designated locations for financial sector growth and trade under the Economic Recovery Plan, are partnering to develop a property technology acceleration programme. As another example, multinational financial services company Citi launched a global technology centre at its Bahrain offices in September 2021. As the first centre of its kind in the region, it aims to employ 1000 coders over the next decade.
The national rejuvenation drive is already stoking a revival in the real estate market. Local real estate transaction value rose by 46% in 2021 to $2.8bn, according to Bahrain’s Survey and Land Registration Bureau. Industrial and real estate investment is expected to be catalysed by infrastructure projects which include a plan to create five new cities; a tourist resort in Al Jazayer; a 4000-person capacity convention centre, several industrial zones, a health complex including academic and medical facilities at King Abdullah Medical City; an international sports city; and groundbreaking for 50,000 new housing units.
The NREP also calls for continued reform, including the launch of a national database of real estate projects, and a one-stop portal to host interactions between financial stakeholders and the government. Incentives are poised to attract more developers to the kingdom. Transparency is another key theme, requiring full disclosure of investors’ rights, obligations and restrictions in all new sales contracts, which should provide additional reassurances.
Similarly, in October 2019 RERA took steps to calibrate licensing requirements for real estate appraisers which brought the Bahraini market in line with international best practices, thereby further improving market stability. Given that the RERA was formed in March 2018, the Golden Visa will likely accelerate latent demand for Bahraini real estate which could not materialise due to global Covid-19 pandemic restrictions.
Read More from OBG
