Having entered the Covid-19 pandemic with a relatively high level of economic diversification, the resulting drops in business and tourism activity pushed Bahrain’s vacancy rates up, which in turn put pressure on building owners. Despite the oversupply seen in the kingdom’s residential and commercial spaces, a government-led response and legislative reforms successfully accelerated the economic rebound that followed the pandemic-related downturn in 2020.
New Authority
Since the Real Estate Regulatory Authority (RERA) commenced operations in March 2018, the kingdom has acknowledged the importance of real estate as a catalyst for non-oil growth. RERA’s primary objective since its inception has been to protect buyers and end-users, for example by requiring a licence for off-plan developments. To further boost Bahrain’s real estate market, in March 2021 the authorities launched the National Real Estate Plan 2021-24, a strategy to enhance the industry’s value chain, implement international best practices, support developers and promote the sector globally. Together with favourable technology-focused legislation, a 10-year Golden Residency Visa programme and 100% foreign ownership, the plan seeks to modernise Bahrain’s real estate industry while raising its international profile.
Spearheaded by RERA, the plan has five pillars, 17 work priorities and 21 initiatives to be executed over the four-year period. These are centred on developing a sustainable real estate investment ecosystem; encouraging smart and environmentally friendly projects; and fast-tracking investment by streamlining government procedures. To fulfil its targets, in August 2022 Bahrain launched the Government Land Investment Platform, which showcases government land available for investment. This followed the July 2021 launch of the National Real Estate Databank project, a joint undertaking between RERA and the Information and eGovernment Authority to provide investors and developers with data on performance and trends in the local real estate market. The government is not only pursuing the modernisation of its own procedures to improve efficiency, but also to attract international companies specialising in real estate technology. The aim is to make the sector more transparent and offer more investment opportunities, as well as introduce provisions to encourage licensees to use modern technology. Similarly, RERA has forged a partnership with Bahrain FinTech Bay to boost the kingdom’s property technology capabilities, and leverage blockchain and artificial intelligence in equity and debt crowdfunding platforms. This should further cement Bahrain’s position as a centre for real estate information technology.
Regulatory Efforts
Bahrain’s ongoing legal evolution reached another milestone with Decree Law 41 in November 2022, which changed provisions to enhance RERA’s regulatory muscle and better define the role of developers in managing joint property common areas. The amendments increased the fines applied by RERA, and strengthened its ability to undertake a transparent review and adjustment of annual subscriptions.
Similarly, in a major departure from Law No. 27 of 2017 – which Decree Law 41 addresses – developers can manage and maintain common areas in major projects, a role previously reserved for owner associations. These amendments seek to balance the interests of owners and developers by instilling a high level of consumer confidence for soon-to-be-owners and empowering developers to protect their brand equity.
Another key reform for strengthening ownership rights and minimising disputes has been allowing judges to deal with properties themselves in inheritance disagreements, not just the plots of land on which they sit. These changes to the 1994 Land Division Law, issued via royal decree in November 2022, empower real estate planning authorities, as judges need a written assessment from the relevant authorities to issue a verdict. Ultimately, this seeks to ensure fairer outcomes for litigants and better practices in urban development.
Read More from OBG
