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Bahrain Real Estate Report Q1 2011
Business Monitor International, Dec 2010, Pages: 63
Bahrain Real Estate Report provides industry professionals and strategists, corporate analysts, real estate associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Bahrain's Real Estate industry.
In the residential sector, demand for social and affordable housing in Bahrain has escalated and looks set to worsen, in the absence of adequate supply. The need for social housing has now reached approximately 53,000 households, and is growing by 3,000-4,000 units per annum. Unfortunately, developers focused on building luxury apartments leading up to the global downturn in 2008. With a large number of projects still under development, the oversupply of this stock will worsen.
Similarly, there is an oversupply of virtually all kinds of commercial real estate, which will continue to worsen due to continuing projects. Given the subdued outlook for the overall economy, the glut is likely to persist for some time.
Yields have been moving sideways in the industrial sub-sectors, and in the office sub-sectors away from Manama. Elsewhere, they have risen. Capital values have fallen dramatically relative to rental rates, which have also been falling, but at a lower rate. Investors now view real estate as a moderately risky investment from which returns come more in the form of income rather than capital gains. We anticipate a gradual fall in yields over the next four years.
In the economy, our real GDP growth forecasts for Bahrain remain largely unchanged from last quarter, with growth expected to remain sluggish in the short to medium term as the country makes a slow recovery from the recent downturn. However, Bahrain is moving towards an even heavier reliance on the energy sector than already exists, thereby exacerbating its vulnerability to changes in global oil prices.
The outlook for oil prices remains highly uncertain, due to the world economy’s patchy recovery from
economic turmoil.
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