Bahrain ends 2022 with consistent performance across real estate asset classes amidst strong economic growth, says CBRE

On the back of strong GDP growth, high oil prices and new fiscal reforms, Bahrain’s real estate transaction volumes continued to improve throughout the end of 2022, reaching 5,659 transactions in Q4 and ending the year with a total of 21,603. This marks a full-year increase of 0.7% year-on-year compared to 2021, and a jump of 3.2% from Q3.

Looking at Bahrain’s office sector, CBRE data shows that Grade A & B office rental rates stabilised in 2022, at a monthly average of BD5.250 per square metre, having recorded a decline in the previous year. With supply continuing to outpace demand and key pipeline projects becoming operational in the next twelve months, it is anticipated that rental rates will continue to face downward pressure. Amongst the projects introduced at Cityscape Bahrain, key commercial developments included the office component of Onyx Skyview, which is set to provide 40 offices. There are limited strata title products available in the office sector and this project marks the first in Bahrain Bay.

In the residential sector, average quoted apartment rental rates fell marginally in Q4 2022, down 0.4% from the previous quarter. In terms of sales, average rates declined by 1.3% in the fourth quarter, following a brief increase in Q3 2022. Average quoted villa rental rates slightly increased in Q4 2022, with rates increasing by 1.5% from the previous quarter, while quoted sales rates fell by 0.8% over the same period. Overall for 2022, villa rental rates averaged BD923 per month across all villa types and governorates in the mid- to high-income market segment. Bahrain has seen the launch of the latest government-led housing programme, which will provide 19,000 affordable housing units at a total value of BD1bn. The launch of the first phase includes 771 units (both villas and apartments) in Salman Town and Khalifa Town. A number of new projects were also introduced at Cityscape Bahrain, including Onyx Skyview in Bahrain Bay (mixed-use with a residential component), Strata at Dilmunia, and Ras Hayan Village in Askar (mixed use with villas and apartments).

Within the hospitality sector, data shows that hotel occupancy in Manama increased by 6.8 percentage points compared to 2021, and one percentage point compared to Q3 2022. Whilst ADRs increased year-on-year by 22.1% compared to 2021, they fell by 1.2% compared to Q3 2022. As a result, RevPARs increased by 41.2% compared to 2021 and 2.4% compared to Q3 2022. The last quarter of the year saw the opening of Exhibition World Bahrain, a ten-hall exhibition/convention centre with a total area of 95,000m², making it the largest centre of its kind in the region. Built at an approximate cost of BHD84 million, the launch of the venue forms part of the government’s strategy to diversify the economy, focusing on industries such as MICE, events, entertainment and sport. Q4 also witnessed the return of cruise ships for the first time since the COVID-19 pandemic, bringing more than 11,000 tourists over just three days in December.

In the retail sector, we have seen positive average occupancy growth in H2 2022 across our set of tracked malls in Bahrain. The average occupancy rate has increased by an average of 2.9 percentage points compared to H1 2022, now sitting at 66.0%. Overall, occupancy rates increased in a majority of the tracked shopping centres, with Dragon City and the Avenues recording the highest occupancy rates. Positive occupancy growth is backed by current shopping trends, with CBRE witnessing an increase in preference for in-store shopping compared to e-commerce options. Our data shows that over 66% of people now prefer to shop in-store, compared to 61% in 2021. This may be attributed to the lifting of pandemic restrictions during this time, and a subsequent desire for in-person experiences. Additionally, while online shopping options in Bahrain have increased in recent years, such as for groceries, the Bahraini market remains underserved in terms of online shopping platforms.

Heather Longden, Director – Advisory & Transactions, at CBRE in Bahrain comments: “Bahrain concluded 2022 recording steady recovery in real estate transaction volumes. Performance across asset classes was consistent, with the commercial office sector rental rates remaining stable but facing further pressure, as a number of new landmark developments are scheduled to add to the existing stock in the next 12 months. In the retail sector, average headline rental rates have also seen no change year-on-year, and we’ve tracked a marginal increase in occupancy rates across shopping centres surveyed by CBRE.”