Real estate market conditions in Bahrain have been affected by a rise in the number of luxury apartments entering the market, and falling rental prices. Landlords are even converting some apartments into office spaces, creating additional downward pressure on the commercial real estate front. See the following article from Property Wire for more on this.
A high number of luxury apartments entering the market in Bahrain is bringing down rents and prompting some landlords to convert middle quality units into office space, according to a new report.
This is causing concern as they are not laid out for commercial use and do not have enough parking, the report from property consultants CB Richard Ellis, suggests.
The country’s zoning laws need to be overhauled or whole areas could become ‘one dimensional’, leading to greater need for car transportation on the island, the CBRE report warns.
Overall it reports that the third quarter of 2009 was fairly static in the residential sector with little movement in prices, rental rates or transaction activity.
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But a significant number of new apartments could affect the market unless new jobs are created.
‘In Dubai for example, many thousands of units remained unoccupied after completion and this may be the case in Bahrain, particularly with the luxury apartments soon to be completed in Juffair and the north coast of Bahrain,’ the CBRE report says.
If that happens, a large proportion of new apartments may never actually enter the supply chain, and a housing shortage could quickly revive the sales market if the cost of mortgages comes down, it adds.
The Bahraini government has pledged to build 14,000 low cost housing units by the end of 2010. Out of those, 4,000 are scheduled to be delivered by the end of this year.
The report also shows that the commercial sector is experiencing tough times.
Office rents in Bahrain have declined by around 20% this year, according to the report.
The fall increased during the summer months and Ramadan and inquiries have declined significantly between the third and the first quarter, the real estate consultancy said.
‘Banks are typically contracting rather than expanding and their spatial requirements are therefore diminished at least in the short term,’ analysts point out.
This article has been republished from Property Wire. You can also view this article at Property Wire, an international real estate news site.