The market, segmented into residential, commercial, and industrial sectors, has managed to minimize the impact of the pandemic and is projected for growth.
Underpinning Bahrain's economic transformation is the strategic framework aimed at diversifying the nation's hydrocarbon-heavy economy. The government's "five-pillar" economic transformation programme, introduced in November 2021, has sought to align Bahrain with international best practice through changes in labor market, logistics, and tourism funding. In an effort to balance the national budget, the government has raised VAT by 10% and invested heavily in industrial projects and infrastructure. This has insulated Bahrain's economy from oil price fluctuations while attracting international investment interest.
The real estate market, gradually recovering from the pandemic, is seeing several major development projects resume. The value of real estate transactions rose slightly to USD 2.8 billion at the end of 2022. This is indicative of the sector's ability to maintain pre-pandemic levels, although it signals the need for further efforts to realize Bahrain's strategic vision for real estate and property development.
Bahrain has made its real estate market more transparent and accessible, especially to international property buyers and high net worth individuals. The Golden Visa residency scheme, launched in 2022, is one such initiative, overhauling immigration laws and promoting international investment. Other regulatory and legislative measures aim to improve investor confidence.
Luxury real estate in Bahrain is expected to register a CAGR of over 5% by 2027. High-end residential areas such as Saar and Budaiya are witnessing price appreciation, largely driven by Kuwaiti and Saudi investors. Meanwhile, demand for high-quality office space has surged, with forecasts suggesting a CAGR of over 8% from 2022 to 2027 for flexible office space.
2023 is expected to see greater adoption of PropTech, which uses technologies like AI, IoT, and VR to make data-driven decisions about real estate and improve efficiency and sustainability. Bahrain's National Real Estate Plan 2021–2024 aims to foster an integrated ecosystem to promote the use of PropTech, thus diversifying the economy and strengthening the real estate sector.
In conclusion, Bahrain's real estate market, backed by legislative improvements and foreign investment initiatives, has remained stable and promising despite global economic uncertainties. The real estate sector is set to play a significant role in the country's economic growth and diversification.
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