Although it can’t beat its neighbours for sheer size, it does have the most diversified economy in the region, making it an exciting destination for foreign investors looking to expand their portfolio.
Oil and gas may still contribute over 17 per cent of its gross domestic product, but it has declined from an astonishing 56 per cent in 2000. Other major non-oil contributors to Bahrain’s economy include financial services, technology, manufacturing, construction, and of course real estate, which represents around 5.4 per cent of the national GDP.
Like the rest of the region, Bahrain’s property market was growing strongly before the COVID-19 pandemic. Investment blossomed after the formation of its Real Estate Regulatory Authority (RERA) in 2018, which set out rules and mandated licenses, particularly for off-plan developments.
Although the pandemic cause real estate investment to slow, the market has rebounded swiftly since the easing of restrictions.
Bahrain is signalling its keenness for international interest in its economy, especially its real estate sector. One thing making life easier for prospective and existing expatriate property investors in the brand-new Golden Visa, which was introduced in February 2022.
WHO IS ELIGIBLE FOR A BAHRAIN GOLDEN VISA?
Bahrain has introduced a Golden Visa scheme to attract investment to the kingdom. This ten-year residency visa is open to four categories of migrants: residents, retirees, property owners, and talented individuals from various fields of business and industry.
It is designed to make it easier for economically valuable individuals to remain resident in Bahrain, and continue contributing to its economic growth.
The visa includes the right to live and work in Bahrain, unlimited entry and exit to the country, and also residency for close family members.
As of June 2022, the Golden Visa has already been adopted by almost 2,000 expatriates.
To qualify, existing residents must have resided in Bahrain for at least five years continuously, and in that time earned an average basic monthly salary of BD 2,000 (approx. GBP 4,400/USD 5,300) or more.
Real estate investments can also qualify by holding title deeds to a property in Bahrain of a total value of BD 200,000 (approx. GBP 442,000/USD 530,000) or more. That makes the Golden Visa extraordinarily useful for investors looking to increase their holdings in Bahrain by ensuring they can remain resident in the country long-term, with a relatively low bar to entry.
Golden Visa applicants must also have valid health insurance, and remain in the country for at least 90 days a year to ensure it remains valid. Those who continue to meet the criteria can renew their visa indefinitely.
WHO IS INVESTING IN BAHRAIN?
Real estate investment in Bahrain has rebounded fast since the pandemic. Data from online real estate platform Property Finder found that the value of real estate transactions in the kingdom rose by 46 per cent to USD 2.8 billion in 2021, compared with USD 1.9 billion in 2020. In addition, there has been a 35 per cent increase in the total number of real estate transactions to 26,136 in 2021, from 19,405 transactions in 2020.
Data from CBRE, meanwhile, found that demand for office and residential properties increased in the first quarter of 2022, although retail demand declined slightly.
Bahrain has permitted 100% foreign ownership of some property developments since 2016, but in 2021 a new law completed the total liberalisation of foreign ownership restrictions in the country.
Previously, a number of commercial activities required a minimum of 51% Gulf Cooperation Council ownership, but since 2021 foreign ownership is permitted for most activities on the condition that it includes a Bahraini shareholder.
The effect was almost instant: in Q1 2021 nearly 3,000 properties were sold in Bahrain, a 51 per cent increase on 2020. The value of transactions also shot up, reaching USD 600 million. The government has credited the relaxation of ownership rules for this dramatic increase, as well as the number of affordable housing schemes coming into effect at the time, with 5,000 units per year and 40,000 units in total set to be delivered by 2022.
Foreign investment has come from all directions, in particular Saudi Arabia, Kuwait, India, and United Arab Emirates, but also from Europe.
CHALLENGES
Bahrain’s real estate sector is affected by oversupply and high vacancy rates. Efforts by the government and RERA are aimed at encouraging occupier movement and increasing the sector’s appeal to international investors to drive more momentum.
Another of RERA’s missions is to build a more transparent and sustainable real estate sector, and to that end it launched a four-year National Real Estate Plan in March 2021. It has already taken steps to improve transparency, such as by introducing a licensing scheme for all real estate developments, brokers, sales agents, and developers.
Like its Gulf neighbours, Bahrain has identified sustainable development as the key to its economic diversification, investing in technology to improve the environmental footprint of its construction and real estate sectors, and consequently add value to these projects as foreign investors show increasing interest in green investment.
Bahrain’s challenge is to do this while continuing to improve business transparency. The steps it has taken over the last few years show genuine commitment to this, improving its reputation as a stable and reliable destination for international real estate investment.
