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Everything you need to know is included in our Bahrain Property Pack
Are you thinking of investing in real estate in Bahrain? Are you questioning if it's a good time to invest?
When it comes to market timing, everyone has their own opinion Your Bahraini colleague may suggest that it's currently a good time to buy property, but your friend residing in Manama might suggest waiting for a couple more months.
At SandsOfWealth, when we create articles or update our pack of documents related to the real estate market in Bahrain, we prioritize evidence-based work, relying on reliable data and statistics rather than personal opinions or rumors.
After thoroughly analyzing official reports and statistics available on government websites, we have gathered solid information in a database. Here are our findings that can assist you in determining whether it's the right time to invest in real estate in Bahrain.
Enjoy your reading!
How is the property market in Bahrain now?
Bahrain is, nowadays, a relatively stable country
Neutral
If you want to invest in properties, prioritize stability as it ensures a predictable and reliable investment environment. It is an information you need as a foreigner buying a property in Bahrain.
Currently, Bahrain is somewhat stable as a country. The last Fragile State Index reported for this country is 66.6, which is a decent number.
Bahrain has a well-developed infrastructure and a strong economy, which has helped to ensure its stability. Additionally, Bahrain has a pro-Western foreign policy, which has earned it the support of major international powers and helped to ensure its stability.
We should now evaluate more data to see if the timing is right to buy property in this country.
Bahrain is on track for significant expansion
Positive
To figure out if it's the right time to buy a property, start by checking how well the country's economy is doing.
In accordance with IMF projections, Bahrain is set to conclude 2023 with a growth rate of 3%, which affirms the country's positive direction. Concerning 2024, the consensus estimate is 3.8%.
Besides that, the economy will keep growing since Bahrain's economy is expected to increase by 14.2% during the next 5 years, resulting in an average GDP growth rate of 2.8%.
The expected sustainable growth rate in Bahrain is a good thing for someone who wants to invest in real estate in this country because it indicates that the economy is growing steadily and that real estate prices are likely to increase over time, providing a good return on investment.
However, GDP growth is not the only metric to look at.
Bahraini business owners are way more optimistic regarding market conditions
Positive
GDP growth is relevant, but may not capture business community's property market expectations. Thankfully, in Bahrain there is an official metric that is consistently updated. It's not the case for every country, so we're lucky.
The metric called the Business Consumer Index (BCI) gauges business leaders' confidence in the current and future economic conditions, relying on surveys and assessments.
The most recent data published by The Global Economy shows that the Business Confidence Index stands at 28 for Bahrain.
This is an impressive score. It's not surprising as Bahrain's economy stands out due to its successful diversification efforts, moving away from oil dependency and focusing on sectors such as finance, tourism, and manufacturing. Additionally, its strategic location and excellent connectivity make it an attractive business hub (and business owners like that !), serving as a gateway to regional markets in the Middle East, Asia, and Africa.
That's highly promising and, looking at the data, we can see that the trend is showing an upward progression: the BCI score, 12 months ago, registered at 10.
Strong business confidence among local business owners in Bahrain can have positive implications for property investors. It indicates that local businesses are optimistic about the future prospects of the economy, which can lead to increased job opportunities and income growth. This, in turn, can drive up the demand for properties, making it a favorable environment for property investors looking to generate rental income or capitalize on property appreciation.
Bahrain's population is growing and getting richer
Positive
When you're looking to buy real estate, population growth and GDP per capita deserve careful consideration because:
- a growing population means more people needing homes
- a higher GDP per person means people have more money to spend on housing (which can lead to increased property value over time)
In Bahrain, the average GDP per capita has changed by 6.0% over the last 5 years. It's a good performance. Furthermore, the Bahraini population is growing (+14% in 5 years).
This means that, if you purchase a sea view apartment in Manama and rent it out, you will find that each year, you'll attract more tenants with sufficient funds to cover the rent.
If you're considering purchasing and renting it out, this trend is a good thing. Then, there might be a rise in rental demand in Bahraini cities like Manama, Muharraq, or Riffa in 2024.
Rental yields are exceptional in Bahrain
Positive
If you want to assess the earning potential of a property investment, focus on the expected rental yields.
Rental yield is the percentage of the property's value that you can expect to earn in rental income each year.
According to Numbeo, rental properties in Bahrain offer gross rental yields ranging from 8.3% and 11.0%. You can find a more detailed analysis (by property and areas) in our pack of documents related to the real estate market in Bahrain.
It ranks among the top in the world.
Everything you need to know is included in our Bahrain Property Pack
In Bahrain, inflation is anticipated to be moderate
Neutral
Inflation is when the amount of money you need to buy things keeps increasing.
It's when your favorite shawarma sandwich in Manama costs 2 Bahraini dinars instead of 1.5 Bahraini dinars a couple of years ago.
If you're planning to invest in a property, high inflation can offer several benefits:
- Property values often increase over time, leading to potential capital appreciation.
- Inflation can lead to higher rental rates, thereby increasing the cash flow from the property.
- Inflation decreases the real value of debt, making mortgage payments more affordable.
- Real estate can serve as a hedge against inflation, safeguarding the value of the investment.
- Diversifying into real estate provides stability during periods of inflation.
As projected by the IMF, over the next 5 years, Bahrain will have an inflation rate of 9.7%, which gives us an average yearly increase of 1.9%.
This data means that Bahrain could experience a moderate rate of inflation in the future. Then, prices would rise. It might become more expensive to buy in the future. However, if you buy now, your investment might appreciate and you can sell for a higher value later.
Is it a good time to buy real estate in Bahrain then?
Time to conclude !
Undoubtedly, 2024 presents a highly opportune moment to invest in property in Bahrain, supported by compelling factors. The country's trajectory towards substantial expansion, marked by a proactive approach to development, underscores the potential for property value appreciation. A noteworthy indicator is the optimistic outlook of Bahraini business owners, reflecting a positive sentiment in the market and a conducive environment for property investment.
Bahrain's growing population, coupled with improving economic conditions, contributes to the robust argument for property acquisition. This demographic trend, combined with a rise in prosperity, signifies an expanding target audience for property rental and ownership. Notably, Bahrain boasts exceptional rental yields, promising lucrative returns on investment for property buyers.
The current stability of Bahrain as a nation further solidifies 2024's status as a prime time for property purchase. The established peace and order in the country provide a secure backdrop for investment, minimizing risks associated with political instability or upheaval. Additionally, the moderate inflation projected for Bahrain indicates a stable economic environment that is conducive to well-calibrated property prices.
In conclusion, the confluence of favorable signals in Bahrain makes 2024 a definite and advantageous juncture for property investment. The country's growth prospects, buoyant market sentiment, expanding population, exceptional rental yields, and overall stability collectively make a compelling case for potential investors looking to make a sound and potentially lucrative real estate investment.
We genuinely hope this article has provided you with helpful information.. If you need to know more, you can check our our pack of documents related to the real estate market in Bahrain.
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This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.
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