Is 2025 a good time to buy real estate in Bahrain?

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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 offers, today, a stable political and economic climate

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.

You'll be pleased to know that Bahrain is indeed a stable country for investors. The last Fragile State Index reported for this country is 64.2, which is a good number.

Bahrain's stable political and economic climate is largely attributed to its strategic reforms and diversification efforts, which have reduced its reliance on oil by fostering growth in sectors like finance, tourism, and information technology. Additionally, the government's commitment to maintaining strong diplomatic relations with neighboring Gulf countries and international allies has bolstered its geopolitical stability and economic resilience.

The country provides a stable platform for investment. Next, let's assess the economic projections.

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 2024 with a growth rate of 3.6%, which affirms the country's positive direction. For 2025, the consensus estimate is 3.2%.

Besides that, the economy will keep growing since Bahrain's economy is expected to increase by 13.7% during the next 5 years, resulting in an average GDP growth rate of 2.7%.

The expected sustainable growth rate in Bahrain indicates a stable and growing economy, which can lead to increased demand for real estate and potentially higher property values. For investors, this means a greater likelihood of profitable returns and a secure investment environment.

However, GDP growth is not the only metric to look at.

Bahraini business owners keep demonstrating firm belief in the economy

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 20 for Bahrain. This is a strong score.

12 months ago, the score was even stronger, it registered at 31.

With the Business Confidence Index at a strong level, local business owners in Bahrain are demonstrating significant optimism about the economy's future. This positive outlook can benefit property investors, as it suggests potential growth in job opportunities and income. Such economic vitality can boost demand for properties, creating an advantageous environment for investors aiming to earn rental income or benefit from 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 (+8% 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 2025.

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 minimal

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 1.0%, which gives us an average yearly increase of 0.2%.

This data means that Bahrain is expected to have near-zero inflation then. Prices won't rise and then your property investment may not appreciate.

Is it a good time to buy real estate in Bahrain then?

Time to conclude !

2025 is shaping up to be an excellent time to invest in property in Bahrain, thanks to its stable political and economic climate. The country has been known for its steady governance and sound economic policies, which create a secure environment for property investments. This stability is crucial for investors who are looking for a safe haven to park their money, knowing that their investments are protected from sudden political upheavals or economic downturns.

Moreover, Bahrain's economy is on a promising growth trajectory, with an expected increase of 13.7% over the next five years. This translates to an average GDP growth rate of 2.7%, which is a healthy indicator of economic vitality. A growing economy often leads to increased demand for real estate, as more businesses and individuals seek to establish themselves in a thriving market. This demand can drive up property values, offering investors the potential for profitable returns.

Another factor making 2025 a great time to buy property in Bahrain is the country's growing and increasingly affluent population. As more people move to Bahrain and as the existing population becomes wealthier, the demand for housing and rental properties is likely to rise. This demographic trend supports a robust real estate market, where investors can benefit from both capital appreciation and rental income.

Speaking of rental income, Bahrain offers attractive gross rental yields, ranging from 8.3% to 11.0%, according to Numbeo. These yields are quite competitive, making rental properties a lucrative investment option. Additionally, with inflation expected to remain minimal, the purchasing power of rental income is likely to be preserved, ensuring that investors can enjoy stable and potentially increasing returns on their property investments.

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.

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.