Buying real estate in Bahrain as a foreigner?

We've created a guide to help you avoid pitfalls, save time, and make the best long-term investment possible.

Buying property in Bahrain as a foreigner: a full guide

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Everything you need to know is included in our Bahrain Property Pack

Bahrain is a popular destination for foreigners who want to invest in real estate.

It has stunning landscapes, a vibrant culture, and welcoming people. But buying property in a foreign country can be a daunting task, especially when it comes to the legalities.

This guide is here to help foreign buyers understand how the property market works in Bahrain. It covers all the necessary information in a straightforward and simple way.

Also, for a more in-depth analysis, you can check our property pack for Bahrain.

Can you purchase and own a property in Bahrain as a foreigner?

Foreigners looking to invest in real estate in Bahrain will find a relatively open and welcoming market, but there are some specific rules and regulations that they should be aware of.

Foreign nationals can indeed own property in Bahrain, but this privilege is typically restricted to certain designated areas. These areas are usually high-end, developed for luxury living and commercial activities.

In these zones, foreigners can own freehold properties, which means they have full ownership rights. However, outside of these areas, the ownership rules can be more restrictive, and foreigners may not be able to own land outright.

The main difference between foreign and local buyers in Bahrain lies in the location where they can purchase property. Bahraini citizens have the freedom to buy property anywhere in the country, while foreigners are limited to specific areas.

Also, the process of buying property might be a bit more complex for foreigners, involving additional paperwork and possibly longer waiting times for approvals.

Generally, there are no country-specific rules when it comes to real estate ownership in Bahrain. The regulations are pretty uniform for all foreigners, regardless of their country of origin.

However, it's always wise to consult with a local real estate expert or legal advisor, as international relations and policies can change.

Owning property in Bahrain does not necessarily require you to reside in the country. You can buy property as an investment or for occasional use without being a resident.

Owning property might facilitate obtaining a residency permit, especially if it's a significant investment.

To purchase property in Bahrain, you don't necessarily need a specific visa or permit. The process of buying property is separate from immigration and residency procedures. If you plan to live in Bahrain, you will need to follow the standard visa and residency application processes.

While you don't need specific authorization from a governmental institution to purchase property as a foreigner, the transaction and your legal status in the country must be in compliance with Bahraini laws.

There isn't typically a minimum investment requirement for foreigners buying property in Bahrain. However, since property ownership is restricted to certain areas, the market prices in these areas tend to be higher.

This means that while there's no official minimum, the market itself might impose a de facto minimum investment based on property values in the permitted zones.

Can you become a resident in Bahrain by owning a property?

Bahrain offers a residency scheme for foreign nationals who invest in real estate.

This is an attractive option for many who wish to live in Bahrain or seek to have a base in the Middle East.

Bahrain allows foreigners who invest in property to apply for residency. This is part of the country's efforts to attract foreign investment and boost its real estate market. The scheme is quite straightforward but does have specific criteria that must be met.

To qualify for residency under this scheme, there is a minimum investment amount that you need to meet. The investment is usually in a high-value property in designated areas where foreigners are allowed to own property.

Once you've made the qualifying investment, you can apply for residency. The application process involves submitting proof of property ownership, along with other required documents like your passport, financial statements, and potentially a health check.

You'll need to submit these to the relevant Bahraini authorities, typically the General Directorate of Nationality, Passports & Residence.

The residency granted under this scheme is not permanent. It usually comes with a fixed duration, which can vary. You'll need to renew your residency periodically, and this might involve showing continued ownership of the property or additional requirements.

Owning property and having residency in Bahrain does not directly lead to citizenship. Bahraini citizenship laws are quite strict and generally require a lengthy period of continuous residency, among other criteria. Property investment residency is a separate track and doesn't necessarily fast-track citizenship.

The exact number of people who have used this scheme is not readily available, but it's known to be a popular route for expatriates looking for residency in Bahrain, especially among investors from other Gulf Cooperation Council (GCC) countries and beyond.

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Market metrics

You can find fresh and updated data in our pack of documents related to the real estate market in Bahrain.

Based on the the the GDP per capita indicator, it is apparent that Bahraini people have become 6.0% richer over the course of last 5 years.

This rise in wealth can potentially drive demand for real estate.

If we check the data reported on Numbeo, we see that residential real estate in Bahrain offer gross rental yields between 8.3% and 11.0%.

With such high rental yields, foreign investors can enjoy significant returns on their investment, making it an attractive avenue for wealth creation.

To know more, you can also read our dedicated article: is it a good time to buy a property in Bahrain?

The life as an expat

Living as an expat in Bahrain is an exciting and rewarding experience.

The country is well known for its warm hospitality, and expats are welcomed with open arms. Bahrain is a modern and cosmopolitan country, offering a wide range of cultural activities, restaurants, and nightlife. Expats will find that Bahrain is a great place to live, with a high quality of life and a low cost of living. The country also offers excellent job opportunities, with many international companies based in Bahrain.

Bahrain is a very safe and secure country, with low levels of crime and a strong sense of security. Expats will find that the local people are friendly and welcoming, and they will be able to make friends easily. Bahrain also offers a great variety of leisure activities, with plenty of beaches, parks, and cultural attractions to explore. The country also has a vibrant nightlife, with plenty of bars and clubs to explore.

Overall, living as an expat in Bahrain is a great experience. The country is welcoming and friendly, with plenty of opportunities for expats to explore and enjoy. Expats will find that Bahrain is a great place to live, with a high quality of life and a low cost of living.

What are the best places to buy real estate in Bahrain?

This table summarizes some of the best places to buy a property in Bahrain.

City / Region Population Average Price per sqm (BHD) Strengths
Manama ≈ 200,000 800 - 1,500 Capital city, financial hub, modern infrastructure, cultural attractions
Amwaj Islands ≈ 8,000 1,200 - 1,800 Island living, waterfront properties, marinas, leisure facilities
Seef ≈ 5,000 1,000 - 1,500 Commercial district, luxury developments, shopping malls, entertainment options
Juffair ≈ 17,000 900 - 1,500 Residential area, expat community, restaurants, nightlife
Adliya ≈ 6,000 900 - 1,300 Artistic and cultural district, trendy cafes, art galleries, vibrant atmosphere
Amwaj Islands ≈ 8,000 1,200 - 1,800 Island living, waterfront properties, marinas, leisure facilities
Riffa ≈ 115,000 700 - 1,200 Historic area, traditional markets, mosques, family-friendly neighborhoods

Do you need a lawyer when buying a property in Bahrain?

When purchasing a property in Bahrain, engaging a local lawyer can be beneficial to ensure a smooth and legally compliant process.

One important document they can assist with is the Sale and Purchase Agreement, which is a legally binding contract between the buyer and seller that outlines the terms and conditions of the sale.

The Bahraini lawyer can also help you conduct a Title Search to verify the property's ownership and ensure there are no legal disputes or encumbrances.

Furthermore, they can guide you through the process of obtaining necessary approvals and permits from the relevant authorities, such as the Survey and Land Registration Bureau.

They will ensure that all applicable taxes and fees, such as the Property Registration Fees and Agency Fees, are paid correctly and in accordance with Bahraini laws and regulations.

What are the risks when buying a property in Bahrain?

We've got an article dedicated to the risks associated with purchasing property in Bahrain.

When buying a property in Bahrain, there are some unique risks to consider that are not common in other countries.

The first is the risk of purchasing a property that is part of a larger development. Many developments in Bahrain, especially those in the city of Manama, are owned by individual landlords who have multiple properties. This means that if the landlord fails to pay his or her taxes or fees, the entire development could be seized by the government.

Another risk in Bahrain is the risk of purchasing a property that is subject to a lien. Liens are legal claims against a property that must be paid before the property can be sold. Liens can be placed on a property for a variety of reasons, including unpaid taxes or debts.

Finally, there is the risk of purchasing a property that is subject to a legal dispute. In Bahrain, there is no centralised court system, so disputes over ownership of a property can be lengthy and expensive.

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Everything you need to know is included in our Bahrain Property Pack

What are the documents needed for a real estate transaction in Bahrain?

When buying a property in Bahrain, the following documents are required:

1. A copy of the buyer's passport or other government-issued identification.

2. Proof of address.

3. A written agreement between the buyer and seller that outlines the terms of the sale.

4. A copy of the title deed.

5. A copy of the property registration card.

6. A copy of the property valuation report.

7. A copy of the property tax assessment.

8. A copy of the property insurance certificate.

9. A copy of the buyer's bank statement.

10. A copy of the buyer's credit report.

We review each of these documents and tell you how to use them in our property pack for Bahrain.

How should you approach negotiations with people from Bahrain?

When negotiating to purchase a property in Bahrain, it is important to understand and appreciate Bahraini culture, which is deeply rooted in history, Islamic traditions, and a strong sense of community.

Bahraini society places great importance on respect and building personal relationships. It is advisable to approach negotiations with a respectful and considerate attitude, taking the time to establish a genuine connection with the local seller.

Open and honest communication is highly valued in Bahraini culture. It is essential to clearly and transparently communicate your intentions, expectations, and the terms of the sale. Directness and clarity are generally appreciated. Also, patience is key during negotiations in Bahrain. Decision-making processes may take time, and it is important to show understanding and flexibility. Demonstrating patience and a willingness to engage in thoughtful discussions can help build trust and lead to successful outcomes.

Familiarizing yourself with the local real estate market and legal procedures is essential. Conduct thorough research on property laws, regulations, and any associated costs such as taxes, fees, and maintenance expenses.

This knowledge will empower you during negotiations and ensure a smooth transaction.

Lastly, embracing Bahraini culture and customs can create a positive impression. Showing an interest in the country's rich heritage, Islamic traditions, and warm hospitality can help foster a harmonious relationship with the seller and enhance your overall experience of buying a property in Bahrain.

Can foreigners get a mortgage in Bahrain?

Foreigners can get property loans in Bahrain, but the eligibility criteria and requirements vary depending on the lender and loan terms.

The specific conditions and requirements for a foreigner to obtain a property loan in Bahrain may vary, but typically they need to have a valid residence permit, provide necessary documentation, such as proof of income and identity, and fulfill the criteria of the lending institutions in the country.

Some banks in Bahrain that can grant mortgages to foreigners include Ahli United Bank, Bahrain Islamic Bank, and National Bank of Bahrain.

In Bahrain, mortgage rates for a 20-year term range between 5% and 9%, which are considered average.

What are the taxes related to a property transaction in Bahrain?

Here is a breakdown of taxes related to a property transaction in Bahrain.

Tax Description Calculation Who pays
Stamp Duty Levied on certain property-related documents 2% of the property value Buyer
Municipal Tax Levied by the municipality for property services 10% of the contract amount for foreign owners Buyer

For a deeper dive into the calculation, refer to:
- the Bahrain Company Formation's website
- the Property Finder Bahrain's website

What fees are involved in a property transaction in Bahrain?

Below is a simple breakdown of fees for a property transaction in Bahrain.

Fee Description Calculation Who pays
Registration Fee Charged for registering the property transfer 1.7% of property value within 60 days of sale contract or 2% after 60 days Buyer
Legal Fee Charged by the legal advisor or lawyer Typically negotiated based on the complexity of the transaction Buyer or Seller
Real Estate Agent Fee Applicable if a real estate agency is involved From 1% to 5% of purchase price, depending on the type of property and the overall purchase price Seller or Buyer

You can find more information about the calculation on:
- the Survey and Land Registration Bureau, Bahrain's website

Buying real estate in Bahrain can be risky

An increasing number of foreign investors are showing interest in Bahrain. However, 90% of them will make mistakes. Avoid the pitfalls with our comprehensive guide.

buying property foreigner Bahrain