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The real estate market in Manama: 2024 forecast

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As we step into the year 2024, the real estate landscape in Manama continues to evolve, presenting both challenges and opportunities for investors, homeowners, and industry stakeholders.

In this article, we will give you a clear picture of what's happening in Manama's real estate scene for the year ahead.

If you need a full and more detailed report, with fresh data and actionable advice, please note that you can get our property pack for Bahrain. This pack will also give you unlimited access to our team of experts, allowing you to ask them anything related to the housing market in Manama specifically.

How's the Bahraini economy doing?

Current state

The real estate market in Manama, the capital city of Bahrain, is intricately tied to the country's economic and political stability.

Historically, Bahrain has been known for its economic diversification, with a strong emphasis on banking and tourism, which in turn influences its real estate sector.

Looking at the real estate market as a whole, it has experienced various phases of growth and moderation. Bahrain's strategic location in the Gulf, its relatively liberal business environment, and the presence of numerous multinational corporations have historically made it an attractive destination for real estate investments.

In the housing market specifically, there's been a steady demand, primarily driven by the growing expatriate population and the local populace's rising income levels.

Government policies have played a pivotal role in shaping Bahrain's housing market. For instance, the government's focus on affordable housing projects and public-private partnerships has addressed the housing needs of its citizens.

Moreover, initiatives like the 'Eskan' housing program have been instrumental in providing housing assistance to Bahraini families.

In recent years, the government has continued to focus on the housing sector, introducing regulations and policies to ensure a balanced and sustainable market. Notably, there have been efforts to regulate the market to avoid speculative trading, which had previously led to inflated property prices.

From a local perspective, Manama remains a popular area for real estate investment. The city's modern infrastructure, coupled with its cultural and economic significance, attracts both local and international investors.

Properties in areas like Seef and Juffair are particularly sought after, given their proximity to business districts and lifestyle amenities.

For foreign investors, Bahrain offers specific incentives such as the ability to own freehold property in designated areas. There are drawbacks too, like the fluctuating oil prices that can impact the economy and, by extension, the real estate market.

Comparing real estate prices in Manama to neighboring regions, it's generally more affordable than in Dubai or Doha, making it an attractive market for those looking for value investments.

However, it's important to consider that the economic scale and international profile of these cities differ.

Finally, the legal framework surrounding real estate in Bahrain is fairly stable and transparent. The government has made significant efforts to enhance legal processes and property registration to ensure a secure environment for investors.

However, like any market, it's crucial for investors to conduct thorough due diligence and possibly consult local real estate experts before making investment decisions.

Outlook and forecast

Manama's real estate market has several unique factors that distinguish it from others.

Its strategic location as a financial hub in the Middle East, coupled with a relatively liberal business environment and a cosmopolitan culture, makes it an attractive spot for both regional and international investors.

Additionally, the presence of a significant expatriate population contributes to a diverse demand in the housing sector, ranging from luxury properties to affordable housing.

Forecasting the economy and stability of Manama, and consequently its real estate market, requires considering various factors.

Currently, the economy seems to be on a positive trajectory, primarily due to efforts in diversifying away from oil dependence and focusing on sectors like finance, tourism, and information technology.

This diversification strategy suggests a stable and potentially growing economy, which bodes well for the real estate market.

Manama appears to be growing at a steady pace, possibly faster than other regions in Bahrain. This is due to its role as the capital city and the center for business and finance. The continuous development of infrastructure, like the airport expansion and new hotel and retail projects, also contributes to this growth.

It's reasonable to anticipate continued efforts in regulatory reforms and infrastructure development. Bahrain has been proactive in introducing real estate regulations aimed at ensuring market stability and protecting investors.

Any new policies are likely to follow this trend, possibly focusing on further market regulation, affordable housing initiatives, or investment incentives.

Signs of improvement in Manama's real estate market can be seen in the ongoing urban development projects, increased foreign investment, and the government's efforts in enhancing the business environment.

These factors suggest a healthy demand for real estate, which could lead to a rise in property values and investment opportunities.

However, potential risks should not be overlooked. The region's political stability is a key factor; any geopolitical tensions could impact investor confidence. Economic dependency on oil prices remains a concern, despite diversification efforts.

If oil prices were to fall significantly, it could lead to a slowdown in the economy and the real estate market.

Another risk is the potential for real estate market oversupply, particularly in the luxury segment, which could lead to a correction in property prices. Investors should be mindful of these risks and consider them when making investment decisions.

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What about housing prices in Manama?

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Current state

In Manama, the real estate market has witnessed varied trends over the past few years.

Historically, like many major cities, Manama's real estate prices have been sensitive to global and regional economic fluctuations. During times of economic booms, such as periods of high oil prices benefiting Bahrain's economy, there was a noticeable increase in property values.

Conversely, during economic downturns or crises, real estate prices tended to stabilize or even decline, reflecting the interconnected nature of the economy and the real estate sector.

Comparing current real estate prices to those a decade ago, there's been a general increase. This growth has not been uniformly rapid or exponential. Instead, it has been characterized by periods of stability interspersed with moderate increases.

This is partly due to the government's regulatory measures to control speculative trading in the real estate market, aiming for a more sustainable growth trajectory.

Currently, the real estate prices in Manama are relatively stable with a slight upward trend in certain areas. This stability is a result of balanced supply and demand, economic diversification efforts by the government, and the influx of foreign investment in the region.

The types of properties experiencing the highest growth in real estate prices in Manama are predominantly luxury residential properties and commercial spaces in prime locations.

This trend is driven by factors like the increasing demand for high-quality living spaces from the affluent segments of the population and international investors.

Additionally, commercial properties in central business districts are in high demand due to Manama's status as a financial hub.

The population dynamics of Manama have also influenced real estate trends. In recent years, the city has seen a steady increase in its population, partly due to the influx of expatriates attracted by employment opportunities in various sectors.

This demographic change has spurred demand for housing, particularly in areas favored by expatriates, leading to growth in certain segments of the real estate market.

These trends are caused by a combination of factors including economic diversification, government policies aimed at stabilizing the real estate market, and global economic conditions affecting investor confidence and capital flow.

Additionally, urban development projects and infrastructure improvements have made certain areas more attractive, thereby influencing real estate prices.

Outlook and forecast

In Manama, the current state of real estate prices is influenced by a combination of economic and demographic factors.

One key economic factor is the diversification of Bahrain's economy away from oil. This shift has led to the growth of sectors like finance, tourism, and information technology, creating more job opportunities and attracting a skilled workforce, which in turn boosts demand for housing.

Another significant factor is foreign investment. Bahrain's policies that encourage foreign business and investment have attracted international companies and investors to Manama. This influx of foreign capital has a positive effect on the real estate market, particularly in the commercial sector.

Demographically, Manama has experienced an increase in its expatriate population, due to its position as a regional business hub.

This has led to a higher demand for residential properties, especially in areas popular among expatriates, driving up prices in these locations.

Looking into the near future, several specific factors could lead to an increase in housing prices in Manama. For instance, continued economic diversification and infrastructure development projects are likely to attract more businesses and residents to the city.

Additionally, any government initiatives aimed at boosting tourism or enhancing business environments would also contribute to an upward trend in property values.

However, this trend might not be uniform across all cities and regions in Bahrain. Other areas may not experience the same level of investment or economic growth as Manama, which could lead to a more varied real estate price trajectory across the country.

Conversely, specific factors could lead to a decrease in housing prices in Manama. A key risk factor is the global economic climate.

If there are downturns in the global economy, they could lead to reduced investment and lower oil prices, which would indirectly affect Bahrain's economy and real estate market.

Political instability in the region is another potential risk. Any geopolitical tensions could deter investment and affect the overall economic stability of Bahrain, leading to a possible decline in real estate prices.

It's important to note that these potential decreases may not impact all cities and regions in Bahrain uniformly. Some areas might be more resilient due to local economic factors or specific developments that insulate them from broader economic challenges.

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How's the demand for the real estate market in Manama?

Current state

In Manama, the current demand for residential real estate is relatively robust, influenced by the city's status as a financial and commercial hub in the region.

This demand is largely driven by a mix of local residents, expatriates, and international investors.

When examining the balance between buyers and sellers, it appears that the market is reasonably well-balanced, but with slight variations depending on the type and location of the property.

In some prime areas, there might be more buyers than sellers, leading to a competitive market, especially for high-end properties. In contrast, other areas might have a more balanced or even a surplus of properties, catering to a different segment of the market.

The supply of new housing in Manama has been responsive to this demand, with several new developments and projects in the pipeline. These include both high-end luxury apartments and more affordable housing solutions, aiming to cater to the diverse needs of the population.

However, the challenge remains to align this supply with the specific demands of various market segments.

Buyers in Manama are looking for a range of properties, but there's a noticeable interest in well-located, modern apartments with amenities, reflecting the lifestyle preferences of a significant portion of the city's residents and expatriates.

There's also demand for family homes and villas, particularly in suburban areas, from those seeking more space and privacy.

Current mortgage interest rates in Bahrain can affect the buying power and demand of consumers. Traditionally, the interest rates in the region have been relatively moderate.

Lower interest rates tend to make mortgages more affordable, thereby enhancing buying power and stimulating demand in the real estate market. Conversely, higher rates can constrain buying power and dampen demand.

Recent changes in government policies or regulations can also have a significant impact on the local real estate market.

Traditionally, the government has been proactive in introducing measures to stimulate the real estate sector. This could include tax changes, subsidies for homebuyers, or adjustments in zoning laws.

Such measures are typically aimed at ensuring a stable and sustainable real estate market, supporting affordable housing initiatives, and attracting foreign investment.

Outlook and forecast

Demographic shifts play a significant role in shaping the real estate market of Manama.

One of the notable trends is urbanization, where more people are moving to the city for employment and lifestyle reasons.

This urban influx increases the demand for residential properties, particularly apartments and townhouses that are well-suited to urban living. Such properties are often in central locations, close to amenities and workplaces, making them highly desirable.

Regarding household formation trends, there is a growing preference for smaller, more manageable living spaces, reflecting a global trend toward smaller family units and a more fast-paced, urban lifestyle.

This shift influences the demand for apartments and smaller homes, which are easier to maintain and fit well into the urban landscape of Manama.

In terms of real estate investment trends, there’s a noticeable interest in buying properties as investments, not just for living purposes. Investors are looking at properties that offer good rental yields and appreciation potential.

This includes both residential and commercial properties, with a specific focus on well-located apartments and retail spaces.

Cultural trends also have an impact on the housing market. For example, there’s a growing awareness and preference for sustainable and eco-friendly living.

This trend is slowly influencing the demand for properties that incorporate green technology, energy efficiency, or are built with sustainable materials. This is still a niche market compared to the mainstream real estate demand.

Foreign investment plays a crucial role in Manama's real estate market. It brings in capital and increases demand, particularly for high-end, luxury properties and commercial real estate.

These properties are often seen as attractive investment opportunities due to their location, amenities, and potential for appreciation.

In terms of regulations, Bahrain has made efforts to attract foreign investors, including allowing them to own property in designated areas.

These policies can boost demand as they make it easier for foreigners to invest in the local real estate market. Any changes or perceived instability in these policies can also slow down demand.

Lastly, niche markets like luxury properties and eco-friendly homes are experiencing unique trends. The luxury property market in Manama is driven by both local and international high-net-worth individuals looking for exclusive residences or investment opportunities.

The market for eco-friendly homes, while still emerging, is driven by a growing global consciousness about sustainability and environmental impact.

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How's the rental market in Manama?

Current state

The rental market in Manama is vibrant, reflecting the city's status as a financial and commercial hub in the region.

The demand for rental properties varies based on the type of property and the specific needs of the tenants.

Apartments, particularly in central urban areas, are in high demand. This is largely due to the influx of expatriates and professionals who prefer living close to their workplaces and urban amenities. These apartments range from luxurious, high-end units in exclusive areas to more modest, affordable ones in other parts of the city.

Tenants in Manama prioritize different features based on their individual needs and lifestyles. In general, location is a key factor, with a preference for properties close to business districts, shopping centers, and entertainment venues.

The size and layout of the property are also important, especially for families who may need more space. Amenities such as modern appliances, high-speed internet, and fitness centers are increasingly sought after, particularly by younger tenants and professionals.

Tenant preferences vary significantly between urban, suburban, and rural areas. In urban areas, there's a greater demand for apartments and shared accommodations, especially among young professionals, singles, and expatriates. These tenants often look for convenience, proximity to work, and access to city life.

In suburban areas, the demand shifts towards single-family homes and villas, popular among families and older tenants who prefer more space and a quieter environment.

Rural areas have less demand in the rental market compared to urban and suburban areas, often catering to a niche group looking for tranquility or larger properties.

The demographic characteristics of tenants in Manama vary. Urban areas tend to attract younger tenants, including singles and young professionals, due to the proximity to workplaces and lifestyle amenities.

Suburban areas are more appealing to families and middle-aged tenants, looking for larger homes and a more family-friendly environment. Employment status and family size play significant roles in determining the type of property rented.

For example, families and employed individuals might opt for larger, more stable rental arrangements, while students and young professionals may prefer more flexible, smaller accommodations.

Income levels and economic factors significantly influence the rental choices. Higher-income tenants are more likely to rent larger, well-located properties with premium amenities. In contrast, tenants with lower income levels may prioritize affordability and may opt for smaller apartments or shared accommodations.

Certain regions in Manama have a higher concentration of specific tenant groups. Areas close to universities and educational institutions might have a higher number of students, while business districts predominantly attract young professionals.

Some suburban areas are popular among families and expatriates looking for international schools and a family-friendly environment.

Outlook and forecast

The rental market in Manama is primarily influenced by its status as a commercial and financial hub, which attracts a significant number of expatriates and professionals.

This demographic is key in shaping rental demand, particularly for apartments and modern living spaces in central urban areas.

Evolving lifestyles and work patterns, especially the rise of remote work, are expected to influence future rental preferences. With more people working remotely, there may be a growing demand for properties that offer dedicated home office spaces or are in quieter, more suburban areas where larger properties are more affordable.

Demographic changes, such as the increasing expatriate population and the trend towards smaller household sizes, are reflected in the rental market.

There's a noticeable demand for one- and two-bedroom apartments, suitable for singles or small families, and fully furnished units that cater to the transient nature of expatriate life.

Emerging urban areas, particularly those close to business districts or with improved infrastructure, are becoming new hotspots for rental properties. Developments in areas like Seef and Juffair have witnessed increased rental demand due to their proximity to business centers, shopping malls, and entertainment venues.

Technological advancements are also impacting the rental market. The adoption of digital platforms for property listings, virtual tours, and online rental agreements is streamlining the rental process.

Moreover, tenants are increasingly seeking properties with high-speed internet and smart home technologies.

Sustainability and green living trends are beginning to influence the rental market, albeit slowly. There's a growing interest in eco-friendly homes that incorporate energy-efficient appliances, solar panels, or sustainable building materials. This is still a niche market compared to the mainstream demand.

The rental market forecast across various regions of Bahrain varies. In Manama, demand is expected to remain strong due to its economic and commercial significance. In contrast, other regions may see varied demand based on local economic activities and population dynamics.

The long-term outlook for the rental market in Manama is generally positive. With ongoing economic diversification, infrastructure development, and a steady influx of expatriates, demand for rental properties is expected to remain robust.

However, this outlook is contingent on maintaining political stability and continued economic growth.

In terms of niche markets, luxury properties in prime locations and eco-friendly homes are experiencing unique trends. The luxury rental market, driven by high-income expatriates and professionals, seeks premium amenities and exclusive locations.

The eco-friendly market, though smaller, is driven by a growing global consciousness about sustainability and environmental impact.

Make sure you understand the real estate market in Manama

Don't rush into buying the wrong property in Bahrain. Sit, relax and read our guide to avoid costly mistakes and make the best investment possible.

real estate market Manama

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.