MANAMA: Bahrain’s property market is likely to remain subdued for some time due to lack of financing, while oversupply in both the residential and commercial sector will put further pressure on rents, a report said on Monday.
Some 19,300 new homes are expected in the Gulf Arab state over the next five years if developers stick to current plans, property consultancy DTZ said, adding that residential rents fell 15-20 percent over the past year in some areas.
"The freehold residential market in Bahrain continues to be characterized by general malaise and negative sentiment as it struggles to emerge from the downturn," the report said.
"This is likely to continue as lack of finance, investor apathy and oversupply continue to have a depressing effect on the market," it said.
While the global financial downturn has hurt Bahrain’s property sector, it has suffered less than Dubai, the region’s business and tourism hub, where house prices fell as much as 60 percent from their peaks in 2008.
Developers in Bahrain face significant levels of defaults on staged payments as buyers are no longer paying due to stalled construction on their properties, DTZ said.
"The disappearance of this source of cash flow has led to the cancellation or delay of a large number of residential projects with many now in a state of inactivity," it said.
Bahrain’s office sector will likely see further pressure on rents for the remainder of the year as more supply adds to already low levels of demand, it said.
Knight Frank in a report published on Sunday said sales of freehold villas and apartments "have been almost non-existent in Bahrain over the last two years".
It said that asking prices for high-end apartments fell about 20 percent from 2009 levels.
Both reports said there is significant pent-up demand for low-income housing, with some 47,000 Bahraini nationals on waiting lists for government homes.