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Real Estate in Bahrain

The popularity and success of the Real Estate in Bahrain is well documented; but in sharp contrast Bahrain – which is one of the Middle Eastern property markets with the greatest potential – is little known and often overlooked.

 

Bahrain has a small but well establish luxury Real Estate in Bahrain and recent changes to legislation allowing for foreign freehold ownership of property within certain real estate developments in Bahrain has created a surge of investor and consumer interest in the kingdom.

 

The kingdom of Bahrain has long been home to a large expatriate community, with expats mainly heralding from the UK, Europe and the US. Expatriates living in Bahrain generally enjoy an incredibly high standard of living, substantial tax free income and an inimitably luxury lifestyle – and the type of accommodation they seek has become the iconic style of real estate now for sale to foreign purchasers. Indeed, the real estate developments where foreign freehold ownership of title is allowed in Bahrain epitomize quality and opulence.

 

In recent years Bahrain has been working hard to diversify its economy away from oil by focusing on five main business areas; namely business & financial services, tourism, information technology, healthcare & education and telecommunications. As a result many more multinational companies have established bases and headquarters in the kingdom which have created more employment opportunities and in turn attracted more international executives and their families to Bahrain.

 

This influx of foreign residents to the kingdom of Bahrain has resulted in a thriving rental real estate sector which has further helped to underpin an already incredibly successful economy. Recently Bahraini officials began to realize the potential of the real estate sector if they allowed for foreign freehold ownership, and this led to legislative and constitutional changes and the officials have been rewarded for their foresight by the creation of an incredibly popular and successful property market.

 

It’s a fact that many of the expats living in Bahrain are now taking full advantage of their right to own freehold title to real estate. It is also a fact that there is still an increasing requirement for quality accommodation to let out in Bahrain and this is pushing rental rates sky high. Both of these facts mean that real estate investors have a property market ripe for exploration in Bahrain with immediate income achievable from the rental sector and the release and realization of capital appreciation easy to achieve with a market hungry for completed resale property.

Properties in Bahrain

Despite its five thousand year history, US allied Bahrain is an ’emerging’ nation and has been in a significant state of transition since the current king and former amir of Bahrain Sheikh Hamad bin Isa Al Khalifa came to power in 1999 and it’s critical that any investor examining the property market prospects in Bahrain for profit potential in 2007 and beyond understands the nature of the development of the country before they consider committing to it.

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While the current period of transition now means that Bahrain has become one of the most prosperous and attractive nations in the Gulf region in which to live, work, invest and prosper, it’s rapidly expanding economy and significant political changes have created an underlying feeling of destabilization among certain factions of the local population.

While generally speaking  properties in Bahrain market prospects for 2007 are very positive indeed and this article covers the positive prospects for the market, it also details the underlying problems that could undermine the short term attractiveness of the country’s real estate sector so that investors can make as informed a decision as possible about market entry and investment commitment.

Since the current king of Bahrain came to power his nation has made incredible progress…on the political front Bahrain is now allied with the likes of the USA and UK, it has a free trade agreement in place with America, it has open elections and in 2006 the first ever female parliamentarian in any Arab Gulf country was elected into office in Bahrain. On the economic front the king of Bahrain has been key to the transition of his nation away from its economic dependence on oil and going forward into 2007 and beyond, Bahrain has a strong economy with very positive annual GDP growth rates.

All of these factors have indirectly started a property market in Bahrain revolution which is largely fuelled by international citizens moving in greater numbers to Bahrain to live and work. The reason for this is that Bahrain is located in an important strategic position in the Gulf and has taken it upon itself to be the nation offering least resistance to multinational businesses requiring a physical presence in the region. As a result of attractive legislation, transparent business practices and a low/no tax policy, Bahrain has succeeded in attracting large numbers of international and multinational corporations to its shores who each require a base in the Gulf region and who each recruit large numbers of international expatriates who are now moving to live in Bahrain.

This resultant strong inward migration of professional expatriates demanding housing saw Bahrain being one of the first of the Gulf nations to grant freehold real estate ownership rights to foreigners. This has meant that now international citizens and investors are buying up swathes of real estate as it comes to the market and forcing up property prices out of reach of the local population. In addition to this situation, supply of property especially in the main commercial areas is in limited supply which has also resulted in a frenzied rental market too which further excludes many local citizens – clearly all of this activity has created a feeling of frustration among local Bahraini citizens and it is this frustration that is causing an undercurrent of disaffection.

There is another factor affecting the housing market in Bahrain as well – as Bahrain is joined by a 25 km causeway to neighboring Saudi Arabia and yet is a far more liberalized and tolerant country, Westerners working in Saudi are also choosing to live in Bahrain and to commute across the King Fahd Causeway rather than live directly in Saudi Arabia. On the one hand all of these factors mean that there is strong and increasing demand for commercial and residential property for sale and rent in Bahrain among an increasingly affluent international community – this means that in 2007 and beyond there will be a perfect environment in Bahrain for property investors to exploit.

On the other hand however there is mounting tension among those local people who cannot continue to afford the rising real estate prices. While this tension goes largely ignored some are starting to say that Bahrain has moved too fast in developing new areas of its economy and in allowing multinational companies to set up operations in the country. These multinationals have been accused of largely employing expatriate staff in a country where, especially among the Bahraini youth, there are significant unemployment issues and also minimum wage issues.

So, while international demand for properties in Bahrain is strong and increasing and unlikely to subside in 2007 which means investors have a hot market to target, increasing land and construction costs and a growing division between local affordability and real estate prices is creating a very real environment of disquiet that should not go overlooked by an investor determining whether the risks of market entry outweigh the prospects for property market profit.

Real Estate Agent in Bahrain

Ten years ago, a search for real estate would have started in the office of a local Real Estate Agent in Bahrain or by just driving around town. At the agent’s office, you would spend an afternoon flipping through pages of active property listings from the local Multiple Listing Service (MLS). After choosing properties of interest, you would spend many weeks touring each property until you found the right one. Finding market data to enable you to assess the asking price would take more time and a lot more driving, and you still might not be able to find all of the information you needed to get really comfortable with a fair market value.

 

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Today, most property searches start on the Internet. A quick keyword search on Google by location will likely get you thousands of results. If you spot a property of interest on a real estate web site, you can typically view photos online and maybe even take a virtual tour. You can then check other Web sites, such as the local county assessor, to get an idea of the property’s value, see what the current owner paid for the property, check the real estate taxes, get census data, school information, and even check out what shops are within walking distance-all without leaving your house!
While the resources on the Internet are convenient and helpful, using them properly can be a challenge because of the volume of information and the difficulty in verifying its accuracy. Even a neighborhood specific search for real estate can easily return thousands of Web sites. With so many resources online how does an investor effectively use them without getting bogged down or winding up with incomplete or bad information? Believe it or not, understanding how the business of real estate works offline makes it easier to understand online real estate information and strategies.
Real Estate Agents in Bahrain
Despite the flood of real estate information on the Internet, most properties are still sold directly through real estate agents listing properties in the local MLS or CIE. However, those property listings do not stay local anymore. By its nature, the Internet is a global marketplace and local MLS and CIE listings are normally disseminated for display on many different Web sites. In addition, the listing may be displayed on the Web site of a local newspaper. In essence, the Internet is just another form of marketing offered by today’s real estate agent, but it has a much broader reach than the old print advertising.
In addition to Internet marketing, listing agents may also help the seller establish a price, hold open houses, keep the seller informed of interested buyers and offers, negotiate the contract and help with closing. When an agent provides all of these services it is referred to as being a full service listing arrangement. While full service listing arrangements are the most common type of listing arrangement, they are not the only option anymore.
Changes in the technology behind the real estate business have caused many agents to change the way they do business. In large part, this is due to the instant access most consumers now have to property listings and other real estate information. In addition, the Internet and other technologies have automated much of the marketing and initial searching process for real estate. For example, consumers can view properties online and make inquires via email. Brokers can use automated programs to send listings to consumers that match their property criteria. So, some agents now limit the services they offer and change their fees accordingly. An agent may offer to advertise the property in the MLS but only provide limited additional services. In the future, some real estate agents may offer services in more of an ala carte fashion.
Because of the volume of real estate information on the Internet, when people hire a real estate agent today they should look at the particular services offered by the agent and the depth of their experience and knowledge in the relevant property sector. It is no longer just about access to property listing information. Buyers and sellers historically found agents by referrals from friends and family. The Internet now provides ways to directly find qualified agents or to research the biography of an agent referred to you offline. One such site, excelestate.com, is quickly becoming the LinkedIn or Facebook for real estate agents. On this site an agent can personalize their profile, start a blog, post photos and videos and even create a link to their web site for free. Once unique content is added to their profile page the search engines notice!
Some have argued that the Internet makes REALTORS and the MLS less relevant. We believe this will be false in the long run. It may change the role of the agent but will make knowledgeable, qualified, and professional REALTORS more relevant than ever. In fact, the number of real estate agents has risen significantly in recent years. No wonder, the Internet has made local real estate a global business. Besides, Internet or not, the simple fact remains that the purchase of real property is the largest single purchase most people make in their life (or, for many investors, the largest multiple purchases over a lifetime) and they want expert help. As for the MLS, it remains the most reliable source of real estate listing and sold information available and continues to enable efficient marketing of properties. So, what is the function of all the online real estate information?
Online real estate information is a great research tool for buyers and sellers and a marketing tool for sellers. When used properly, buyers can save time by quickly researching properties and, ultimately, make better investment decisions. Sellers can efficiently research the market and make informed decisions about hiring an agent and marketing their properties online. The next step is to know where to look online for some of the best resources.