Bahrain’s plan to build thousands of low-cost homes for its citizens may be sidelined by Bahrainis refusal to live in apartments, property analysts have warned.
The Gulf kingdom last week unveiled a scheme to build more than 4,000 low-cost units in a bid to address its chronic affordable housing shortage, but nationals have proved reluctant to live in properties other than villas, said real estate consultancy CBRE.
“Even when developers build housing units at prices that meet market expectations in the form of apartments, sales profiles remain weak due to a general resistance to apartment living by Bahraini nationals,” analysts wrote.
The protest-hit kingdom has one of the largest shortfalls of affordable housing in the GCC, lacking an estimated 40,000 homes for its population. More than 86 percent of Bahraini households qualify as low-income, according to Jones Lang LaSalle. The country has more than 55,000 citizens on a waiting list for social housing.
Martin Cooper, head of consulting for the Middle East at property consultancy DTZ, said many Bahranis would struggle to afford to live in villas.
“It’s the aspiration among most potential [Bahraini] homeowners because that is what they have grown up in,” he said. “But if you look at average wages, disposable incomes and the price of villas, the reality is that a large part of the market is going to have to look at apartment living.”
Bahrain’s residential real estate market has struggled in the wake of widespread protests in the Gulf state, which saw thousands take to the streets to demand curbs on the ruling family’s power.
Compound communities have been particularly affected, including those in the Saar Budaiya area used by workers who commute across the border to Saudi Arabia, CBRE said.
The developments are close to Shia neighbourhoods that have been the focal point of the unrest.
“This has resulted in an unsettling environment for those with young families and there has been a gradual migration out of the area,” analysts wrote. “Consequently, both rents and occupancy have tumbled in compounds to varying degrees throughout the year.
"At worst, rents and occupancy have dropped by around 30 percent but many compounds have been able to sustain occupancy through rent reductions.”