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With the property marketing booming in Bahrain, we asked the CEO_of home finance company Sakana - Mr R Lakshmanan - for the low down on buying a dream home in the kingdom ...
Q. What types of properties are being bought?
A. It really comes down to personal choice of what type of property is most suited to the buyer.
The market in Bahrain is small but there is a great deal of choice in terms of location and property types available to buyers. Currently on the market are a range of apartments, villas and townhouses some overlooking golf courses, the sea or man-made lakes.
It is worth noting that Bahrainis and GCC nationals can buy a property anywhere in the kingdom. Expatriates, however, can only buy properties in freehold areas such as Amwaj Island, Juffair etc.
Buyers should expect to pay around BD120,000 for a townhouse and BD75,000 for a two-bedroom apartment. If you can, buy off-plan and save around 20 per cent on the cost of a new house this way.
Q. Who is buying property in Bahrain?
A. The market is witnessing a broad cross-section of people investing in property.
Buyers fall generally into the following categories: Bahrainis, other GCC nationals, expatriates living in Bahrain or an expatriate living outside of Bahrain, particularly in Saudi Arabia, real estate investors, companies and employers who wish to provide housing for their employees.
Q. Are buyers living in the houses that they purchase or are they buying to let?
A. Buyers are essentially investing in property for several reasons, which vary depending upon their own personal or business interests.
Some people are buying houses or purchasing land to build their own house to keep for themselves and to pass on to family members later as a legacy; others are buying or building to sell on and hopefully make a profit; some are buying to let, so they are essentially renting out the property with a view to cover the mortgage.
Interestingly, in areas such as Juffair and Amwaj, there are a cross section of Bahrainis and expats purchasing property. However, Bahrainis are generally buying the properties as investments, whilst the expats are buying to live in the properties. A good example of this is Sakana's recent foray into property consultancy when we for sold "Nasmah", a residential tower block in Juffair. A resounding 70 per cent of buyers were from the GCC, yet they were buying mainly for investment purposes to rent or resell or for their children to live in.
Q. How can buyers identify a good investment?
A. There are three key things to look for when you buy a property:
Location is extremely important as the area always makes the investment.
Reputation of the developer(s) is important, as this ensures a quality product. There is nothing worse than a badly finished home.
Price is obviously also important, the price should be reasonable and have some potential for growth.
Q. What should first time buyers in Bahrain be aware of?
A. One of the key things is not to over commit yourself if you are acquiring a mortgage to pay for your home.
A mortgage is a long-term commitment that should be considered carefully. Do your budget calculations mean that you can afford to buy your dream property? Or do you need to review your goals? Asking these questions realistically can avoid the loss of your home if you don't keep up with your financial commitments. Remember that a mortgage is probably the biggest financial commitment you will ever make, so review your decision carefully.
If you're going for a mortgage, shop around. A real estate broker can help, but plan to spend quite a bit of time on the phone, visiting the websites or offices of mortgage providers and asking for rates and making comparisons.
Q. How is property valued in Bahrain?
A. Property valuations are carried out on similar basis compared to established markets. At Sakana, for example, we have our own independent valuer who values the property thus safeguarding the buyer by ensuring that the value is fair and reflective of market prices.
Q. How can buyers protect themselves from inflammatory prices?
A. The key thing here is to identify what type of property you want and lock the deal, assuming it fits into your budget.
Buyers may consider getting pre-approval - assuming they need a mortgage - and then choose the property. This works well in a scenario when market price is increasing. As the key benchmark rates continue to reduce, the financing cost may become cheaper and increase affordability.
Q. What specific considerations should expats have when buying in Bahrain?
A. There are several things expats should take into account when buying a property. The most important thing is to find out where the available freehold properties are as there are restrictions on where you can buy. Expats should also be aware of the regulations in terms of their rights.
In terms of the law on inheritance and succession, this is based on your home country. For example, a UK resident would have the property passed down to their dependants as they would under UK law.
Also, do your research on the developer. If you can pay more for a property in a good development it is always worth the extra money.
