Huge demand for low-cost housing in Bahrain

Huge demand for low-cost housing in Bahrain: "Huge demand for low-cost housing in Bahrain"

Whilst most sectors in the Bahrain real estate market continue to suffer from a supply-demand imbalance, there is considerable pent up demand for affordable housing, according to the latest property report from Cluttons Middle East.
The latest figures from the General Organisation for Social Insurance (Gosi), which record the level of salaries receivable by insured workers show that 90 per cent of non- Bahrainis and 60 per cent of Bahrainis earn under BD400 ($1,061) per month.
This constitutes 86 per cent of the total insured workforce.
With average mortgage rates at around 9.5 per cent and loan to value ratios of 80 per cent, this demographic implies a large demand for low-cost housing units.
'Traditionally developers in Bahrain have focused on the mid to high income buyer demographic targeting the wider GCC market, particularly purchasers from Saudi Arabia,' the report said.
'This has resulted in a lack of supply of low-cost housing.
'Given the average wages in Bahrain, much of the population has therefore been unable to purchase the majority of new stock coming to the market.
'Over the last 24 months the demand for Bahrain property from the GCC market has waned, leading to an over-supply of high-end residential property.'
'Through the 2030 strategic plan, the government is in the process of reacting to the demand for low-cost housing,' the report said.
'Latest government figures show that 12,200 social houses have been built across the kingdom from 2003 to 2009.
'However, in isolation, these units have fallen short of satisfying existing demand. To this end the Economic Development Board has stressed the importance of co-operation between the public and private sectors in providing suitable units for those in need of low-cost housing,' the report said.
'In order to respond to the pent up demand for low-cost housing units, the private sector must be attracted to developing suitable stock to meet the demand,' the report adds.
'Inevitably this will require the ability of private developers to generate profit from the development of these units.
'If the demand for low-cost housing units is to be met in the near future, a re-calibration as to buyer expectation as to size of housing unit will need to take place.
'Given the increasing propensity for Bahrainis to live in smaller family units, this sector shows potential for high levels of growth if the private sector can be attracted to producing suitable, good quality, low-cost housing units,' the report adds.-TradeArabia News Service

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