By: Bader Nass
Managing Director
InfoReal Estate WLL
Many real estate owners complain about the lack of circulation or the stagnation of the real estate market, and there is no doubt that there is a general recession, which has its known causes. But unfortunately, there are hidden reasons for some and I will mention the most important ones.
Bad locations or low-quality furniture of some of the real estate units offered:
– Poor marketing of some landlords, and not to mention exaggerated prices.
– The surge of high electricity bills on foreign tenants or owners.
– The behaviour and treatment of some landlords for tenants or those who are about to buy.
– The increase in rental or sale prices after the global real estate market inflation.
Landlords are demanding their properties at a price of one million dollars, and in return, they lose $300 to clean the property. If you do not respect and appreciate your property, how do you expect others to appreciate it? Others furnish the properties with low-quality furniture and then complain the property is not being sold or rented out. You must be convinced that the street on which your apartment is located has 500 apartments competing with you, and that the area in which your street is located in which your apartment is located has 5,000 units competing with you as well, so where does your apartment stand between this competition?
As a real estate owner, developer, or real estate investor, consider the use of a decor designer, because even if you have the funds to invest or develop a property does not mean that you are a good interior designer. The unit must be treated as a product or a commodity and it must compete in the market, and you must treat your property as a competitive product.
We have come out of the period of real estate market price inflation, and real estate owners have to consider this period and study it well. As investors, we must accept that we are heading into a difficult recession that has begun to descend and will continue for the next three years, unfortunately. If you want to exit your investment, you must be prepared to face obstacles and accept the reality of losing 20% to 35% of the current value of your property in order to reach acceptable prices for trading in the next five years.
There is no doubt that this period is considered a period of price and market correction, and we are unfortunately at the beginning of the worst recession of the real estate market and the world, which began in 2019 and will continue for a period of five years; the worst of which is 2020 to 2023. Investors, your erroneous decision of buying apartments in which the cost exceeds 650 BHD to 750 BHD per square meter does not mean that another mistake will correct the first mistake and will compensate you with what you invested.
The price per square meter for buying an apartment for investment purposes ranges between 800 BHD and 1200 BHD per square meter and speculation is inevitably a wrong and useless decision. There is no calculator that can return your investment unless you are ready to give these properties to the next generation of your family. You must accept the reality with open arms and revisit your calculations by not increasing the price of the meter offered for sale beyond 650 BHD and 750 BHD, as a maximum, per square meter.
Those who are unaccepting of this reality in the hopes of improving conditions soon must realize that the decline and recession will last between three to five years, where we hopefully begin to recover from the fifth year onwards. Do not blame COVID-19 for not renting or selling your property; real estate at a reasonable price and location that brings you good news do not stand in the market, meaning, it is in circulation. Under par properties or units with exaggerated price tags have no place in the market in the coming years.
This article was published as part of the fifth edition of Property Finder Bahrain’s Trends Report
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