Curbs on property purchase 'will hit economy'
Manama, December 26, 2007
An MP's proposal barring foreigners from buying property in certain areas of Bahrain has received a mixed response from real estate firms.
"The passing of this proposal will definitely have a negative impact on the economy and foreign investment," Landmark Bahrain chief executive Mohammed Shafi told the Gulf Daily News, our sister newspaper.
"The idea of changing the law just to be able to build 4,000 houses for Bahrainis will create panic in the market at a time when other countries in the region are slowly catching up with our five-year headstart of attracting foreign investment.
"Grassroots spending from anyone living in Bahrain is suffice for the economy to support the reclamation of more land around Bahrain which is actually cheaper than developing real estate inland.
"The impact of this proposal has been upsetting and everyone who has so far spoken to me is concerned about the real estate that they have invested in and whether they will eventually be the owners or not."
The idea of restricting the purchase of land in specific areas of Bahrain already exists as some areas are defined as being residential family zones, Bahrain Real Estate Association board member and administration manager Saleh Mohammed Faqihi has said.
"There are high investment areas in Bahrain such as Amwaj or Durrat, but even if you were to build a block of apartments in Manama and the price of each apartment is BD60,000 the price will not go down just by barring foreigners from investing in that area.
"The introduction of this proposal is good for Bahrainis as expatriates will pay more in locations where the majority of low-income Bahrainis couldn't afford.
"In terms of the economy, however, the proposal could have a negative impact on our open market, and reverting back to the old system would be defeating the objective of maintaining a free trade economy."
"Banning GCC nationals from purchasing land has never been discussed before and this is the first time I have ever heard of it," Amwaj Gateway general manager and Bipex publicity officer Rizwan Mumtaz said.
"The Bahrain economy has received a tremendous boost from GCC nationals and I don't think that this proposal is the correct path to take at a time when the region is becoming closer.
"The Bahrain-Qatar Causeway is being developed and banning other GCC nationals from owning land in specific areas is inappropriate when GCC nationals share the same culture."
The proposal could lead to a greater diversification of Bahrain's growth as more industries begin to target Bahrainised areas and the division of land properties could also decrease the inflation of rental and housing expenses according to Deluxe Real Estate operation and development manager Steven Brown.
"The economic consequence is that non-eligible land will decline in value as the opportunity value of the land has decreased," Mr Brown said.
"Whilst already built properties' values will rise at a traditional rate with no self correction, poorer citizens will be able to purchase villas at a more reasonable rate and from an economic standpoint this will lead to a second form of economic growth." -TradeArabia News Service