Bahrain: Overview

RENTAL YIELDS

Yields are high in Bahrain at 10%

Yields are estimated by local realtors at well over 10%, given the present shortage of properties for rent and strong demand.

The rental market is almost entirely foreign-driven, and has grown greatly since the massive increase in US army numbers, who live largely in Juffair. More recently the Saudi oil boom has meant a substantial increase in new residents, who drive across the straits rather than live in Saudi. The World Trade Centre is another attraction. Finally, the construction boom itself is fuelling rental demand.

TAXES AND COSTS

Complete tax freedom

There are no income taxes in Bahrain. There is no withholding tax, capital gains tax, gift or inheritance tax.

The system is the same for residents and nonresidents.

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BUYING GUIDE

Transaction costs are very low in Bahrain

Roundtrip transaction costs, i.e., the total cost of buying and selling a property, in Bahrain are very low, at the most being around 5%.

The major variable is a possible 3% landscape maintenance charge, payable to the developer. Together with the real estate agent’s fee, that adds up to 4%, payable by the buyer. The buyer and seller share the real estate agent's fee of 1%.

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LANDLORD AND TENANT

Bahrain's pro-landlord rental market

Bahraini landlord and tenant market practices are PRO-LANDLORD.

Rents: Initial rents can be freely determined, as can rent increases. Three months' rent are paid in advance before a tenant can move in.

Tenant eviction: Landlords must serve a 60-day notice for termination of tenancy. In the absence of notice, tenancy agreements are automatically renewed on a monthly basis.

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ECONOMIC GROWTH

Not super-rich but still impressive

Bahrain is different from the other Gulf states, because it has little oil and has to earn its living in other ways. In regional terms it is relatively poor, but is experiencing very strong economic growth, with GDP growth above 5%.

Bahrain is the most democratic country in the region. In 2001, Bahrainis strongly backed proposals put by the emir - now the king - to turn the country into a constitutional monarchy with an elected parliament and an independent judiciary.

Elections were held in 2002 for the 40-member Council of Deputies, the first such poll in nearly 30 years. The new body includes a dozen Shia MPs. The country has been enjoying increasing freedom of expression even in the local context, and monitors report that the human rights situation has improved.

But the ruling family, the Al-Khalifas, still provide the prime minister, deputy prime minister, and ministers of foreign affairs, defense, oil and finance, in fact nearly half the cabinet members are related to each other. Political parties are banned, and Parliament’s upper house is unelected.