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Bahrain, Saudi Arabia slowly open property mart to expatriates

January 2, 2001
Bahrain and Saudi Arabia may be moving, if gradually, towards allowing 100 per cent foreign ownership of land for development purposes, according to real estate sources there. Bahrain, for one, "has eased most of the requirements in the last few years.

Non-GCC nationals or companies are being brought into the fold, and allowed to take up land possession, maybe in specially designated areas," said Hussein Alsaffaf, managing director of Manama-based property developer Saffaf Homes.

"I believe talks in this regard are going on at the highest levels, and it will provide a definite boost to the property market." While banks operating in Bahrain can own the land on which their head office is located, sources suggest the "net could be cast wider, allowing companies in other sectors to do the same".

As for Saudi Arabia, "the new investment law passed in April commits to 100 per cent foreign ownership, but whether this extends to real estate as well is not known. "But there are definite indicators to liberalize the sector, which is quite the right move to make in these times and help draw in long-term capital commitment," said Donald Bradley, partner for Bahrain and Saudi Arabia at Cluttons, the UK property firm.

"Property in the Gulf is still relatively inexpensive compared to other world markets, with no taxes on occupancy and rental rates geared more towards the cost of construction than on actual land value. And there are extensive areas which could be made available. "Obviously, with foreign ownership allowed, property value will appreciate, which is why any opening up should proceed cautiously."

While rising oil prices have been a help, major property developments on the commercial side are taking place in Saudi Arabia the Faisaliah Center, which opened early this year, and the Kingdom Center, opening late this year, being the more prominent among them.

Where the government is finding it difficult to provide the funds, private developers are increasingly active in taking on infrastructure projects in the developing areas and then selling serviced plots. "All the main cities in the kingdom are expanding, and we see a definite demand for higher standard retail and office space," Bradley said.

Alsaffaf said: "Bahrain is still very competitive as an operating base compared to Dubai, with costs approximately 40 per cent lower. We are seeing a revival of interest by international companies, and the recent decision by Orbit to have its regional operations here is testimony to that. These will in turn fuel demand for bigger projects."

Up market properties, the 25-storey National Bank of Bahrain Tower for instance, are currently going for 7-10 Bahraini Dinars (about Dh70-Dh100) a square meter in Manama's commercial district, according to Bradley. Comparable rates in and around the Diplomatic Area and Seef are about 6-8 Dinars.
Source: Gulf News
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02 January 2001 06:27:12 PM