Gulf Daily News - 29/5/2006

MANY Bahrainis are being priced out of the housing market due to a lack of decent mortgage loans available, according to experts.

Few reasonable mortgages are being offered, making it difficult for investors to sell units in both the primary and secondary markets, said property developers, financers, investors and exhibitors at Property Arabia 2006.

RealCAPITA finance vice-president Hassan Mansour said this takes many properties out of the reach of average Bahrainis.

"The mortgage rates on offer are often not competitive and they require a down payment of 20 per cent, which would mean about BD15,000 or BD20,000 per property," he said.

"Most people cannot afford this."

He said that a solution would be for the government to allow the private sector to enter the affordable houses market, but that the groundwork for such a move was not yet in place.

"At the moment for people with modest incomes, the only option available to them is the Housing Bank, for which they have to wait years for their turn to come," added Mr Mansour.

Gulf Finance House Commercial Bank assistant general manager Ebrahim Al Mannai said he believed the government should do more to improve the wealth of average Bahrainis and increase the liquidity in the market.

"There could be a government bank that could refinance mortgage loans at a lower rate to reduce the debt burden on consumers," he said.

"This would even benefit existing banks because consumers would be able to borrow even more."

Mr Al Mannai, who said it was his personal opinion and not those of the bank, added he would also welcome a government development bank that would give loans to small and medium-sized businesses at a decent rate.

"We need a bank like this to cater to business which need loans of between BD20,000 to BD100,000, which we don't currently have," he said.

"This would make Bahrainis a lot more productive and may even solve the free visa issue.

"One of the main reasons that Bahrainis sell their visas or give their businesses to expats in exchange for monthly payments is because they are unable to get the loans they need."

Al Khaleej Development Company (Tameer) business development executive director Mohammed Abdul Khaliq agreed that current mortgage facilities were not helping business.

He said that more banks are needed which deal specifically in mortgages, rather than conventional commercial banks, because they would be willing to offer longer-term loans.

"Mortgages are available, but are usually not flexible enough," said Mr Abdul Khaliq.

"We established the Real Estate Finance Company (REEF), the first company specialising in financing property projects, for this reason."

He said the property sector was also facing problems because of inflation.

"Sand prices are currently very high because of the shortage we are experiencing," he said.

"In addition to this, steel and concrete prices are going up because of the mega projects being announced in the region. Demand is growing while supply is staying the same."

Mr Abdul Khaliq said that he hopes this issue will be resolved following a Cabinet decision to open up the building materials supply market.

He also wants the government to hurry up with its plans to revamp Bahrain's zoning system.

"At the moment, an investor may find a plot of land he wants but when he checks with the authorities, he'll find that it isn't zoned," said Mr Abdul Khaliq.

"He then has to decide whether to buy the land based on whether it is near a commercial zone.

"This creates a problem because people then start to invest money based on speculation, which isn't how it should be.

"Investors should be confident that authorities will not come along in the future and declare the area a residential zone."

The four-day Property Arabia 2006, which ended yesterday at the Bahrain International Exhibition Centre, was organised by Arabian Exhibition Management under the patronage of the Economic Development Board (EDB).