Expats' Bahrain Property Buying Power Explored

Bahrain has become an attractive investment opportunity for expats looking to buy property in the country. In recent years, Bahrain has changed its real estate laws to allow non-citizens to purchase properties, but only in certain areas. Expats can buy freehold properties in places like Ahmed Al-Fateh, Hoora, Seef, Amwaj Islands, and Durrat Al-Bahrain. While Bahrain doesn't impose taxes on its citizens, foreign property owners must pay a 10% municipal tax on their properties.

What are the requirements for expats to buy property in Bahrain?

Expats looking to buy property in Bahrain will find a welcoming market, but there are some rules and regulations to be aware of. While foreign nationals can own property in Bahrain, this is usually restricted to certain designated areas, which tend to be high-end and developed for luxury living and commercial activities. In these zones, expats can own freehold properties, giving them full ownership rights. Outside of these areas, the rules are more restrictive, and foreigners may not be able to own land outright.

The process of buying property in Bahrain as a foreigner may be more complex than for locals, with additional paperwork and longer waiting times for approvals. It is recommended to consult a local real estate expert or legal advisor before proceeding with any purchase, as international relations and policies can change.

To purchase property in Bahrain as an expat, there is no specific visa or permit requirement, and the process is separate from immigration and residency procedures. However, if you plan to live in Bahrain, you will need to follow the standard visa and residency application processes. Your transaction and legal status in the country must comply with Bahraini laws.

While there is no minimum investment requirement for foreigners, the designated areas in which they can buy property tend to have higher market prices, creating a de facto minimum investment.

When it comes to specific areas where expats can buy property in Bahrain, there are several options:

• Amwaj Islands: Located 10.5km northeast of Bahrain's main island, this community offers a luxurious lifestyle with modern amenities, retail spots, healthcare facilities, and tourism attractions.
• Juffair: A vibrant area on the southeast side of the capital, Manama, featuring hotels, restaurants, flats, and villas.
• Durrat Al Bahrain: A resort island city with beachfront villas, luxury apartments, offices, hotels, and a range of entertainment and leisure facilities.
• Seef: A commercial district in Manama with luxury apartments, headquarters for banks, and multiple shopping malls.
• Bahrain Bay: A large waterfront project in the heart of Manama, providing residential, commercial, and tourist services.
• Abraj Al Lulu: A large residential project in Manama with luxury apartments and a range of sports and recreational facilities.
• Reef Island: An artificial island 2km north of downtown Manama, offering a gated community with a five-star hotel, marina, shopping mall, and other amenities.
• Saar: A residential area in the west of Manama, known for its ancient history, green spaces, and large villas.
• Diyar Al Muharraq: A complex of seven artificial islands with picturesque beaches, historical monuments, and luxurious services and facilities.

In summary, while expats can certainly buy property in Bahrain, they need to be aware of the designated areas where foreign ownership is permitted and the associated requirements and restrictions. Consulting with legal and real estate professionals is essential to navigate the complexities of the Bahraini property market successfully.

Where in Bahrain can expats buy property?

Expats can buy property in Bahrain, but only in certain areas. These include:

• Amwaj Islands: A community of six man-made islands, located 10.5km northeast of Bahrain's main island, offering a luxurious lifestyle with modern amenities and facilities.
• Juffair: A vibrant area in the southeast side of the capital, Manama, known for its hotels, restaurants, flats, and villas. It is also home to attractions such as Al Fateh Mosque and Al Shabab Road.
• Durrat Al Bahrain: The third-largest artificial island in Bahrain, located 40km south of the capital. It features beachfront villas, luxury apartments, offices, hotels, resorts, parks, entertainment precincts, and more.
• Seef: A commercial district in Manama with headquarters for banks, luxury apartments, and shopping malls.
• Bahrain Bay: A large waterfront project in the heart of Manama, providing residential, commercial, and tourist services. It is home to attractions such as the Four Seasons Hotel and Water-bay Residence.
• Reef Island: An artificial island located 2km north of downtown Manama, offering amenities such as a five-star hotel, a marina, and a shopping mall.
• Saar: A residential area in the west of Manama, known for its compounds with large villas. It is considered the commercial hub of the kingdom and is close to the KSA border.
• Diyar Al Muharraq: A complex of seven artificial islands located 10.5km northeast of Manama, featuring picturesque beaches and a combination of ancient history and archaeological monuments.

In general, properties built on reclaimed land, such as those in Juffair, Seef, Amwaj Islands, Reef Island, and Durrat Al Bahrain, are available for purchase by expatriates. Additionally, there are specific areas in Bahrain where expats can buy freehold properties, such as Ahmed Al-Fateh, Hoora, Bu Ghazal, Northern Manama, and Dannat Hawar.

What are the fees and taxes involved in buying property in Bahrain as an expat?

While Bahrain is a tax-free country, foreign property owners must pay a 10% municipal tax on properties. On top of this, there are several fees and taxes that expats should be aware of when purchasing property in Bahrain.

Firstly, registration fees for the property range from 1.5% to 3%, depending on the property type and price. This fee is paid to the Bahrain Survey and Land Registration Bureau. Additionally, there may be Agency Fees involved, which are typically paid to a legal advisor or lawyer, and are negotiated based on the complexity of the transaction. If a real estate agency is involved, a Real Estate Agent Fee of 1% to 5% of the purchase price is standard, depending on the property type and overall purchase price.

It is important to note that expats can only purchase freehold properties in designated zones, and these zones tend to be high-end areas developed for luxury living and commercial activities. Outside of these areas, ownership rules are more restrictive, and foreigners may not be able to own land outright.

When purchasing property in Bahrain, it is advisable to consult with a local real estate expert or legal advisor, as regulations and policies can change. Engaging a local lawyer can help ensure a smooth and legally compliant process, including conducting a Title Search to verify the property's ownership and ensuring compliance with all applicable taxes and fees.

What is the process of buying property in Bahrain as an expat?

Yes, foreigners can buy property in Bahrain, but there are some specific rules and restrictions to be aware of. Foreigners can only purchase freehold properties and only in certain designated areas, such as Amwaj Islands, Seef, and Juffair. These areas are usually high-end and developed for luxury living or commercial activities.

• Property Search: Begin by searching for properties that are of interest to you. You can do this through real estate agencies, online listings, or local contacts.
• Legal Checks: Conduct due diligence by consulting with a local real estate attorney or office to understand the regulations and restrictions specific to the property you're interested in. It is important to verify that the property is in an area where foreign nationals are permitted to own property.
• Offer and Acceptance: Once you have found a suitable property, make an offer. If your offer is accepted, it will lead to a formal agreement between you and the seller.
• Legal Assistance: Engage the services of a local attorney experienced in real estate transactions to ensure a smooth and legally sound process. They can assist with the Sale and Purchase Agreement and conduct a Title Search to verify the property's ownership and ensure there are no legal disputes.
• Survey and Appraisal: Conduct a survey and property appraisal to determine the condition and value of the property.
• Conveyance and Closing: Finalize the transaction by exchanging contracts and completing the sale.
• Registration: After the sale is complete, register the property with the Bahrain Survey and Land Registration Bureau. Registration fees vary from 1.5% to 3% depending on the property type and price.

Additional Considerations:

• It is important to note that the agreement must be notarized at the legislation court.
• While Bahrain does not have a minimum investment requirement for foreigners, the market prices in the designated areas where foreigners can buy tend to be higher.
• Foreign property owners must pay a 10% municipal tax on properties.
• Owning property in Bahrain can facilitate obtaining a residency permit, especially if it is a significant investment. Bahrain offers a residency scheme for foreign nationals who invest in real estate, which involves meeting a minimum investment amount and submitting proof of property ownership, along with other required documents.
• Foreigners can get property loans in Bahrain, but eligibility criteria and requirements vary. Some banks that offer mortgages to foreigners include Ahli United Bank, Bahrain Islamic Bank, and National Bank of Bahrain.

Common Pitfalls and Problems:

• Legal Complexities: Navigating property laws and regulations as a foreign buyer can be complex, so it is important to seek legal advice.
• Real Property Tax: Understanding and managing real property tax obligations is essential.
• Environmental Considerations: Some properties may have environmental restrictions or require assessments.
• It is recommended to consult with a lawyer or real estate agent throughout the process to avoid any pitfalls and ensure compliance with all regulations.

What are the benefits of buying property in Bahrain as an expat?

Bahrain has become an attractive destination for expats looking to relocate, even topping InterNations' 2018 list of the best expat countries. The country's property market has grown significantly, with a lot of investment opportunities in both businesses and residential developments.

Legal protection and well-defined procedures:

Bahrain's legal property ownership rights are sophisticated and well-developed, providing protection for purchasers once permission to buy is granted and deeds of ownership are transferred. The procedures for buying property in Bahrain are similar to those in other countries, and it is recommended to seek independent legal assistance throughout the process.

Residency and sponsorship benefits:

As an owner of a freehold property in Bahrain, you are entitled to a Self Sponsorship Residence Permit, which is valid for life and renewable every 2 to 5 years. This permit also allows you to sponsor a residence permit for your spouse (if they are not employed) and children under 18. Additionally, you and your spouse can enter and exit the country without needing a return visa.

Tax advantages:

While foreign property owners in Bahrain must pay a 10% municipal tax on properties, the country is otherwise tax-free, which can provide significant financial benefits for expats.

Investment opportunities:

Bahrain offers a range of investment opportunities in both residential and commercial real estate. The country's property market is worth over $6 billion, and the relaxation of ownership laws has led to increased demand for apartments, villas, and other properties.

Access to desirable locations:

As an expat, you can buy property in specific areas of Bahrain, including Amwaj Islands, Juffair, Seef, Durrat Al Bahrain, and more. These areas offer modern amenities, luxurious lifestyles, and easy access to essential services and attractions.

Strong expat community:

Bahrain is highly recommended by expatriates as a place to relocate, and the country has seen an influx of foreign nationals investing in property. This means that there is already a strong and established expat community in Bahrain, which can provide support and make the transition smoother for new expats.

Frequently asked questions