Real estate trading declined by 19% in the first half of the holy month of Ramadan, to fall to regarding 42.69 million dinars, compared to a circulation of 52.74 million dinars in the first half of Ramadan 2022, and regarding 45.49 million dinars for the same period of Ramadan 2021, according to the Survey and Land Registration Authority in the Kingdom of Bahrain. .
While the number of real estate transactions increased to 1,260 in the first half of the current Ramadan, compared to 619 real estate transactions in the first half of Ramadan 2022, with a growth rate of 104%.
The highest trading day during the first half of the current Ramadan was on April 2, when the trading volume amounted to 9.8 million dinars, while the lowest trading day was on March 26, when it amounted to 2.27 million dinars.
The volume of trading in the current Ramadan, compared to previous years, was affected by the rise in interest rates on bank deposits to record levels, which causes high borrowing costs for those wishing to buy real estate.
The Central Bank of Bahrain raised the basic interest rates on deposits 9 times in a row, from March 2022 to March 2023, according to the US Federal Reserve, due to the Bahraini dinar being pegged to the US dollar.
The total interest rate hikes during the year for 9 consecutive times amounted to 475 points, in light of developments in the international financial markets, and within the measures taken by the Central Bank to ensure the smooth performance of the money markets in the Kingdom of Bahrain.
The Central Bank also raised the basic interest rates on one-day deposits during the year 2022 to 1% in March, 1.5% in May, 2.25% in June, 3% in July, 3.75% in September, and 4.5%. in November, to 5% in December, to 5.25% in February 2023, and to 5.5% in March 2023.
And raising the basic interest rates on one-week deposits during 2022 to 1.25% in March, 1.75% in May, 2.5% in June, 3.25% in July, 4% in September, 4.75% in November, 5.25% in December, and to 5.5% in February. 2023, and to 5.75% in March 2023.
On a global level, US finance professor Jeremy Siegel warned that the recent turmoil in the US banking sector threatens to restrict lending, pressure on commercial real estate and lower economic growth.
The retired finance professor at Wharton said during the Wisdom Tree blog: “The pressure of deposit exits will lead to tightening lending standards, which is negative for the economy in the coming period.”
US local banks have seen billions of dollars out of deposits, as anxiety mounts among customers following the collapse of several banks.
“We haven’t seen sharp losses in commercial real estate, but the expected weakness is likely to lead to a further slowdown in the second half of the year,” Siegel said. “It may take a month or two before the full impact of the Silicon Valley crash appears in economic data.”
