Bahrain has worked really hard over the past year to build an excellent reputation in the real estate market and the year 2014 is a witness of how dominant the kingdom of Bahrain is now in the market.

The real estate market in Bahrain nowadays is the second largest economic sector in the kingdom as it runs 16 other sector.

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The regulation terms for real estate development law in Bahrain

And in order to maintain its place in that flourishing market, the Government approved the issuance of Bahrain’s new real estate development law, where some real estate experts confirmed it would increase the purchasing rate between 50% and 60%.

The issuance of this law came after the long calls from investors on the importance to have a law that organizes the work in this sector and protects the rights of each of Realtors, investors and buyers.

Why this law is considered the guarantee to preserving the rights of Realtors, investors and buyers?

First The developer is required to deposit 20% of the value of the project in a bank account that is called “Deposit Account”in cash or in the form of the project’s land before starting the process of selling on maps.

That is in addition to the establishment of an escrow account in the project’s name in order to deposit the amounts from both the developers and depositors and cash them on the establishment, implementation and project management.


And therefore it will be impossible to start the project without having the money resources that guarantee its completion.

Also, the existence of separate bank accounts for each project will prevent the mix between accounts and the possibility of using one project’s account on the establishment of another.

Second only a licensed developer is permitted to practice the business of real estate development.

Fines will be imposed over any developer who practices real estate development activity without a license.

Third it is not permitted to start the development of a certain project unless the master plan is finished and licensed by the competent authority.

Fourth the developer is committed to execute the project according to the agreed specifications and any change in these specifications will only be approved by the competent authority if it sees the necessity of these changes to the projects’ development.


Any delay or refrain to deliver the sold units will cause the developer to be held custody for a year or paying a fine.

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Fifth the commission paid to the developer for selling one unit will not exceed 3%.

Sixth if the developer temporarily was unable for any reason to proceed with the project, then the competent authorities will take all the necessary measures to protect the rights of the depositors by either completing the project or refunding the money to the depositors.

This requirement will definitely guarantee that none of the projects will be delayed in the future.

Seventh Delisting the developers if they didn’t start executing the project within six month from getting the license to develop.

Eighth Banning any advertisements for the purpose of selling units till the finishing of the master plan and registering those units; then and only then the Competent governmental authorities can organize the rules for advertising or participating in exhibitions.


This will with no doubt prevent fraud in the selling process or the action of selling units that don’t exist.

There is no doubt that this law came to put an end to the persistence of some developers who made huge troubles with buyers and investors.

Advantages of issuing the law:-

Issuing the law in this timing is no coincidence. Since the real estate market is at its peak right now, gaining the trust of investors in this market is a priority to the Kingdom of Bahrain.

The existence of a legal reference to return to whenever any dispute occurs is a guarantee of the investor and the buyer’s rights.

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