Real Estate Competitiveness and the Need for Rapid Legal Evolution

The real estate sector remains one of the key pillars of Bahrain’s national economy. The enactment of Law No. (27) of 2017 and the Decision No. (1) of 2020 regulating Provisions of Owners Unions of Joint Properties, represented a significant step toward institutionalising the sector and enhancing investor confidence. However, in today’s highly competitive global environment, legislative adequacy alone is no longer enough. What increasingly determines a market’s attractiveness is the speed with which its legal framework evolves to meet international investor expectations—particularly in the governance of jointly owned properties, commonly known as Owners’ Associations.

Bahrain’s current legal framework provides a solid foundation of investor protection. The law grants Owners’ Associations independent legal personality, ensuring a clear separation between property management and the financial position of the developer. It also mandates registered bylaws, the establishment of reserve funds to ensure sustainable maintenance, and compulsory insurance against risk. These measures form an essential first layer of protection and contribute positively to market stability.

Yet global competition for real estate capital has intensified. Investors today look beyond basic safeguards toward more advanced systems of oversight, transparency, and enforcement. One of the most pressing challenges in this regard is mitigating the risk of financial mismanagement or abuse within Owners’ Associations. Experience across markets shows that legal loopholes—if not addressed proactively—can undermine confidence and erode asset value.

To strengthen trust, Bahrain would benefit from enhanced regulatory oversight mechanisms. Linking Owners’ Associations’ bank accounts to a unified digital platform under regulatory supervision would allow real-time monitoring of financial flows, improve accountability, and embed continuous oversight into daily operations. Such transparency reassures investors that service charges and maintenance funds are being managed responsibly and for their intended purpose. Enforcement is equally critical. Strengthening penalties for violations—extending to criminal liability in cases involving conflicts of interest by property managers—would send a clear and reassuring signal to both local and international investors. Effective enforcement is not punitive by nature; rather, it serves as a cornerstone of confidence in well-regulated markets.

Modern investors expect clear visibility over operating costs and service charges. They want assurance that expenses are reasonable, proportionate, and directly linked to asset preservation—not consumed by inflated or unjustified administrative costs. Transparency in cost management has therefore become a competitive advantage rather than a regulatory luxury.

For Bahrain to remain a preferred destination for real estate investment, strategic focus must balance cost control with improved service quality. Capital today is highly mobile, and investors are sensitive to the ease with which they can enter and exit markets. Jurisdictions that fail to address inefficiencies or respond slowly to investor concerns risk losing competitiveness.

Globally, the pace of reform has accelerated. Many markets have already adopted blockchain-based property registration systems and introduced specialised, fast-track real estate arbitration frameworks to address one of investors’ greatest concerns: slow dispute resolution and delayed returns. These developments highlight the importance of agility in regulatory decision-making.

Updating Law No. (27) of 2017 to align with international best practices is therefore not a matter of ambition, but of necessity. An investor who feels protected by a transparent, technologically enabled, and effectively enforced regulatory environment—and who can participate in Owners’ Associations from anywhere in the world—is far more likely to reinvest and to promote Bahrain as a destination of choice.

In a competitive global real estate market, legal agility is no longer optional. It is a prerequisite for sustained leadership.

(Captain Mahmood Al Mahmood is the Editor-in-Chief of The Daily Tribune and the President of the Arab-African Unity Organisation for Relief, Human Rights and Counterterrorism)