Bahrain property market quiet, prices static

* Bahrain property market prices static

* Buyers waiting to see impact of credit crisis

* Developers' cash-flows may come under pressure

By Frederik Richter

MANAMA, Dec 1 (Reuters) - Bahrain's real estate market is starting to feel the effects of the global financial crisis, but its more modest growth rate than nearby Dubai should prevent it from seeing a sharp decline, local property experts say.

"Prices over the past months have been fairly static, nobody is buying and nobody is selling, there's little activity", said Mike Williams, senior director at real estate adviser CB Richard Ellis in Bahrain.

He said property buyers are waiting for the local impact of the global crisis to become clear, while sellers are not desperate to sell, having largely not bought for speculation.

The CEO of Bahrain-based Sico Investment Bank, Anthony Mallis, said prices had started to fall slightly in areas of the capital Manama dominated by expatriates, but were still rising in areas with a high share of Bahraini upper and middle classes.

A number of high-end housing and commercial projects are under development on newly reclaimed land in the north of Bahrain, an island with a population of just over 1 million, but so far no developer has announced any major project cuts.

"Those that are being worked on will be completed, whether they'll be all occupied is another question," Mallis said.

Williams said the current reluctance of buyers could put developers' cash-flows under pressure.

Property growth in Bahrain has been fuelled by demand from a growing population and an influx of local and regional money, unlike Dubai, which attracted speculators from around the world.

Signs that Dubai's property boom days are over have been increasing as developers scale back projects, property prices fall and jobs are cut.

Meanwhile, in Bahrain, the presence of the U.S. Navy's Fifth Fleet also helps to bolster the local the housing market.

The U.S. Navy last month decided to allow sailors' spouses to permanently live in Bahrain again, lifting a 2004 ban imposed because of security fears.

"Making this a family posting again will put pressure on family housing for the next two to three years," Williams said.

While the luxury and middle segment of the market are overall in a supply-demand equilibrium, the lower end has long been neglected by developers. "There's a massive shortage in the low-income housing market," Williams said.

Newly launched developer Naseej, owned by a consortium led by Islamic investment bank Ithmaar ITHMR.BH, said it sees strong opportunities in low-cost housing.

The commercial property sector has not yet felt any pain, as the local financial system has so far shown resilience to the crisis.

"We have not been impacted at all, banks are still expressing interest in relocating to us," said Salwan Uchi, marketing director at the Bahrain Financial Harbour, a key project, which is mainly commercial.

Experts say if the Dubai real estate bubble bursts, shaking confidence in other Gulf Arab property markets, the impact on Bahrain could be limited.

"The boom in Bahrain started only three years ago, the accumulated baggage is much smaller, and the stock of capital invested is significantly smaller (than in Dubai)", Mallis said. (Reporting by Frederik Richter; Editing by Andrew Macdonald)