Overpriced property market struggling to attract buyers

by Saba Haider Saturday, 14 June 2008

The recent slump in Kuwait's real estate market is because buyers are being priced out of the market, the chairman of local property firm Al-Mutakhasses said on Saturday.

Faraj Al-Khudari said in a report the market was witnessing "stagnation" with prices remaining above levels potential buyers were able or willing to pay, according to state news agency KUNA.
The situation had created "a wide distance between the prices of demand and supply", Al-Khudari said.

He attributed high cost of real estate in the Gulf state to factors such as inflation and the rising costs of construction materials, as well as the summer season and a lack of tourism-based real estate investments.

Al-Khudari called on the government to establish an authority to promote the sector.

Government data showed Kuwaiti real estate sales dropped about 35 percent in April, the first decline in months.

Global Investment House said at the time the decline was due to government restrictions on residential property trading aimed at curbing record inflation. Real estate sales jumped 15 percent in March.

Inflation in the Gulf state hit a fresh record of 10.14 percent in February, driven by higher food costs and rents.

The value of all real estate deals - including residential, investment and commercial property - was around 206.03 million dinars ($772.7 million) in April compared to 316.75 million dinars a year ago, according to government data.

However, residential sales, the biggest segment of the market, fell to 94.31 million dinars in April compared to 185.47 million dinars in the same month last year.



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