A slump in the Kuwait real estate sector is likely to continue this year, according to property experts in the country.
Trades in the sector of residential properties are expected to remain limited in 2024 maintaining the bearish trend of 2023 that recorded a 30 per cent fall compared to the previous year’s transactions.
Experts revealed that statistics of the real estate and documentation division at the Ministry of Justice showed that there were 3,039 housing deals in 2023, in contrast to 4,362 transactions in 2022.
Kuwait real estate forecast
Total value of the dealings dropped from KD1.927bn to ($6bn) in 2022 to KD1.287bn ($4bn) in 2023, down by 33 percent.
The number of deals in the investment segment (apartment buildings) in Kuwait dropped by 16 per cent last year compared to 2022; from 1,369 to 1,140 contracts.
The recorded value fell from KD1.98bn ($6.4bn) to KD822m ($2.7bn), down by 25 per cent.
In the commercial sector (offices, stores, malls), the number of the contracts dropped by 27 per cent last year, where 116 sales were recorded compared 161 in 2022.
The total value moved down by 29 per cent from KD605m ($2bn) to KD425m ($1.4bn).
Sulaiman Al Dulaijan, manager of Al Dulaijan Real-Estate Office, said in an interview with state run Kuwait News Agency (KUNA) that the trend in the residential segment would remain low in 2024, noting that the authorities had enacted fresh laws to limit speculations in this particular sector.
Al Dulaijan said the year 2023 witnessed a 5 to 15 per cent drop in the residences’ value, particularly in regions of noticeable activity, namely Sabah Al Ahmad Sea City, Abu Ftairah, Fnaitees, Al Masayel, Salwa and Al Rumaithya.
He clarified that the forecast downward trend would be in the regions eyed as far from the capital region, where activity would remain unchanged despite enactment of new laws on undeveloped plots’ monopoly.
In part, an owner of lands exceeding 1,500 square meters will be compelled to pay the state annual fees for each undeveloped plot.
Al Dulaijan noted that there has been recession in the speculator activity in the residential sector due to the banks’ decision not to lend a citizen who has more than two houses, in addition to the shift of their funds to the investment and handicrafts’ fields.
He noted that the investment segment has recently showed a decline after authorities abstained from granting residency to some expatriates, amid forecast instability.
Plot prices in the regions between the first and fourth road rings have remained high as compared to the other residential areas; however, number of transactions has remained unchanged in these inner areas.
Qais Al Ghanem, a realty expert, told KUNA that some of the reasons for the downward trend in the realty sector is funds’ shift to the safe haven; the banks that offer lucrative interests.
The recently issued land monopoly law is not expected to be effective in lowering prices in the near future, however it may be so in the coming years, Al-Ghanem said.
He proposed establishing new residential areas with a main role for the private sector.
He lauded the banks’ decision not to fund nationals who own more than two houses, explaining that the move would stem speculations, nudge speculators to quit the sector, thus raising anticipations for bearish prices in the future.
Alaa Behbehani, General Manager of Abraj Behbahani Real-Estate company, dubbed as normal the fall in the field, amid the soaring prices in the aftermath of the coronavirus outbreak and the lucrative investments in the banks.
He singled out Sabah Al Ahmad Sea City as the region with the steepest fall, due to an upsurge of speculations.
The housing sector, since the third quarter of 2021, witnessed drastic decline with respect of the total trade value, while that of the investment segment witnessed slight rise.
However, the commercial sector maintained balance.
The lacklustre atmosphere in the sector in Kuwait is forecast to hold in the current year in the shadow of the geopolitical and economic conditions.
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