The Kuwait real estate sector is thriving – here are 6 reasons why

Sakan recently unveiled its latest Q3 2024 report about Kuwait, providing a comprehensive overview of the real estate market in Kuwait.

Six trends shaping Kuwait’s real estate market

• The rise of residential cities: Government housing projects, such as Al Mutlaa City and South Saad Al Abdullah City, contribute to the creation of modern urban communities and accommodate the growing demand for housing units
• A golden age of infrastructure: Huge investments estimated at $32.6bn to develop infrastructure, such as roads, airports and railway projects, contribute to boosting economic and real estate activity
• Storage crisis and its impact on the market: The challenges facing the storage sector due to high demand and lack of licensed space highlight the need for more regulation and investment in this sector
• Changes in property ownership for foreigners: New rules now provide GCC nationals with the same property rights as Kuwaiti nationals in Kuwait, while strict conditions are set for other nationalities to buy real estate
• Gulf tourism wave: Expectations of an increase in the number of tourists to 7.4m by 2028 boost demand for the hospitality and retail sectors, which will positively reflect on the real estate market
• Offices: Flight to quality: With more options available, the office market is seeing a shift towards higher quality offices, catering to the needs of businesses seeking better working environments

The Kuwaiti real estate market witnessed strong performance during the third quarter of 2024, with a balance between stability in the value of transactions and growth in the number of deals.

Although the value of real estate transactions remained stable at KD853m ($2.8bn), the number of transactions increased by 24 per cent, indicating the market’s focus on smaller real estate transactions, especially in the residential and investment sectors.

Indeed, investment property sales grew by 49.5 per cent in Q3 compared to the same period last year, according to government data. This increase reflects increased interest from buyers in investment apartments, compensating for a weaker commercial property performance.

Despite the challenges facing the commercial real estate sector, this expansion in residential investment reinforces the position of the Kuwaiti real estate market as a promising investment destination in the region.

Housing and infrastructure projects play a vital role in boosting the performance of the Kuwaiti real estate market, as highlighted in the Q3 2024 report.

Ongoing major housing projects include Mutlaa City ($30bn), Jaber Al-Ahmad City ($1.4bn), and South Saad Al-Abdullah ($6.9bn), contributing to the creation of sustainable housing opportunities and stimulating economic growth.

Apartment rental prices in Kuwait during the third quarter of 2024 showed clear disparities between governorates and regions, reflecting the diversity of housing options and demand for different properties.

The Capital Governorate topped the list of highest rents, with the average rent for a two-bedroom at KD643 ($2,100) per month and a three-bedroom apartment reaching KD888 ($2,900) per month.

The capital is considered the most attractive due to its proximity to business centres and services.

The Hawalli Governorate came in second, especially in the coast-facing areas of Salmiya and Salwa, where rents reach KD550 ($1,800) per month for a two-bedroom apartment and KD693 ($2,200) for a three-bedroom apartment.

Investment yields for apartments based on median prices were estimated at 7.6 per cent (two-bedroom) and 9.1 per cent (three-bedroom) in the Hawalli-Salmiya area, and 6.9 per cent (2-bedroom) and 8 per cent (3-bedroom) in the Sabah Al Salem area.

The report also shows housing prices across Kuwait. The average house price in Kuwait was KD480,000 ($1.6m), with the Capital Governorate leading the way with an average of KD750,000 ($2.4m).