By Shane McGinley
The report found the number of deals in the Gulf emirate was also up 69 percent
The value of real estate transactions in Kuwait rose by nearly half year-on-year in Q1, according to a report released by Kuwait International Bank (KIB).
Total request value reached KWD899m (US$3.2bn) in the first three months of the year, a rise of 49 percent compared to the same period last year.
The total number of deals was 2,657, up 69 percent compared to the first quarter of 2011.
January saw the highest number of sales, recording 1,022 deals worth KWD358.9m (US$1.279bn).
The majority of trades in the housing sector centred in Sabah Al-Ahmad city, followed by Abu Ftaira, Funaitees, Khairan and Salam.
“These figures reflect interest of medium-income investors in new districts where prices are generally affordable,” the Kuwait News Agency said.
Last year, a senior executive at Gulf Bank said mainstream banks in Kuwait are lobbying for an overhaul of mortgage regulations in a bid to open up the Gulf state’s underserved home loans market.
Islamic lenders already offer home financing packages but conventional lenders are restricted from doing so, putting them at a disadvantage.
“Mortgage loans are something that is a big problem here in Kuwait,” said Aly Mahmoud Shalaby, head of consumer banking at Gulf Bank, Kuwait’s second largest lender by market value. “Conventional banks are upset and not happy and we [put] pressure on the government.”
The lack of mortgage options has left a number of Kuwaitis struggling to secure financing to purchase their own home. A government lending scheme offers first-time buyers a loan of KWD70,000 ($254,684) and many nationals apply for a 15-year personal loan for another KWD70,000.
But Shalaby said this is usually not enough to cover the price of buying and building a “reasonable villa”, which he said costs on average around KWD250,000.
“That is a huge gap… it doesn’t fulfill it, which means they need [alternative finance] from their parents,” Shalaby said.