By Shane McGinley
Value of property deals declined, but number of transactions rose shows NBK data
Real estate sales in Kuwait increased nine percent month-on-month in November, driven by a 92 percent surge in the apartment investment sector, a report has found.
National Bank of Kuwait data found there were 542 property transactions registered in November, a rise on nine percent on the previous month, though the value of the deals had declined 20 percent to KD144m ($511m).
The drop in value was attributed to the poor performance of the commercial sector, which saw an 85 percent month-on-month drop in the total value of sales with only four deals completed.
While the residential sales sector as a whole fell six percent in volume, the investment sector, which consists mainly of apartment sales, rose 92 percent to 150 transactions. This is one of the sector’s strongest performances since June last year.
“Decent rates of economic growth, improving borrowing conditions and strong underlying demand for housing suggest that the property sector – at least outside of the commercial segment – is likely to remain fairly buoyant through 2011,” the report said.
While the November figure appears to show improvement in the sector, it is still around half the level of sales being witnessed earlier in the earlier part of 2010.
One of the main obstacles for potential buyers is the lack of liquidity available for mortgages. The number of loan approvals made by the Savings and Credit Bank (SCB) declined eighteen percent in November to 168, a year-on-year plunge of 46 percent and the lowest level of approvals since 2001.
“The total number of SCB loan approvals per month has averaged 274 – the weakest for years. This is likely related to the slow pace of the government’s land distribution program from earlier on, and perhaps to difficulties for borrowers in obtaining supplementary financing from banks,” the report said.
However, it does forecast that lending is likely to improve in 2011 “as the pace of plot distributions accelerates.”