By Gavin Davids
Despite fall in liquidity, commercial transactions rose to unprecedented levels.
Private and investment housing occupied 81.3 percent of the Kuwaiti domestic real estate market liquidity in 2009, a report by Al Shall Consultancy said on Saturday.
The report added that the business sector took up 18.3 percent of the market liquidity, while warehouses took up a mere 0.4 percent.
Despite the fall of the liquidity in real estate trading in 2009, the average value per transaction for private housing remained at $760,788 dollars, as compared to $729,369 dollars in 2008, according to the report. This was in contrast to the average value of a single deal for investment housing which dropped from $1.9 million to $1.79 million during the year.
The report also indicated that commercial transactions rose to an unprecedented level, increasing to $10.7 million from $9.64 million the previous year.
Kuwait’s real estate sales sector experienced a surge in growth in 2009, with a 41 percent rise measured till November. Sales in the Gulf State rose to $672.6 million from $478.13 million.
The consultancy firm noted that the fall in the ‘value of the deal’ in investment activities led to a 3.4 percent decrease in overall property deals.
The report also showed that the liquidity of real estate deals in 2009 dropped considerably from 2008 levels, with the exception of December.
The total value of transactions, agencies and contracts for 2009 amounted to $64.04 billion, a 33.5 percent drop compared to 2008, when the total value was approximately $96.2 million. In comparison to 2008’s record high of $155.17 billion, the total value of transactions, agencies and contracts fell by 58.7 percent.
The report added that the deals of 2009 came eighth in terms of liquidity of the local property market, in the last 11 years.
Kuwait has an indeginous population of approx 1m, and approx 85,000 are registered for social housing. Less than 10% you may say, but one only qualifies if one is male, married has a child so the figure of 85,000 does not include children, kuwaiti ladies married to non-kuwaitis etc.. The government has not completed the 5 new housing areas for social housing, coupled with a restricted credit policy (capped at 40% of your base for financial obligations and a max of 70k from the private banks) and a long history up to 2008 of local investment companies flipping/trading residential land (now illegal) has resulted in the maximum one can borrow of KD140k (this includes the govertment interest free loan of KD70k) not covering the minimum housing prices of KD170k and rising. So the increase, in percentage terms, relates to the merchant transactions but a more telling figure would be actual quantities per area.