Residential sales have fallen 5 percent, driven mainly by a decline in transaction volumes, while Investment sector sales reached $1.23bn in Q2 2018, nearly double last year
Second quarter real estate sales in Kuwait are up 31 percent to KD 774 million ($2.55 billion) from the time period the previous year, according to a new report from NBK Economics.
In a new report, NBK said real estate sales rose “modestly” between the first and second quarters of 2018, while the volume of transactions are up 13 percent year-on-year.
“Although the market remains soft relative to the highs of 2014-2015, the improvement in activity levels versus last year and a recent modest rebound in residential prices are encouraging signs,” the report sad.
“The improvements were likely helped by a better macroeconomic outlook and a confidence boost from higher oil prices.”
Investment sector sales reached KD 347 million ($1.23 billion) in Q2 2018, nearly double the performance of last year.
Additionally, prices have fallen significantly since 2017, with prices of buildings down 10 percent and apartments down 6 percent compared to a year ago.
“Sellers and buyers may be in the process of converging to a new lower equilibrium price, in line with lower building valuations and high vacancy rates for apartments,” the report noted.
“We expect prices in this sector to stabilise once the gap between demand and supply narrows, although this may take some time.”
Residential sales were found to have fallen 5 percent year-on-year to KD 306 million ($1.01 billion), driven mainly by a decline in transaction volumes. Home prices, however, posted a small 1.1 percent increase. The decline of land prices appears to be stabilising, with a rate of decline slowing to 0.8 percent in Q2.
Commercial sector sales rose 40 percent to KD 120 million in Q2, with 29 transactions compared to 13 during the same time period last year.
Overall, sales and activity are strong relative to previous quarters, with prices have eased to become more in line with demand.
“However, downside risk is still present. Rising interest rates may weaken demand for housing, and persisting oversupply in the rental market is likely to keep prices subdued,” the report said.
“Meanwhile, home and land prices, although recovering, may see headwinds in the near-to-medium term as more areas and homes are introduced and distributed by the Public Authority for Housing Welfare.”