Kuwait real estate market dips
28 June 2023
Recovery and growth for GCC real estate
Kuwait’s real estate market recorded sales of KD714m ($2.3bn) in the first quarter of 2023, marking the lowest level since the third quarter of 2020, according to a report by National Bank of Kuwait (NBK).
The downward trend is attributed to heightened valuations in the residential sector and rising borrowing costs, as well as uncertainty about reforms to utility subsidies and the allotment of plots and housing units.
The report also says there has been a decline in residential sales activity to KD363m, its lowest since the first quarter of 2020. The decrease has been primarily driven by lower transaction volumes, particularly in the Hawalli and Al-Ahmadi governorates, which accounted for 54 per cent of total residential sales. Rising returns on deposits and speculation about government reforms in the sector could also be contributing factors.
At the same time, the residential price index eased for the second consecutive quarter, with growth slowing to 8.4 per cent compared to the same quarter in the previous year.
The NBK report also said that despite higher recorded valuations, particularly in Kuwait City and Hawalli, elevated prices seem to be deterring potential buyers.
The investment sector, encompassing apartment and apartment building sales, mirrored the residential trend, with a dip to KD254m. Despite a minor uptick in transaction volumes year-on-year, the slow recovery of the rental market and rising borrowing costs could be causing this downturn.
Commercial sector sales also declined by 5.8 per cent year-on-year to KD96m in the first quarter of 2023, although there was an increase in activity from the previous quarter. This was primarily supported by the concentration of sales in Jibla-Kuwait City, despite a quarterly transaction volume decline of 13.6 per cent.
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