High Demand, High Liquidity: Kuwait's real estate sales reach $1.1 Billion in June
Real estate sales in the month of June in Kuwait increased by 27 per cent year-on-year, to reach KD339 million ($1.18 billion), a report said.
The solid growth in sales was across the three major segments of the market, added the latest Economic Update from the National Bank of Kuwait (NBK).
Overall, the first half of the year closed on an almost equal footing with the same period of last year, registering a 3 per cent year-on-year (y/y) increase.
The increase in the first half (H1) of 2013 came on the back of an exceptionally strong-performing commercial sector; by contrast, both the residential and investment sectors were slightly down compared to H1 2012. Nonetheless, the level of real estate transactions in Kuwait overall seems to be in good shape, the report said.
Sales in the residential sector totaled KD166 million in June, up 12 per cent y/y. Similar to May, the increase came about due to rising average transaction size, while the total number of transactions was down y/y in June. Residential sales reached KD 904 million in H1 2013, down a small 3 per cent compared to H1 2012.
A relatively sizeable drop in the total number of transactions in the first half was mostly offset by an increase in the average transaction size for both homes and plots of land (which make up most of the transactions in the segment).
The investment sector saw KD124 million in sales in June, a 9 per cent y/y increase. This makes the total sales for 1H2013 amount to KD655 million, a 5 per cent decline from H1 2012.
Although the sector saw an increase in the total number of transactions, the drop in sales was due to a smaller average transaction size. This was because the current year saw a substantial increase in the number of apartments sold, while the number of whole buildings sold declined.
June sales in the commercial sector reached KD 48 million, a huge 9-fold increase y/y. Such large monthly movements are somewhat common in the sector, though commercial sales have had solid results in the first half of the year.
Total sales for the segment reached KD216 million in the first 6 months of 2013, compared to just KD 102 million in the same period in 2012. The sector has seen some resurgence this year, backed by some involvement by the Kuwait Investment Authority to inject liquidity into the commercial market.
Though the extent of KIA’s involvement is difficult to quantify, it looks likely that the commercial sector is on its way to a very solid year, possibly surpassing pre-crisis levels of sales, the Economic Update said.
The Savings and Credit Bank disbursed KD11 million in housing loans in June, while approving a further KD33 million.
A little over half of the approved loans, which came from 662 applications, were for new constructions. In the first six months of 2013, the SCB approved 3170 loan applications, worth KD181 million.
According to NBK, these figures are roughly double the amount approved during the same period in 2012.
Conversely, the SCB expensed about KD62 million in 1H2013, a 10 per cent decrease compared to H1 2012. The increase in demand for housing financing could potentially have been brought on by a pickup in the pace of government distribution of lands this year, but it also highlights the strong underlying demand existing in the residential sector.