Real estate sales in Kuwait top $1 billion
The real estate sales in Kuwait registered a solid 19 per cent year-on-year (y/y) growth in March to hit KD293 million ($1.02 billion) after two months of weak sales, said a report.
The residential sales totaled KD149 million in March, a mere one per cent (y/y) increase. This came from a total of 490 transactions, the National Bank of Kuwait said in its economic update for the month.
Compared to last year, this translated to a 7 per cent increase in the average transaction size, it stated.
NBK pointed out that the recent events in the consumer financing area could translate to increased activity in residential real estate purchases in the near-to-mid term, though any potential increased appetite could also be faced with supply constraints.
These recent events include the ceiling increase for housing loans provided by the Savings and Credit Bank (see April 10th issue), the establishment of the ‘family fund’ to help debtors with their pre-2008 loans, as well as a potential cut in interest rates on housing loans provided by conventional banks, said the report.
According to NBK, the investment sector witnessed a 31 per cent y/y increase in March sales which soared to KD122 million. These sales were made up mostly of buildings, apartments, or plots of land, with the intention of renting out the end-product, it stated.
The sector is also seen as an alternative to investing in the Kuwait Stock Exchange. In the past few years, for example, interest in investment property has picked up as returns in the stock market have disappointed.
"Overall, we expect the investment sector to see a solid performance in 2013, as both robust demand and supply exist in the market. Nevertheless, we could see a one-off y/y drop this April, driven by a basis effect, as April of last year had exceptionally strong sales," said the top Kuwaiti lender in its report.
On the commercial sector – the smallest of the three major sectors – NBK said it saw KD22 million in sales, split over 12 transactions.
The sector has been performing well in the past two quarters, which – at least partially – may be attributed to active participation in the market by the Kuwait Investment Authority (KIA), said the report.
"KIA, through funds managed by two local companies, has aimed to inject some liquidity into the commercial property market, though no official announcements about acquisitions have been made, it added.
- Mounting supplies: Dubai's impending property correction
- The $200 billion boom and slave labour: the realities Qatar must come to terms with
- This times it's North Koreans! Modern-day slavery still 'rampant' in Qatar
- The Dubai Tram: A good ride for Marina property prices or not?
- The other side of the economic 'miracle': 65% of Dubai residents forced to relocated due to exploding rents