Kuwait real estate sales soaring, and in billions
December’s sales numbers were supported by an exceptional performance from the investment sector
Kuwait has registered a 10 percent year-on-year growth in its real estate sales which soared to KD399 million ($1.41 billion) in December when compared to last year on the back of a strong investment sector, according to country’s top lender National Bank of Kuwait (NBK)
This is the closest sales have gotten to breaking the KD400 million mark since July 2013 where sales totaled KD426 million, the report said.
December’s sales numbers were supported by an exceptional performance from the investment sector. Annually, 2013 was a record year with total monthly sales averaging at KD308 million. Furthermore total sales grew 18 percent y/y compared with 2012.
According to NBK, the sales in the residential sector reached KD156 million in December, down 24 percent y/y. This decline came despite a continued surge in average transaction values (over 38 percent y/y), which was effectively offset by a sharp decline in the number of transactions (down 44 percent y/y).
The year-on-year decline in sales was due to an unfavorable base effect rather than weak sales per se. Large swings are not uncommon in a property market where month-to-month trading volumes are relatively low, stated the top bank in its report.
“Annually, the sales in the residential sector continued to rise, up 6 percent y/y from 2012 to KD1.8 billion. This is despite the number of transactions dropping 20 percent to 6,325. Indeed, it is likely that limited housing supply is one factor that continues to push prices higher,” the NBK report added.
In terms of location, half of transactions were in Ahmadi Governorate, mostly in the Sabah Al-Ahmed Sea-City. Mubarak Al-Kabeer governorate accounted for a further 36 percent. Sales of land plots – as opposed to finished buildings – accounted for 57 percent of all residential transactions in December.
Sales in the investment sector increased to a record KD207 million in December, up 79 percent year-on-year. The previous sales record was KD 184 million in April 2007, confirming that sales have returned to pre-financial crisis levels. The number of transactions in the sector reached 198, a 54 percent y/y increase.
Whole buildings made up 42 percent of all transactions followed by individual apartments with 38 percent - mostly in Mahbola. Several large transactions drove sales in the investment sector to record heights, including two KD 11 million deals in the Salmiya and Murghab areas, said the country’s top lender.
Annually, sales in the investment sector registered a 24 percent increase from 2012, to KD 1.4 billion.
Additionally, the number of transactions in the sector increased by 10 percent y/y compared to 2012, it stated.
NBK pointed out that the sales in the commercial sector dropped 18 percent to KD35 million in December from KD43 million a year earlier.
The sales in this sector were particularly lumpy, and the decline came on the back of 11 transactions, compared to 15 a year earlier. However the average transaction size remained positive at KD 3.2 million, up 12 percent y/y, it said.
The Kuwaiti bank said 2013 was an exceptional year for the commercial sector, with y/y sales up in 8 months of the year. Total sales in 2013 reached KD440 million, up 75 percent when compared to 2012.
The increase was driven by a large number of transactions which, at 178, more than doubled their 2012 levels, the report added.