NBK: Real estate sales remained weak during first quarter of 2009…SBC loans firm
In its latest economic brief on the monthly statistics of registered real estate contracts issued by the Ministry of Justice, excluding sales conducted through agents, National Bank of Kuwait reports that real estate sales remained weak in March, following a notable jump in February. A total of 386 sales transactions were registered in March, at a value of KD 89.4 million. Sales volumes fell by 11.6%, while number of transactions rose by 18.4% from the previous month. However, sales volume and number of transactions figures were 67.8% and 55.8% down yoy, respectively.
NBK noted that the drop in March came largely from a decrease in activity in the commercial property sector with sales falling 56.7% (mom). The monthly decline was from a high level in February when a couple of large transactions took place.. Most of the activity in the real estate market continued to come from residential property sales. Number of transactions in residential plots and homes represented the bulk of real estate sales with 67% of total transactions in 1Q09. The residential property sector represented 48% of total sales volume (KD) of real estate. The number of transactions for residential plots in Khairan Pearls and Abu Futaira areas accounted for more than half of all residential plots in 1Q09.
In the first quarter as a whole both sales volume (KD) and the number of transactions fell, by 21.7% and 20.6% respectively, compared with 4Q08. 1Q09 activity was also lower than in 1Q08, having fallen by 57% in both sales volume (KD) and number of transactions. However, sales volume for the commercial sector was more brisk rising by 35% in 1Q09 compared to 4Q08 (perhaps helped by one-time large transactions in February).
Meanwhile, March saw a drop in average prices, were 9% lower in apartments properties and fell by 2.6% for residential properties.
The value of loans approved by the Savings and Credit Bank (SCB) grew moderately in March, up 7.4% in number and 3% in value. The number of loans approved for the construction of new homes rose by 23% m-o-m, this increase is consistent with the rise in permits issued for the construction of new homes. During March, permits issued for construction of new homes rose by 55.7% compared to previous month. SCB approved 451 loans in March, compared to a monthly average of 412 in 2008. Meanwhile, the value of loans disbursed in March rose by a faster 23% from the previous month to KD 14.3 million, the highest since November 2007. However, loan approvals for 1Q09 as a whole were up 10% and 15.5% in number and value, respectively, compared with 4Q08. Loans from the SCB are up in recent months and are showing more life than the rest of the real estate sector, probably thanks to the distribution of plots of land in mid 2008.