Real estate sales volume in Kuwait dipping 33% during 2008

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 real estate sales volume dropped in December after strong activity the month before. Sales volume was KD 113 million, down 17.5% from the prior month. Compared to a year before, the sales volume was down 45.6%.
NBK said the December decline was led by a drop in apartment buildings and commercial real estate, down 42% for the month. Residential sales were up 10%.
Real estate activity saw a significant slowdown during 2008, with registered real estate sales volume totaling KD 1.9 billion, down 33% from a year earlier. The decline was clearly evident in the residential property market, where both sales volume and number of transactions fell, by 42% and 41% yoy respectively. Meanwhile, the apartments and commercial sector saw sales volume drop by 21.7%.
Residential properties sales volume suffered during 2008 because of laws 8&9. The residential sales volume and number of transactions dropped in 2H08 by 54% and 62% respectively, compared to same period in 2007. The weakness in apartments and commercial properties sales was more the product of sectorial and economic conditions.
In 2008, the apartments and commercial segment accounted for most of the activity in the real estate market, representing 52% of the total sales volume, though there were more transactions in the residential sector (74% of all transactions). Al-Ahmadi, Hawalli and Farwaniya, accounted for the bulk share of all real estate transactions. The Hawally Al-Ahmadi governorates hosted most of the transactions involving apartment building blocks in 2008, and the Al-Ahmadi dominated sales of commercial units. Residential transactions were concentrated in Al-Ahmadi and Farwaniya governorates.
The size of the average transaction for apartments and commercial property fell by 26%.  The average residential transaction rose 1% in 2008, suggesting steady prices in that sector (first chart).
According to NBK, Savings and Credit Bank (SCB) approved housing loans declined during December, with the number and value of loans approved falling by 14.4% and 23.5%, respectively. In 2008, SCB approved a monthly average of 412 loans, 9% more than the 378 averaged in 2007. However, the value of loans approved increased modestly in 2008, as SCB approved a monthly average of KD 15 million in loans, up 20% from the previous year. The increase was largely visible in loans for construction of new homes which increased by 80%, while the purchase of existing homes saw a 38.5% decline.