Sales overviewThe latest NBK Real Estate Brief stated: Real estate activity registered another super-strong month in May, with the market apparently completing a remarkably rapid transition from major weakness in 2008/09 to near-boom conditions just a year later. The total number of property sales (residential, commercial and investment) registered at the Ministry of Justice stood at 857, 15% higher than in April and more than 2.5 times stronger than a year ago. Much-improved sales levels are being driven by the residential and investment (i.e. apartment) sectors. Admittedly, sales numbers continue to be boosted by unusually strong sales of land, rather than buildings. Yet even stripping out land sales (which can exaggerate transactions numbers because of large plots being split into multiple units), sales reached a level only surpassed at the height of the boom period in early 2008. In KD value terms, the picture has, if anything, been even better. Sales rose 42% from April to KD 251 million, more than three times higher than a year earlier and the strongest since March 2008. Interestingly, rising sales have not yet been accompanied by strong increases in bank lending, suggesting that some home purchases may be being financed with cash, perhaps involving the liquidation of other types of assets.i) Sales – residential (mostly villas and land)Total residential sales stood at 632 in May, up from 558 in April and the highest level for more than two years. Around half of these sales came from transactions involving land, as opposed to buildings, and around one-third of those were at the Khairan Pearl development in southern Kuwait. Much of this is likely speculative purchasing, since the project is a long way from completion. Nevertheless, sales for what might be termed as more ‘fundamental’ purposes – private homes – are also rising strongly, having more than doubled since the end of last year. Average sales prices in the residential sector also recovered after last month’s dip.ii) Sales – investment (mostly apartments)The number of sales in the investment segment surged to their highest levels on record, at 215. This compares to the previous peak of seen 175 at the height of the property boom in mid-2007. Sales volume was also at a strong KD 90.1 million for the month... Nevertheless, average sales values are still well off their historic highs because of the sharp declines seen in 2008/09. Anecdotal evidence suggests that purchases of such properties may have become more popular because of fragile stock market conditions and low returns on deposits.iii) Sales - commercialCommercial property enjoyed a solid, if not spectacular month. There were 10 commercial property transactions, down from an unusually high 18 in April. While sales in the commercial sector are often ‘lumpy’, it is noticeable that the improvement in activity in this segment has been less marked than elsewhere. One reason might be a possible overhang of supply, making the segment’s prospects somewhat uncertain. Other reasons might be size and relative illiquidity of investments in this segment, making them less attractive to individual investors. Savings and Credit Bank loansThe NBK report concluded: The number of loans approved by the Savings and Credit Bank (SCB) fell back 4% between April and May to 333. After suffering a heavy fall in late 2008 and early 2009, approval levels have been fairly range-bound over the past year, but are still below their historic trend of 400-450. In value terms, approvals fell by 8% in May to KD 9.3 million, but are close to their average levels of the past six months.Within the overall numbers, loans approved for home purchases – at 153 in May - have moved off their lows of last year, but remain well below their 400+ per month highs of 2008. And within this figure, loans for the construction of new houses remain especially weak – a continued disappointment given the government’s intention to accelerate its land distribution program. The slight pick-up in the segment has been related to loans for purchases of existing homes. By contrast, the other main segment - loan approvals for maintenance and additions purposes - continues to run close to ten-year highs.