Kuwait real estate market sales rise significantly
Investment sector sales doubled last month
Kuwait’s real estate market sales (contracts and power of attorneys) increased significantly during the month of May 2017. Total sales reached its highest levels yet since December 2014, increasing by 150% compared to April 2017, and by 63% compared to May 2016, thereby reaching KD 370 million,
The total count of deals increased by 91% compared to the month prior, and increased by 50% compared to the corresponding period of last year, reaching a total of 713 deals. Additionally, the average deal value increased by 31% compared to the previous month, reaching KD 519,000.
An increase across all sectors
in the market
Sales performance in the commercial sector contributed significantly to the overall market performance. During the month, sales in the commercial sector quadrupled, compared to the month prior, reaching KD 63 million. Meanwhile, the crafts sector recorded an unprecedented total sales value of KD 50 million during May 2017.
Likewise, sales in the residential sector increased by 84% compared to the month prior, reaching KD 164 million. Furthermore, sales in the investment sector roughly doubled compared to last month, reaching KD 92 million.
Monthly performance of Kuwait real estate market is evaluated by comparing the performance of the month compared to the same correspondent month each year starting from 2007. This comparison shows changes in market indicators, while adjusting for seasonality. May 2017 ranked third in sales (compared to the same month throughout the past 11 years). On the other hand, May 2017 ranked fifth in terms of number of deals per month, as shown in the
Variant changes in average
prices
Average prices are calculated based on market sector and geographical area. The average price per square meter for residential properties increased by 13% compared to the month prior, as a result of an increase in residential property prices in Al Asimah, Hawalli, and Mubarak Al Kabeer Governorates.
Meanwhile, the average price in the investment sector decreased by 2%, caused by a drop in prices in Hawalli and Ahmadi Governorates, as well as an improvement in the prices of investment properties in Mubarak Al-Kabeer and Farwaniya Governorates. As for the commercial sector, it had a very small number of deals of only 5 recorded during the month, which did not enable for a calculation of an average price to properly reflect price changes in the market, as shown in the following table:
Market Sectoral Performance
during May 2017
Total sales for the residential sector witnessed an 84% increase compared to the month prior, and a 33% increase on annual basis, reaching KD 164 million; sales in the sector gained support from real estate auctions carried out in Mubarak Al Kabeer Governorate. Total count of deals in the residential sector reached 486, which is an increase by 59% compared to the month prior, and by 63% on annual basis. Average deal value increased by 16% compared to last month, reaching KD 337 thousand per deal. However, average deal value recorded for the residential sector during May 2017 was 18% lower compared to last year.
Meanwhile, sales in the investment sector increased by more than double compared to the month prior, and increased by 34% on annual basis, reaching KD 92 million. Additionally, the count of deals in the investment sector reached 183, which was double the count recorded during the previous month, and a 10% increase compared to last year. Average deal value in the investment sector was about KD 500,000 per deal; despite a decrease of 29% on a monthly basis, average deal value still higher by 22% compared to last year.
Furthermore, total value in the commercial sector quadrupled compared to the previous month, and increased by 83% compared to the previous year, reaching KD 63 million. The commercial sector recorded only 6 deals during the month of May 2017, with an average deal value of KD 10 million.
The crafts sector witnessed an unparalleled performance in the market during the month, with 37 deals made in Ardiya and Herafi Ardiya in Farwaniya Governorate, amounting to a total sales value of KD 50 million. Average deal value in the sector was KD 1.4 million per deal. Additionally, one deal was made in the warehouse sector with a value of KD 1.5 million.
Geographical Performance of
Kuwait Real Estate Market
Al Asimah Governorate ranked first in terms of total sales with 24% of the total. Meanwhile, Ahmadi Governorate ranked first in terms of total count of deals, with 25% market share, followed by Mubarak Al Kabeer Governorate, as shown in the following table:
Conclusion
Kuwait real estate market indicators witnessed a significant increase during this month, which was driven by a combination of exceptional factors that may not occur in upcoming months. Throughout the month, the real estate market witnessed sales in auctions, the crafts sector witnessed unprecedented market activity, and the commercial sector recovered through high value sales.
If auction and exceptional sales in the crafts sector were excluded, sales would still remain slightly higher compared to last year. This increase may indicate a small improvement in the overall performance of the real estate market during the month; however any significant improvement in market indicators would require a positive development in economic indicators, particularly crude oil prices.