Total sales rise 5% to KD 695 mln in Q2
Kuwait real estate market sales have witnessed an increase of 3.5% during Q2/2017 compared to sales from the previous quarter. Total sales (contracts and power of attorneys) amounted to KD 695 million compared to KD 672 million during Q2/2016, which marked a 5% increase from the corresponding period of last year. The total count of deals recorded in the market reached 1533 which is a 10% increase compared to Q1/2017, and 20% increase compared to Q2/2016. Meanwhile, the average deal value decreased 6% compared to the previous quarter, reaching KD 454 thousand per deal, which was a 13% decrease compared to Q2/2016.
First Half total sales close to
last year levels
During the first six months of 2017, total sales reached KD 1.37 billion (contracts and power of attorneys), compared to KD 1.41 billion recorded for the same period in 2016, as the total sales index declined by around 3%; this indicator, however, fails to showcase the complete profile of the market. The count of deals recorded during the first half of 2017 increased 16%, reaching 2,921 deals compared to 2,510 deals during the first half of 2016. During this period, the market witnessed a 17% decline in the average value of deal compared to the corresponding period of last year, indicating a possible improvement in market activity driven by a relative decline in prices.
Kuwait Market Sectoral Performance
The real estate market was still able to record an increase in total sales. Although there was a decline in sales in the residential and investment sectors, the increase in sales of both the commercial and crafts sectors contributed to the increase in the overall sales in the market.
Meanwhile, total sales for the residential sector reached around KD 368 million, which marked 4% decline compared to Q1/2017, however the total sales realized 29% increase compared to Q2/2016. Total count of deals in the residential sector reached 1,157, which is an increase of 12% compared to Q1/2017, and a 45% increase compared to Q2/2016; marking the highest sales level recorded for the residential sector since Q1/2015. On the other hand, average deal value in the residential sector declined to reach KD 318 thousand per deal.
In the same way, sales in the investment sector dropped 6% q/q, and 20% y/y, realizing only KD 184 million. However, total count of deals recorded for this sector remained close to the previous quarter, reaching a total 318 deals. Additionally, the average deal value decreased 6% compared to the previous quarter, reaching KD 580 thousand per deal.
In the meantime, total sales in the commercial sector increased 12% compared to the previous quarter, reaching KD 86 million. On the other hand, the crafts sector recorded unprecedented total sales of KD 54 million, as the sector witnessed a large number of deals through real estate auctions carried out during the first half of 2017. Moreover, only two deals were made in the warehouse sector with a value of KD 2.8 million, while no deals were recorded in any other sectors in the market.
Geographical Performance
Hawalli Governorate acquired almost 26% of total sales in the real estate market during this period, ranking first in terms of total sales with KD 181 million. Meanwhile, Mubarak Al Kabeer Governorate ranked first in terms of total count of deals with 26% of all recorded deals in the market.
Variant Changes in Average
Prices
The average price per square meter for residential properties increased slightly by 1%, reaching an average price of KD 621 per square meter (in all areas across Kuwait). Meanwhile, the average price in the investment sector decreased by around 5%, reaching an average price of KD 1,610 per square meter.
The commercial sector recorded an inconsiderable count of deals during the quarter, which did not enable for a representative calculation of an average price to properly reflect price changes in the market.
Conclusion
Kuwait real estate market did not witness any substantial changes during the first half of 2017, as recorded sales levels nearly matched those of the first half of the previous year. However, the market witnessed a remarkable increase in the count of deals, indicating a probable onset of an improvement in market activity driven by the decline in prices. It is also important not to overlook the unusually high activity of real estate auctions during the first half of this year, which has positively affected sales and the count of deals.
Kuwaiti real estate market is not expected to witness a significant change in its activity over the next few months, unless we witness a significant change in oil prices or in other economic factors affecting the market activity.