Closure of comm complexes to ‘hit’ property owners severely
‘Landlords should understand economic situation country is going through’
KUWAIT CITY, April 2: The CEO of Aayan Real Estate Company and member of the Board of Directors of Real Estate Union Ibrahim Al-Awadhi affirmed that the closure of commercial complexes will expose property owners to severe financial pressures, especially if the coronavirus crisis prolongs, reports Al-Rai daily.
Al-Awadi disclosed that the current situation is causing great losses for the investors of commercial complexes regarding revenues – especially with the approval of different exemptions for their tenants, including the retail stores, restaurants and many others. He indicated that facilities extended to the tenants out of sympathy by the owners turned into legal right for the tenants, supported by legal texts.
He pointed out that measures taken by the Council of Ministers to prevent an outbreak of coronavirus epidemic, which the closure of complexes stood in the forefront, have prevented tenants from using spaces. This means that they do not benefit from the property and rent payment has become an option.
Crisis
He explained that prolongation of the crisis and continued government closure exposes the complexes to a double blow in terms of the evaluation of assets and their classification by the financing bodies, which will be reflected on their loans and ability to obtain facilities in the future. He indicated the situation will reduce efficiency level of the companies that own the complexes and increase complexities and challenges of the commercial sector.
On the other hand, Al-Awadhi indicated a large segment of apartment tenants are now calling for the same facilities and exemption from rent during the crisis period due to the large segment of expatriates affected by the disruption of economic business, adding the crisis has caused interruption or reduction in salaries throughout the establishments they work for, especially the restaurants and cafe sector whose workers account for 15 percent of the total expatriate workforce in Kuwait, alongside employees of other affected sectors.
He stressed that landlords should understand the economic situation the country is going through and its broad economic repercussions, stressing the importance of keeping tenants in the current period at any cost. He added that landlords will have difficulty filling vacancies in the event of eviction.
He continued that Kuwait does not currently receive new travelers due to the suspension of passenger flights, while deportees and visitors who were occupying rooms and apartments have left amid chances that about 60,000 male and female teachers will be leaving Kuwait in the coming period. There is every possibility that a large segment of teachers will give up their
apartments during the long break until October, which means that financial pressure will increase on the sector even more.
Al-Awadhi declared that some tenants residing in excellent apartments do not deserve exemption due to the financial solvency such people enjoy, alongside non-interruption of their salaries in the last period.
He mentioned that the current phase is called panic period and it’s not advisable to sell property, because the seller will lose due to the tendency of investors keeping
the cash amid the declining appetite for risk that generally weakens the purchasing activities for property, as is the case with all traditional investments that incubate the money.
He reaffirmed that the Real Estate Union presented a set of proposed solutions to His Highness the Prime Minister Sheikh Sabah Al-Khaled regarding the real estate sector and resulting damages, which should be avoided by developing appropriate solutions for them.
Al-Awadhi reiterated the proposals include compensating real
estate companies for the operating expenses of complexes, markets, and hotels and exempting real estate owners from any costs or fees for the current fiscal year, such as electricity, water and communications.
It also includes rescheduling of existing debts to investors and owners on concessional terms, giving soft loans to shareholding companies, and exempting investors and owners from paying state fees with rights to benefit from service and industrial plots by the Public Authority for Industry.