Kuwait’s residential real estate market faces decline
KUWAIT CITY, April 15: According to the Kuwait International Bank (KIB) report, the residential real estate market in Kuwait experienced a notable decline in 2023. The number of real estate transactions dropped to 3,039, with a total worth of 1.2 billion dinars. This marks a significant decrease of 30.3% compared to 2022, which saw 4,362 transactions valued at 1.9 billion dinars, as per Ministry of Justice real estate registration statistics, reports Al-Qabas daily.
The report identified several factors contributing to this decline. One prominent reason was the increase in the Central Bank’s discount rate, leading to reduced economic feasibility in investing in income-generating residential properties and higher financing costs for construction, particularly due to rising labor wages.
Moreover, upcoming laws in Kuwait are expected to shift focus from the residential sector to other areas, aiming to liberate land and prevent land monopoly.
Measures include abolishing real estate agency, imposing annual fees on large land holdings, and introducing utility fees for owners of multiple residential properties. These factors are anticipated to redirect capital towards the investment sector, particularly in operational investment housing, thereby increasing supply and reducing demand in the residential sector.
As a result, residential property prices saw a decline of 12%-15% compared to 2022, especially in areas farther from the Capital Governorate. However, areas closer to the capital experienced a slight decline in prices, except for distinguished locations where prices remained relatively stable.
In terms of private residential real estate, transactions notably decreased in Al-Ahmadi Governorate, particularly in the Sabah Al-Ahmad Marine region, which saw a decline due to reduced investment returns following the normalization of conditions post-pandemic.
In conclusion, the decline in residential real estate transactions indicates a corresponding decrease in prices, while transactions in other real estate segments also experienced a decline.