Com­mer­cial sec­tor boosts Kuwait real es­tate sales

NBK ECO­NOMIC RE­PORT

Kuwait Times - - BUSINESS -

The real es­tate mar­ket re­ceived a sig­nif­i­cant boost from the com­mer­cial sec­tor in Novem­ber, push­ing the monthly sales above KD 200 mil­lion for the first time in six months. Ac­tiv­ity and KD sales of the res­i­den­tial and in­vest­ment sec­tors con­tin­ued to lag last year’s per­for­mance by 22 per­cent year-on-year (y/y) each. Sales in all sec­tors to­taled KD 2.04 bil­lion year-to-date (ytd), down 27 per­cent y/y. Novem­ber’s price per­for­mance, as re­flected in NBK’s real es­tate price indices, in­di­cates some sta­bi­liza­tion and con­ver­gence of trends across sec­tors.

Notwith­stand­ing the oc­ca­sional strong month, the res­i­den­tial sec­tor sales have been gen­er­ally weak through­out 2016. Sec­tor sales to­taled KD 71.4 mil­lion on 244 trans­ac­tions dur­ing the month. KD sales and trans­ac­tions were both down 25 per­cent and 21 per­cent y/y, re­spec­tively. The soft­ness in this sec­tor is con­gru­ent with the slow­down in in­stall­ment loans and bank credit to the real es­tate sec­tor.

Res­i­den­tial real es­tate prices have come down from peaks and lay close to 2013 av­er­ages. The NBK res­i­den­tial home price in­dex stood at 152.5, re­treat­ing by 12 per­cent y/y. The in­dex has been trend­ing down­ward since the be­gin­ning of 2015, when it peaked at 186 in Jan­uary 2015; it is down 18 per­cent from its Jan­uary peak. Mean­while, the res­i­den­tial land price in­dex inched slightly up­ward in Novem­ber to 178.2, though it re­mains down 9.5 per­cent y/y and 13 per­cent be­low its peak in March 2014.

In­vest­ment sec­tor sales this Novem­ber re­mained rel­a­tively sub­dued. Sales to­taled KD 57.9 mil­lion, down 1 per­cent month-on­month (m/m), in 112 trans­ac­tions. The sec­tor’s ac­tiv­ity through­out the last two months has been gen­er­ally soft, re­mind­ing us of the sum­mer lull, de­spite the pickup in in­vest­ment build­ing sales.

The in­vest­ment build­ing price in­dex re­treated marginally in Novem­ber, eras­ing the pre­vi­ous month gain. The NBK in­vest­ment build­ing price in­dex shed four points this month to 180.5, and re­mained down 13 per­cent y/y. Af­ter post­ing mod­est gains since the first quar­ter of the year, the in­dex has been on a down­ward trend dur­ing the last eight months. The in­dex has seen some ba­sis ef­fect, com­ing off record highs seen be­tween June and Au­gust 2015.

The com­mer­cial sec­tor pro­vided the only sup­port for the real es­tate mar­ket this month. Sales soared to KD 82.5 mil­lion, the sec­ond high­est per­for­mance this year. Yearto-date sales were up 5 per­cent from the same pe­riod last year. This was based on only nine trans­ac­tions; the largest trans­ac­tions recorded were two com­mer­cial plots in Sabah Al-Ah­mad Sea City for KD 20.3 mil­lion and a com­mer­cial plot in Salmiya for KD 2.6 mil­lion.

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