Kuwait residential sector to remain bearish: Experts
Trades in the sector of residential properties are expected to remain limited in 2024, maintaining the bearish trend of 2023, which recorded a 30 percent fall compared to the previous year’s transactions. Experts interviewed by KUNA revealed that statistics from the real estate and documentation division at the Ministry of Justice showed that there were 3,039 housing deals in 2023, in contrast to 4,362 transactions in 2022.
The total value of the dealings dropped from KD 1.927 billion ($5.9 billion) in 2022 to KD 1.287 billion (3.9 billion) in 2023, down by 33 percent. The number of deals in the investment segment (apartment buildings) dropped by 16 percent last year compared to 2022, from 1,369 to 1,140 contracts; thus, the recorded value fell from KD 1.98 billion ($3.34 billion) to KD 822 million (2.5 billion), down by 25 percent.
As to the commercial sector (offices, stores, and malls), the number of contracts dropped by 27 percent last year, where 116 bargains were recorded compared to 161 in 2022. And the total value moved down by 29 percent from KD 605 million ($1.9 billion) to KD 425 million ($1.3 billion). Sulaiman Al-Dulaijan, manager of Al-Dulaijan Real-Estate Office, said in an interview with KUNA that the trend in the residential segment would remain low in 2024, noting that the authorities had enacted fresh laws to limit speculation in this particular sector.
Al-Dulaijan said the year 2023 witnessed a 5–15 percent drop in the residences’ value, particularly in regions of noticeable activity, namely Sabah Al-Ahmad Sea City, Abu Fatira, Funaitees, Masayel, Salwa and Rumaithya. He clarified that the forecast downward trend would be in the regions eyed as far from the capital region, where activity would remain unchanged despite the enactment of new laws on undeveloped plots’ monopoly.
In part, an owner of lands exceeding 1,500 square meters will be compelled to pay the state annual fees for each undeveloped plot. Al-Dulaijan noted that there has been a recession in the speculators’ activity in the residential sector due to the banks’ decision not to lend to a citizen who has more than two houses, in addition to the shift of their funds to the investment and handicrafts’ fields.
Elaborating, he noted that the investment segment has recently shown a decline after authorities abstained from granting residency to some expatriates amid forecast instability. Plots’ prices in the regions between the first and fourth road rings have remained high as compared to the other residential areas; however, the number of transactions has remained unchanged in these inner areas.
Qais Al-Ghanem, a realty expert, told KUNA that some of the reasons for the downward trend in the realty sector are funds’ shift to the safe haven—the banks that offer lucrative interests. The recently issued land monopoly law is not expected to be effective in lowering prices in the near future; however, it may be so in the coming years, Al-Ghanem said. He proposed establishing new residential areas with a primary role for the private sector.
He lauded the banks’ decision not to fund nationals who own more than two houses, explaining that the move would stem speculation and nudge speculators to quit the sector, thus raising anticipations for bearish prices in the future. Alaa Behbehani, General Manager of Abraj Behbahani Real-Estate Company, dubbed as normal the fall in the field amid the soaring prices in the aftermath of the coronavirus’ outbreak and the lucrative investments in the banks.
He singled out Sabah Al-Ahmad Sea City as the region with the steepest fall, due to an upsurge of speculations. Since the third quarter of 2021, the housing sector has witnessed a drastic decline with respect to the total trade’s value, while the investment segment has witnessed a slight rise. However, the commercial sector maintained balance. The lackluster atmosphere in the sector is forecast to hold in the current year in the shadow of geopolitical and economic conditions. —KUNA