Govt owners of investment properties considering reducing rentals by 25 pct
Bid to alleviate burden of tenants
KUWAIT CITY, April 20: Several government agencies that own investment properties are considering submitting a study to the Council of Ministers to reduce their investment property rents by 25 percent in the current period until the end of the coronavirus epidemic. The step is within the framework of alleviating the burden of tenants, citizens and expatriates who have been affected by the crisis that prompted the decisions of the Council of Ministers to suspend all commercial activities in the country since last March until until further notice, reports AlAnba daily.
The ongoing study is based on the fact that the proposed reduction would drop investment property returns from an average of about 8 percent to about 5 percent if approved, but it is necessary in light of the current situation in the world due to coronavirus.
The daily quoting a source affirmed that Corona crisis has its significant consequences on the Kuwaiti real estate sector, starting from commercial real estate sector whose revenues stopped since the suspension of commercial activities last March, while investment real estate estate started facing problems when a number of tenants failed to pay. This requires urgent government intervention through legislation approved as a matter of urgency to avoid major legal problems in the next stage.
The source added the world is heading toward a period of economic depression, which means the consequences of the current crisis will not end even after the new coronavirus crisis has ended, and could extend to the end of the current year. For this reason, it has become necessary for the government to start arranging its papers to follow up on imminent developments in the aftermath of the current crisis, so that the Kuwaiti economy is not be harmed in the end.
It is noteworthy a number of real estate companies that own major commercial complexes and investment real estate have announced since the beginning of the crisis that they will exempt tenants from the rents of March, April and May, while a number of them announced a reduction in the rental value. Some owners of investment real estate followed the same procedures while others continue collecting rents in full, without reducing or postponing, with the threat of taking measures against anyone who fails to pay the rental value.