Kuwait real estate sales exceed pre-pandemic levels in Q3, 2021 building on the full recovery seen in the first half of the year.
19 November 2021, 12:00 AM
30 November 2021, 12:00 AM
Real estate Sales in the third quarter totaled KD1.1 billion (+16 percent q/q; +63 percent y/y), averaging a robust KD 360 million per month, on the back of strong activity in the residential sector and a significant increase in home and land prices.
The third quarter also witnessed an improvement in commercial and investment (i.e. apartment) sector sales, although both remain below pre-pandemic levels and the investment sector remains challenged by weaker fundamentals (lower demand and higher vacancies).
Part of the reason for the deviation in performance between the residential and investment sector is a shift in investors’ preference towards residential properties, which gained further momentum in 2017 after utilities tariffs on investment properties were increased.
The coronavirus pandemic was also a factor, pressuring the incomes and employment of expatriates, who are major drivers of the apartment rental market. Looking ahead, residential activity should benefit from healthier demand and a still-limited supply of new units.
Residential sales reached KD 810 million in 3Q21 (+87 percent y/y), driven by a combination of higher volumes (+35 percent y/y) and a steep, general rise in land and home prices.
The residential market should receive a further boost from the likely approval by parliament of the government’s draft mortgage law that was submitted last May. Legislation could come as early as 2022/23. This will facilitate financing and likely provide a further boost to residential activity and prices. However, of concern is affordability, with home prices increasing significantly in relation to the increase in the average citizen’s income.