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Kuwait real estate sector to stabilize by 2018
According to economic experts in Kuwait, rentals are falling, and the decline will continue early in 2018. A former Kuwait University Professor, Dr Hajjaj Bu Khudoor, said there are three major reasons behind the dip in residential and investment rentals in Kuwait.
Although it is still related to the global financial crisis in 2008, even after eight years, Kuwait is getting rid of bad assets. Another factor is the decline in demand for apartment rentals, are the government’s initiative that provided more homes for locals, Bu Khudoor said. Also, the reality in the market is obvious, the greater the supply, lower the demand.
The downward trend indicates a drastic shift in rental prices. Last year, there was a 2 percent decline in occupancy of rental apartments from June to December and real estate market as a whole has remained soft all year through 2016.
As per records, the Public Authority for Housing Welfare (PAHW) for nationals reported that more than 8000 locals applied for housing units last year, with the number having decreased to 4500. Earlier reports show that the housing shortfall in Kuwait was likely to narrow considerably with 25 projects due to be delivered to PAHW last year, and three more coming online in 2016 with several thousand homes to be added to the market.
Apartment living has now become the norm for a large segment of nationals and expats. The crackdown in recent years has nothing to do with current rental decline, as some expats are deported and more newcomers are welcomed. Although a few families have left due to the so-called high cost of living in Kuwait, they are only few, he pointed out, and added that rentals will continue to decline by nearly 40 percent, with real estate sector likely to stabilize by mid-2018.
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