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Property market softens second month in row

Sales across three main real estate sectors in Kuwait totalled to KD256mn in May this year, marking 28 percent decrease compared to previous year, a report by National Bank of Kuwait (NBK) said.

This indicates softening of real estate market for second consecutive month, following the mild recovery seen in March. However, despite the slow activity levels, the size of transactions continued to remain intact during the first five months of the year, and was more or less equivalent to the record-high average transaction size in 2014, largely helped by stabilizing oil prices.

The current softening activity noticed may continue in the coming months, as we reach the summer break and enter the Holy month of Ramadan, followed by periods of low economic activity, NBK said.

The sale in residential sector were down 30 percent year-on-year touching KD119mn in May. The sector recorded 28 percent year-on-year decrease in number of transactions. Although the average transaction volume fell slightly (KD358,000) by 2.7 percent year-on-year, it is better than average sizes in KD334,000.

For second month in row, the activity was heaviest in Mubarak Al-Kabeer governorate accounting for 32 percent of all residential transactions. Ahmadi governorate came second, accounting for 24 percent of transactions, which possibly signals cooling down of plot sales in Sabah Al-Ahmed Sea City.

The investment sector too underperformed in May this year. The total sales in May touched 115.2mn, marking 21 percent year-0n-year dip. The number of transactions, however, recovered from Aprilís dip, registering 141 transactions, marking 3.7 percent year-on-year increase.

The Ahmadi governorate once again witnessed the bulk of activity, with 48 percent of all transactions. The largest transaction, on the other hand was in Salmiya, for a building sold at KD16mn.

Sales in commercial sector dipped in May, but continued to show resilience in comparison to last year, with sale of commercial properties having touched KD22.5mn in May, marking 44 percent decline year-on-year, with just five transactions being recorded.

About 70 percent of sales were attributed to just two transactions in Salmiya. The sector is known for its lumpy and volatile sales. But, in year till date, sales in the month of May grew by 5 percent in comparison to same period last year, as the activity in the sector has picked up owing to good demand.

Meanwhile, the Public Authority for Housing Welfare (PAHW) has announced a new timetable for distributions for 2015-16 fiscal year which includes distribution of another 12,000 units beginning August, mainly in the South Mutlaa City, where infrastructure work is yet to begin.

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