Kuwait Real Estate News
Demand for residential units may touch 100,000 by 2010
The instability of the geopolitical situation in the region, together with the sudden drop in oil prices, could pose a threat to Kuwait real estate sector, reported the Kuwait Financial Center in their real estate report.
Slow reforms of existing laws, together with half-hearted attempts made by government, are restricting the private sector participation in development projects. Apart from this, the high land prices in Kuwait, bears a negative impact on demand and renders new projects financially impossible, said the report.
The real estate and construction sectors of the country are currently experiencing an unprecedented boom, led by the strong economic growth and high oil prices. The growth in Kuwait real estate sector is due to the fact that currently, demand surpasses supply in all segments of real estate, except in tourism and hospitality segments.
The report suggests strong growth in construction and real estate sectors, driven by good economic conditions due to high oil prices.
In the residential sector, Markaz expects private housing sub-segment to continue witnessing an undersupply. However, the demand for private housing units is expected to touch 100,000 in 2010.
In the commercial sector, majority of office space, currently under construction will be ready for renting in 2009. Hence the commercial market may see an oversupply in the long term.
In the hospitality segment, increase in room supply will create an over-capacity situation in the market, and hence Kuwait may witness a lower occupancy rate, restricting new investments in the hospitality sector.
“Kuwait’s realty sector has experienced considerable growth during the last five years, triggered by various factors such as high oil prices, favorable demographics and abundant liquidity. Factors such as huge expatriate influx, young demographic profile, increased disposable incomes, and growing participation from private sector has also contributed to the growth. Real estate prices will continue to appreciate in the short and medium term across majority of the segments,” explains the report.
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