Kuwait Real Estate News
Kuwait ready to handle plunge in property prices
According to a report by the National Bank of Kuwait (NBK) last month, real estate property sales showed a retreat in January 2009.
However, the real estate agents denied any fall in rental prices until last month. They even refused a comparison with situation Dubai, as the nature of investments there is different. Dubai eagerly encouraged huge foreign investments, while Kuwait, involved itself only with small number of domestic investments. Hence, any slump in Kuwait would take some time to notice.
Areas such as Hawally and Salmiya, are still having properties open for rents, with prices in the range from KD300 to KD400.
However, the question that is bound to arise is, the expensive rents, despite flats being vacant. And if the flats continue to remain vacant, the building owners would find it difficult to repay their debts to the banks.
A leading official in a major real estate company dismissed any drop in real estate prices, mentioning that the traditional market in Kuwait could handle the current drop in property prices, until the markets recovered.
Moreover, the inability to rent certain units is the problem only for certain areas, with newly constructed buildings, and the high rental prices were not applicable to the other areas, the official clarified. He also said that rents in such locations were high enough to cover even the cost of construction of those buildings.
Kuwait market is small in nature, and the punctuated liquidity could easily lead to inflation, the official said.
While the asset values of the buildings have dropped, just as indicated in the report, the property agents agree that the demand continues.
Despite the drop in real estate value, a large investor would make wide purchases and the prices would raise again, the official pointed out.
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