Kuwait Real Estate News
Earnings of GCC real estate firms to shrink 20 percent
The Kuwait Financial Center, Markaz, in its recent research report which detailed the past trends in the earnings of GCC property companies, and assessed their future course, noted that the earnings of the real estate companies in GCC will shrink by 20 percent this year.
The report took into consideration, the macro picture of the contraction in earnings and market value of GCC companies and pointed out that the market value has reduced by 44 percent from first quarter of 2008 till date, and bears resemblance to the US market in terms of share of financial companies in the total earnings during the recession phase.
The report also focuses on the historical earnings and price performance of real estate firms in the region and says that the reduction in earnings and market value, hit the bottom during Q4-08, but is stable at present.
Particularly, the real estate companies in Kuwait showed negative 842mn USD during Q4-08, faring worse than the real estate companies in the much doomed Dubai, which posted a negative of 671mn USD. Kuwait companies were the only ones to post loss for the year 2008, the report said.
Real estate companies in Kuwait are mainly investment companies with exposure to other GCC countries. Hence their earnings trend bears resemblance to drop in property values across the region.
The market value has recovered in Q1-09 compared to Q4-08, with Qatar leading the recovery, followed by Abu Dhabi and Kuwait.
Estimation of the trend in earnings of GCC real estate companies at this juncture can be difficult, as the report is dependent on the estimates by analysts, including Markaz.
Therefore, the report considers the earnings of the companies to be a perfect sample of the market. The companies represent 100% of companies listed in Dubai, 93 percent of listed companies in Abu Dhabi, 62% of Qatar, 58% of Bahrain, 32% of KSA and 0% for Kuwait.
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