Kuwait Real Estate News
Commercial rents under pressure in Kuwait
Commercial rents in Kuwait continue to face pressure as office supply now outstrips demand, DTZ said yesterday.
The rental levels in Kuwait have dropped by as much as 50percent from its peak rents in 2007. Further pressure on rents are likely, although landlords hope to stabilize this by offering other types of incentives to new and existing tenants, said DTZ in its first quarter report about Kuwait.
Although there is limited information available about Kuwaits secondary market, DTZ estimates there is about 8000sqm to 12000sqm of second-hand space now open for rent within Kuwait City.
The consolidation of businesses, together with few companies moving from rented to own accommodation has led to increase in availability of second-hand space in the market. Government organizations have been particularly involved in moving from rented space to purpose-built accommodation, the report pointed out.
The financial and economic crisis has led to several companies either failing, or consolidating their operations, leading to decreased demand. With more office supply entering the market, there has been considerable impact on rentals, particularly for new-built properties, as tenants have been pressurizing landlords to maintain the agreed contract rents, but offering short to medium-term incentives such as rent-free periods, the report said.
As for the residential sector, recovery is seen in land prices, following a 25 to 35percent drop from peak levels in 2008. Also, variation in prices has been noticed between established private residential areas. There has also been significant growth in land rates in new areas, where the Kuwait government has granted construction permits.
The report also pointed out to the recent amendment made to existing law, wherein Kuwait parliament had granted permission to expatriates to own property, provided they are employed and a resident of Kuwait for at least 10 years. Therefore, if an expatriate-owner lost his/her job and had to leave Kuwait, they will have to sell the property. It is therefore unlikely that this law would be passed any time soon, the report said.
Unlike other GCC States, Kuwait does not permit freehold ownership by non-nationals.
The Kuwaiti freehold market is typically characterized by villa-type accommodation and the rental sector, which is dominated by expatriates and characterized by apartments for rent.
Kuwaitis have the constitutional right to receive housing when they get married. The Public Authority for Housing Welfare already has a waiting list nearing 100,000 at present, which is likely to increase by another 65,000 by 2014-15.
This has led to several new public sector housing projects aimed at meeting the continuing demand. However, it is yet to be watched if the development can be sustained to meet ongoing needs without any involvement from the private sector, the DTZ report pointed out.
Social Bookmarking
Read more news
> Property markets in GCC region to remain pressurized in 2012
> Kuwait property sector gathers pace following summer slowdown
> Kuwait realty sector post profits
> Kuwait records decline in expat count
> KAMCO report reveals positive indicators for Kuwait realty sector
> Majority of Kuwaitis investing in Dubai properties
> Latest Kuwait property sales report indicates improvement in the sector
> Increased demand for properties in Kuwait realty sector
> Property experts seek private sector support to develop housing sector
> KFH launches promotional campaign to finance residential real estate