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Kuwait property sector rebounds significantly

Property sales value in Kuwait hit record in April, breaking the KD400mn mark, as the sector rebounded and business sentiment improved.

There was considerable growth of 60 percent year-on-year recorded across residential, commercial and retail segments, with total sales of KD447mn.

Although there was a 20 percent decline year-on-year in transaction numbers, this was more than compensated by a rise in the average transaction value, with increase of 80 percent year-on-year, revealed the National Bank of Kuwait (NBK), with a large transaction worth KD40mn being responsible for the increased numbers.

It has to be noted here that despite the strong year-on-year increase in sales, the number of transactions have been declining over the past few months, which is a possible reflection of the short supply of residential properties in the market, said NBK in its latest report on the country’s property sector.

Increased government spending, a positive interest rate environment, improved consumer sentiment, increasing capital market activities, would all boost the industry’s prospects, and real estate market in Kuwait is moving towards full growth trajectory.

Residential sales grew 45percent in April year-on-year touching KD220mn, as per the Ministry of Justice which tracks real estate data. Sales in real estate investment sector grew 63 percent, largely led by state-owned companies.

In the commercial sector, sales soared to touch KD37mn in April, thereby more than tripling from a year ago. The sector recorded 12 transactions, with two of them worth more than KD7mn each. Although the sector’s performance during the initial two months of the year seemed cooling, the March and April sales figures confirm a bounce back, NBK noted.

The real estate sector in Kuwait has come a long way since the global financial crisis with respect to all three property segments. Growing population, influx of expatriates have all played a major role in improved performance of commercial, residential and investment sectors.

The recovery of the sector began late last year when sales jumped 12.1 percent in the fourth quarter when there was increase in land prices. This was further strengthened by improved business sentiment following easing of political deadlock in the country.

With new government having taken over, several stalled development projects have been initiated and a 3.1 percent increase in spending has been approved in the 2014-15 budget. Overall, the growth in real estate would be supported by the local government through higher investment and implementation of development plans and favourable policies, said Global Investment House.

Further, the growing income levels in the public sector would continue to drive growth in the sector, Global Investment House said.

New on-going projects

Meanwhile, at least 925 residential units have been planned by the Public Authority for Housing Welfare, while the Jaber Al-Ahmed City will accommodate 6,679 housing units out of which, 4,494 housing units have been delivered till now, and the 2,185 housing units will be delivered in 2014-15.

The Northwest Sulaibiakhat Project accommodates 1736 housing units out of which, 1030 housing units have been delivered. An additional 704 housing units are due for delivery in 2014. This adds 171 housing units in Abu Halifah, 133 housing units in Sabahyyah and Al-Metla City, said Capital Standards.

The authorities are seeking to keep up the promise made last year to build more than 170,000 new low-cost houses and three separate cities by 2020, including two in the north of Kuwait and one in south of Kuwait.

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