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Weakness in the Kuwait real estate market is persisting despite a pick-up in the commercial sector, a report on the sector by the National Bank of Kuwait issued today says.
“As of October 2015, total real estate sales reached KD 2.5 billion thus far in 2015, down 29 per cent from the same period last year,” NBK says. “Most of the real estate price indices logged weak positive annual growth; the exception was the residential home price index which continued to show a retreat from a year ago.”
Total residential sales reached KD 1,138 million so far in 2015 and KD 73.2 million in October. By value and number of units sold year-to-date were down 26 per cent and 31 per cent, respectively, compared to the same period last year. Only 1,579 residential plots were sold in the year so far compared to 3,056 at the same time last year, NBK says.
“Sabah Al Ahmd Sea City, Abu Fatira and Khairan witnessed the sharpest declines in residential plot transactions so far in 2015,” NBK says. “This recent drop in plot sales is likely, in part, the result of earlier speculative activity in the residential land sector. This has been highlighted as well by the Real Estate Union annual report published recently, that states that around 21 per cent of the residential properties are sold for speculative purposes.”
Sales in the investment sector (mostly apartment buildings) are the lowest in two years. Total KD volumes reached KD 1,027 million in the year to date. This is a 35 per cent decline from the same period last year.
The commercial sector remains active with sector transactions up in the year-to-date, NBK says.
“With oil prices still under pressure and tighter credit regulations, the growth rates of the real estate indices continue to slow in October, struggling to maintain positive year-on-year growth,” NBK says. “The investment building price index remains in the lead up 8.4 per cent, followed by residential-land as the residential-home price index resides in negative territory.”