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Kuwait’s real estate chalks strong gains in June Residential sector sales reach KD 172 mln

Kuwait’s real estate market closed off the first half of 2014 with a record breaking performance, as sales reached KD 522 million in June. The sector broke the KD 500 million-mark for the first time and saw its third monthly record performance in under a year. Exceptional performances across all three sectors helped push sales up, with the commercial sector recording its best figures yet.  Sales in the residential sector reached KD 172 million in June, a 3.4% year-on-year (y/y) increase. The number of transactions in June reached 590, up 25% y/y. Performance within this sector remained relatively stable compared to earlier months and is expected to remain stable in the future as demand continues to grow. 
 
The sector recorded a little over KD 1 billion in sales during the first half of 2014 (1H14), growing by 17% compared to the first half of 2013.  However, the number of transactions in 1H14 dropped by 9% y/y, thus confirming a trend that has been evident over the past several months, namely the decline in available properties on the market. More than half of all residential transactions took place in Ahmadi Governorate. Mubarak Al-Kabeer followed with a 17% share and the Capital with 10%. In the residential sector, the bulk of transactions, 64%, involved the purchase and sale of land or vacant plots.
 
Sales in the investment sector stood at a record KD 235 million in June, up 90% y/y. (Chart 4.) The sector, however, also experienced a slight decline of 1% y/y in the number of transactions.  With larger values but fewer transactions, the average transaction size increased in June to KD 1.3 million. Sales in the investment sector during the first half of 2014 totaled KD 964 million, up 52% y/y; the number of transactions was up by 12%.    
 
Whole buildings accounted for 45% of all transactions in the investment sector. Individual apartments came in second, comprising 40% of all transactions.  The majority of these transactions (buildings & apartments) were in Hawalli Governorate. Transactions involving vacant plots accounted for 10%. Surprisingly, the top two transactions within the sector were neither buildings nor plots, but villas valued at KD 45 million.   Sales in the commercial sector more than doubled year-on-year as sales totaled KD 114 million in June. (Chart 6.) The sector recorded 9 transactions; down by 25% y/y. Noteworthy transactions include a commercial plot in Sabah Al-Ahmed Sea City worth KD 40 million and a building in Hawalli worth KD 20 million. 
 
Sales in this sector can be relatively volatile from month to month which makes trends difficult to identify but the past 4 months suggest a pick-up in volume. And like the investment sector this month, the commercial sector’s performance was record-breaking. Sales for the first half of 2014 reached KD 273 million, up 60% y/y.  The Kuwait Credit Bank (KCB) approved 530 loans worth approximately KD 32 million in June. (Chart 7.) The value of loans approved declined on a y/y basis by 2%. (Chart 8.) Meanwhile, the value of loans disbursed by KCB reached KD 20 million, an increase of 80% y/y.  Recent legislation passed by parliament granting Kuwait’s public housing authority greater powers could have an effect on the rate of approved loans in the near future.
 
By National Bank of Kuwait

 


By: National Bank of Kuwait

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