KUWAIT CITY, Sep 25: The sources in real estate have warned against enacting audacious laws that would negatively affect the real estate sector which includes laws related to restructuring of demographics and ending residence of expats above 60 yrs of age. These types of decisions create serious damage to countries’ economies, particularly in the real estate sector. Many of those who are above 60 do not possess graduation degrees and are currently merchants, partners in major companies and are in administrative positions. Implementing such decisions will affect residential and commercial sectors in the real estate market.
The real estate sector plays an integral part of the economic system in all countries of the world as it is strongly linked to the banking and financial sector. If these hasty and random decisions are implemented in Kuwait without complete study it will hamper countries development and expansion.
Real estate investment sector will be the first victim as it largely depends on the expat population of the country, as it will widen the gap between supply and demand which will force the real estate sector to reduce the rental price.
Damage to the real estate sector will create collateral damage to many other sectors especially to the financial sector as it largely works on loans and interest, hence it will threaten the banks and will run into recession. The government must be aware of this matter as currently the country is trying to heal from the corona economic crisis and with this decision will have to also work on healing the wounds of real estate.
Some of the real estate sector in other Gulf countries due to the Corona crisis where there have been exodus of expats are currently working on mergers to breathe a life line in this sector, reports Al Anba. Some Gulf real estate companies, especially those facing great challenges, may resort to merging with each other in addition to reducing the prices of their units, as there has been contraction of the sector in the region, decrease in demand and cash flow due to the pandemic that has led to delayed payments and installments from buyers.
Some Gulf countries, especially those that have real estate developers, in which real estate prices have fallen dramatically, which resulted in the developers facing difficulties in paying their financial dues or debts will force them to go into merger as last resort which is not necessarily negative as its future implications will be positive, as these companies will be able to reformulate the capital and schedule their debts, in addition to that they will preserve the rights of shareholders and their years of experience that they made their career. .
The sources added that mergers in Kuwait is usually an inadmissible option as a large proportion of Kuwaiti companies, banks and financial institutes buy shares in companies that default in paying their debts, hence it saves them from bankruptcy or forces them into mergers.