KUWAIT CITY, Dec 23, (KUNA): Property experts predict the year 2016 will witness decline of prices of investment and residential units but believe those for commercial purposes will firm. Recent interest raise on the Kuwaiti dinar and ongoing decline of oil prices are among main factors that will push property rates down. Tariq Al-Ateeqi, former directorgeneral of Property Clearance Company, said residential units’ prices declined 20 percent, early this year, compared to the previous year, adding that distribution of plots by the Public Authority for Housing Welfare in new residential areas, namely South Al-Metlaa, West Andullah Al-Mubarak and Northwest Al-Sulaibikhat, primarily affected the prices.
Moreover, the recent government distribution of housing plots led to easing off pressure on private housing sector because the government showed seriousness in tackling this file with efforts to resolve it quickly. “All these factors result in slashing the prices in the medium and long terms,” he said. The plots’ distribution will lead to results that will be seen in the rented housing sector (investment houses), which flourished in recent years. Kuwaiti families that occupied these houses will move to the distributed ones distributed by the authority, thus easing off some of the pressure on private housing sector. Therefore, prices in this sector will fall in the next three years, particularly in areas such as Al-Gurain, Al-Messila, Al-Fnaitees and Abu Ftaira.
Forecast decline of the housing properties will affect the investment sector (the apartment buildings), where prices will also move down, in addition to decline of costs of buildings promoted for sale. As to commercial sector, namely shopping malls and stores, the rates will remain steady in shadow of current circumstances, namely noticeable hike of rents that pushed the price per square meter from KD 5.5 to KD 8.5. This sector may be affected with the purchase power of the consumers, who in turn get affected with changing economic conditions. In case oil prices dropped further and fears of yet another bout of global economic crises grow, the commercial sector will take the brunt of effects, although its current performance “is good with no negative pressures.”
For his part, Secretary General of the Real-Estate Union Qais Al-Ghanim foresees further downward movement in the sector in second half of 2016 because the market will absorb the forecast economic developments at the local and international levels. Elaborating on these changes, he mentioned the oil prices’ decline to unprecedented levels since 2007 and forecasts that they will drop further to $25 per barrel. “This is a very negative eventuality that will negatively affect various property sectors,” he says. Recent decision by the Central Bank of Kuwait to raise the interest rate leads to slashing rates of the housing units, namely the leased ones.
Moreover, government plans to levy fees on some utilities and services will lead to slowdown in some of the sectors, namely construction and contracting, where products’ prices will increase, thus demand on new property units and plots will shrink, Al-Ghanim said. Ali Al-Bloushi, of Al-Jamal realty company, said prices in the investment sector will fall because supply is higher than the demand. The year 2015 witnessed decline by 10 percent of the investment plots in areas such as Hawally, Al- Salmiyah, however other regions namely Al-Farwaniah, Khaitan and Al-Mahboula witnessed deeper falls. Prices’ decline is a new opportunity for investors, who had dropped out of the market due to soaring prices, to benefit from significant forecast proceeds, namely in the apartment buildings’ sector.