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Saturday , October 23 2021

Real estate agencies witness 526% growth in H1 of 2021

Trend tied to low trading in view of Covid-19 restrictions

KUWAIT CITY, July 29: Real estate agencies sold 349 houses with a total value of KD 119 million in the first half of 2021 — 526 percent growth compared to KD 19 million within the same period in 2020, reports Al- Jarida daily. This huge leap in the volume of residential transactions in real estate agencies is due to the low trading in the first half of last year as a result of closures and health measures taken by the government to deal with the corona pandemic. The agencies are considered a major gateway for speculation in the residential sector in terms of the period of completing the sale process and they are not required to obtain a description certificate from Kuwait Municipality. This means a property whose owner committed violations can be sold through a real estate agency.

The agencies can also avoid paying the real estate registration fee — 0.5 percent, as the fee is fixed at KD 500 for properties worth KD 100,000 and above; while the fee is KD 250 for properties less than KD 100,000. Based on the current prices, the registration fee is much higher than the real estate agency fee. Also, housing grant applicants can use the real estate agency to purchase real estate property without canceling their housing grant application because the real estate property is not registered in the Real Estate Registration Department. The agent can dispose the real estate property and then sell it in the same manner. The real estate agency bears many risks. For example, if there are financial cases against the principal owner and legal measures are taken against him, the property sold through the real estate agent can be seized and this directly harms the agent or the buyer.

Reason
On the other hand, some consider the real estate agency the main reason behind the speculation on residential real estate properties; because the sale process is completed within a very short period compared to the documentation method, which may take a month or more. The real estate agency is also one of the reasons behind the increase in the prices of residential real estate properties, as it is easier for speculators to buy and monopolize land and real estate properties and then offer them for sale at higher prices with lower fees through the agency. Some real estate agents pointed out that the real estate agency system is only applied in the State of Kuwait, causing many problems for citizens as the agent may lose the property in case of seizure. They suggested that it is better to cancel the real estate agency system and ease procedures for transferring the property directly in order to eliminate speculation and manipulation. They explained the transfer of a real estate document takes months — a very long period that may result in many variations in prices. The National Assembly ratified a law to increase the real estate agency fee from KD 10 to KD 500 after the market witnessed many problems as a result of dealing with the real estate agency. Before this, the real estate agency fee was KD 2.

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