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Wednesday , August 17 2022

Rise in demand pushes rates of land for ‘private housing’

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‘Beyond reach of most young Kuwaitis’

KUWAIT CITY, May 1: The Economist Intelligence Unit (EIU) touched on the housing crisis in Kuwait, noting that the government had recently approved funding of 2.1 billion dinars for the South Saad Al Abdullah housing project, which is one of the projects being built on the outskirts of the capital, aimed at alleviating the chronic shortage in the country’s housing for middle class people, reports Al-Rai daily.

However, the EIU believes that the growth in housing demand will continue to outpace the growth in the supply of new homes until 2026, while political paralysis continues to impede the much-needed reforms of the systemic imbalance that the market suffers from. Housing sources pointed out that the chronic housing shortage for the young segment of the population of Kuwait, which is rapidly increasing, has always been a cause of great concern and resentment, because the waiting period for allocating government housing has become longer, often about a decade, with a backlog of requests from more than 100,000 people who wish to obtain housing

Benefits
As part of the generous benefits enjoyed by citizens, every Kuwaiti couple, regardless of their income, is entitled to land to build a house, and a loan of 70,000 dinars, free of interest given by the credit bank. But restricted supply, and speculation driven by high investment returns, have pushed prices for the private housing sector to be more than 20 times the average annual salary, a level beyond the reach of most Kuwaitis.

The Economist Intelligence added that real estate financing was limited as a result of the failure of successive governments to approve a draft mortgage law that was published in mid-2020 in the National Assembly due to the ongoing political conflict. Under this law, the government covers part of the interest on housing loans from commercial banks. The unit expected that the government’s decision to inject 800 million dinars in liquidity into the Credit Bank in January would have a marginal impact on the problem. It believes that there is a moderate acceleration in addressing the supply side with the recovery of international oil prices, which allows an increase in capital investment.

Financing
The daily quoted the Finance Minister Abdulwahab Al-Rasheed as saying, during his announcement of the financing of the South Sa’ad Al-Abdullah project (which will be distributed over several annual budgets), that housing is a priority for the government (currently in place as a caretaker government after its resignation in early April).

The project, which extends over an area of 59 square kilometers, will include at least 25,000 housing units that will be built on the basis of a “smart city” under a joint project agreed upon in 2016 between the Public Corporation for Housing Welfare and a South Korean consortium. In March 2021, the main Chinese contractor handed over the second batch of housing units in the South Al-Mutla’a project in the Jahra Governorate, which is the largest planned project, which will be built on an area of 120 square kilometers and provide housing for 400,000 people upon completion.

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