Kuwait property market gets fee-fueled jolt

KUWAIT CITY, Aug 30: Economist Nasser Al- Mutairi says the implementation of progressive fees on undeveloped plots and the enforcement of Law No. 126/2023 since the beginning of March have successfully broken the stagnation in the real estate market and reduced the monopolistic control over private residential plots.

In a press statement, Al-Mutairi stressed that the market has begun to reap the benefits of this important legislation through a range of immediate and structural outcomes that have contributed to enhancing fairness and expanding the supply of real estate available to citizens. Al-Mutairi summarized the most prominent positive results achieved in the real estate market following the implementation of the law, foremost among them the significant decline in the practice of monopolizing residential plots. He explained that the law reduced the area of freehold ownership permitted for citizens from 5,000 square meters to just 1,500 square meters.

This strict limitation prompted major landowners to relinquish excess land to avoid paying exorbitant progressive fees. The implementation of the law led to a significant increase in the supply of residential land, a decline in speculation, and the transfer of hundreds of undeveloped plots from unproductive speculation and stagnation to direct sale. Prices have stabilized and shown relative improvement due to the increased options available to serious buyers. The implementation of the law has also gradually helped eliminate fictitious transactions and artificial speculation, which had unjustifiably inflated market values. The implementation of the law has stimulated construction and revitalized urban development, boosting the contracting and building materials sectors and stimulating the broader economic cycle associated with construction.

It has also limited the role of financing entities in private housing. The strict prohibition on companies and individual institutions owning, selling, or mortgaging private housing plots has protected the sector from the massive liquidity that was crowding out citizens. Limiting banks to financing only one residential property per client who does not own a home has restored the private housing sector to its fundamental social function as a basic necessity for citizens, rather than an investment tool.

The implementation of the law has supported the state’s general budget through fair revenue channels, as the Ministry of Finance has begun collecting the required fees at a rate of KD 10 per square meter exceeding the permitted limit. These fees will increase progressively by KD 30 annually until they reach KD 100 per square meter, providing a sustainable source of revenue for the state. Al-Mutairi stated that the implementation of the law has contributed to accelerating the pace of private construction, which has helped reduce the waiting period for housing applications.

By Najeh Bilal Al-Seyassah/Arab Times Staff