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Demand rises with population growth
KUWAIT CITY, Aug 10: The Kuwait International Bank (KIB) revealed that the private housing real estate sector in the governorates of Kuwait witnessed a relatively small increase during the last six months, compared to last year, despite the price infl ation reaching record levels, which resulted in a reduction in trading volume and a decline in its rates, reports Al-Qabas daily. In its semi-annual real estate report, KIB stated that the private housing real estate sector in Kuwait continued to take a conservative curve in its rate of increases, until the end of the first half of this year, where the rates of price increases, compared to last year, ranged between 4.7% and 6.1% for different governorates. The report’s data showed the varying rates of change in prices between the end of 2021 to mid-2022 for each governorate, so that during that period Ahmadi recorded the highest rate of change in the increase in primary prices per square meter, while Mubarak Al-Kabeer witnessed the lowest.
The director of real estate appraisal at KIB, Eng Ali Al-Shas, stated that the continuous increase in demand, coinciding with the growth of the population, is offset by a lack of supply in light of the housing crisis, with a scarcity of land and desirable locations, especially with the allocation of plots in relatively remote areas.
Moreover, the continuation of infrastructure works in the new residential areas, he also pointed to the continuity of speculation and investment in residential real estate, as one of the reasons for this decline in the rates of rise in private housing.
According to what was stated in the report on real estate registration contracts in the first five months of this year, the total number of registered contracts was 2,693, led by the private housing sector contracts with a rate of 74.68%, and the investment sector witnessed a noticeable increase in trading rates.
The relative demand currently came with the return of residents to the country after the repercussions of the health crisis, and the resolution of some laws that will lead to the stability of the occupancy rate of the units, anticipating a rise in the rate of rents in the future. Focusing on the transactions of private housing real estate in the governorates of Kuwait, the KIB report showed that the Ahmadi Governorate led its movement by 43.7%, of the total contracts registered for private housing properties in the past six months, and the person explained this by increasing the concentration of trading and demand for land and housing in the Sabah Al-Ahmad coastal area noting that it represents a recreational outlet for citizens, adding that villas and houses in some areas of the Ahmadi Governorate are still affordable for a large segment of citizens, in light of the high prices of land in and around the interior regions, as well as the high cost of primary building materials, such as iron, cement, aluminum and others not to mention the cost of labor.
The report indicated that the residential areas of Shuwaikh, Al-Siddiq, Saad Al-Abdullah, Al-Masayel, Ishbiliya and Al-Aqeelah regions recorded the highest average price per square meter for land prices in all regions while Sulaibikhat, Salwa, Al-Waha, Sabah Al-Salem, Khaitan and Sabah Al-Ahmad residential areas recorded the lowest price per square meter.
The person indicated that despite the relative increase in prices for the private housing sector in the first half of the last period, there is an expected correction movement that is expected to decrease prices during the coming period, with several indicators, including:
• The rise in the value of private housing prices and the cost of building materials so that they are no longer commensurate with the financial capacity of a large segment of citizens.
• The new expansion of Saad Al Abdullah residential suburb, which will increase the supply of housing units.
• The number of registered deals decreased by 51.33% compared to the first half of 2021.
• The recent rise in the discount rate from the central bank.