THE announcement by the Minister of State for Municipal Affairs and Minister of State for Housing Affairs, Abdullatif Al-Mishari, to activate the real estate developer is a step in the right direction for resolving the housing crisis that has been escalating for decades. The role of the real estate developer should have been implemented 10 or even 20 years ago, but as the saying goes, “Better late than never”. This decision signals a potential revival in all Kuwaiti markets. The “plot and loan” policy has long proven ineffective in tackling the housing challenges. This policy was implemented to satisfy parliamentary and governmental interests aimed at achieving private interests, rather than serving the public good. As a result, the responsibility for construction was left to the citizens, leading to most residential areas becoming filled with unattractive concrete blocks.
The goal of housing welfare beneficiaries shifted from simply acquiring housing to dealing with the debts they incurred in building unnecessarily large spaces, either to keep up with their neighbors or to generate income by renting out unused floors and apartments. In countries that prioritize housing support for their citizens, there is a focus on ensuring that new residential areas are compatible with both the social and natural environment, while also easing the financial burden on citizens. These countries allocate undeveloped land to real estate developers, who are required to adhere to a set of three or four standard building models, each offered at a different price point. Beneficiaries can select the option that best suits their needs and financial capabilities. Random construction is prohibited, thus preventing the issues of excessive borrowing and failure to repay installments, as seen in Kuwait. In exchange, governments commit to covering the loan interest, or a portion of it.
The state also guarantees the beneficiary’s regular loan payments, with homeownership being fully transferred only after the final loan installment is paid, which is typically after 10 to 20 years. These countries also ensure that residential cities are self-sufficient in all basic services, including electricity, water, sanitation, and hygiene. Committees are assigned to manage each residential city, which has resolved many issues. Also, some countries have adopted the principle of administrative decentralization, making each residential city independent in terms of services.
This has helped reduce the burden on the state’s public budget. With the activation of real estate development projects, there is potential to launch major initiatives involving Kuwaiti commercial banks, which currently hold over 100 billion dinars that are underutilized. These funds need to be deployed in a way that commensurate with the local market’s capacity and the capabilities of real estate developers, as well as emerging sub-projects and startups. In the past, all solutions were ineffective. Housing decision-makers failed to consider realistic solutions due to interference from parliamentary, governmental, and influential entities, as I have previously stated. Now, every citizen can access housing assistance without incurring additional burdens or exhausting loans. Moreover, the government will not face any financial strain. On this occasion, I would like to extend my sincere gratitude to the Minister of State for Municipal Affairs and Minister of State for Housing Affairs, Abdul Latif Al-Mishari, for taking the initiative to resolve this long-standing crisis by following the right path. There is no doubt that this step will require the implementation of building models similar to those used in neighboring countries, so that homes are harmonious and aligned with the surrounding environment. The involvement of real estate developers will also push banks forward, as these institutions rely on generating profit from capital.
By Ahmed Al-Jarallah
Editor-in-Chief, the Arab Times
