Published: Aug 24, 2014
Source: Saudi Gazette

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Kuwait real estate subdued in July

KUWAIT's real estate sector saw a modest performance in July as sales totaled KD 268 million, said a report issued on Friday by the National Bank of Kuwait (NBK).

Sales dropped by 37 percent year-on-year (y/y) and by 49 percent from June, which was a record month. Sales across all sectors were down, however, with the drop attributed to seasonality and the fact that July only had 18 short working days when factoring in the Holy month of Ramadan and the Eid Al-Fitr holiday, said the report, which NBK publishes monthly on the Real Estate sector in Kuwait. 

Sales in the residential sector totaled KD 132 million in July, a 31 percent y/y decrease.  The number of transactions in July dropped to 429, down 30 percent y/y. It is not unusual to see performances in this sector decline during the summer. The overall outlook for the sector, however, remains stable, noted the report.

Up to 294 residential transactions took place in Ahmadi Governorate, placing it first among governorates with 68 percent of all transactions. Mubarak Al-Kabeer followed with an 11 percent share and Kuwait City with 7 percent. In the residential sector, 74 percent of all transactions involved the purchase and sale of land or vacant plots.

Sales in the investment sector stood at KD 133 million in July, down 24 percent y/y.  The sector experienced a larger decline of 49 percent y/y in the number of transactions, which led to an increase in the average transaction size to KD 1.2 million.

Apartments accounted for 48 percent of all transactions in the investment sector. Whole buildings came in second, comprising 36 percent of all transactions. The majority of these transactions (buildings & apartments) were in Ahmadi Governorate, with the largest transaction in the sector involving an entire building which sold for KD 11 million. Transactions involving vacant plots accounted for 12.5 percent. 

Sales in the commercial sector witnessed a sharp decline to KD 3.4 million in July from KD 114.4 million in June.  Only 3 transactions were recorded during the month, with one large property in Al-Jahra governorate costing KD 2.6 million. Sales in this sector can be relatively volatile from month to month, however sales are up on average in recent months.

The month of July saw one coastal line transaction valued at KD 5 million. The property is located in Mubarak Al-Kabir governorate. Costal line transactions tend to be infrequent and high in value.

The Kuwait Credit Bank (KCB) approved 285 loans worth approximately KD 17 million in July.  The value of loans approved declined on a y/y basis by 53 percent.  Meanwhile, the value of loans disbursed by KCB reached KD 10 million, a decrease of 11 percent y/y.

The Public Authority for Housing Welfare (PAHW) released a timetable for the scheduled distributions (homes, apartments, plots) during fiscal year 2014/15. The Authority announced that it has already distributed 3258 since the start of the fiscal year. A remaining 9495 units are expected to be distributed in order for the authority to reach its 12735 target. The target is considered high given that in recent years PAHW has averaged between 3000 to 4000 units annually. However recently passed regulations are expected to help PAHW speed up the distribution process, said the report.

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