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Drop in property prices in the second half of 2015
June 2, 2015, 2:23 pm
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Experts in local real estate market expected that the second half of this year will witness drop in prices due to recession in the regular summer season, besides regional factors. They added in remarks to KUNA that the market will suffer a trading drop during the second half of 2015, along with the summer season and upcoming holy month of Ramadan during which the "trading in property becomes weak." The market will also be affected by the regional situation and forecasts of rise in interest prices on the Kuwaiti dinar, besides a number of local auctions which are related to residential property, they added.

This does not entail severe drop in real estate prices, especially the residential ones which are witnessing continuous demand from citizens, as the prices fell during some property auctions that took place lately, but they immediacy rose again, they affirmed. Predications indicate a drop in real estate prices, due to low yield of private residential units, and investment housing units, after a hike in lands' prices, Former Director General of the Kuwait Clearing Company (KCC) Tareq Al-Atiqi said.

Any increase of interest rates on the dinar during the second half of this year will lead to a retreat in property prices because the investors will save their capitals in guaranteed returns' deposits, instead of investing them in costly residential real east of low income, he added. There is a number of price differences, which the investors started to remark besides a fall in residential and investment real estate prices equally, as the recession wave will continue until the end of 2015, Al-Atiqi added. President of the Real Estate Union Tawfeeq Al-Jarrah said there is slight retreat in the prices of residential and investment property in Kuwait, expecting the recession period to take place until the end of this year.

Despite stability in rental returns on residential and investment real estate, yet the operating ratio in all of the country's areas did not drop below 95 percent, which is capable to strengthen the condition of real estate and the stability of prices in the foreseeable future. The investors fear to enter into new real estate investments due to the market's situation currently, especially following the negative developments in the Gulf Cooperation Council (GCC) region, he said.

Any increase in interest prices on the dinar valued deposits will negatively affect the real estate prices in Kuwait, he added. The demand on private houses did not decrease in spite of the recent government distribution of housing units, which was only done on maps, and not in real life until more three years for a number of residential towns to continue constructing all of their housing units that were distribute lately.

Director General of Busheri real estate institution Jawad Busheri said that prices of residential property will suffer a drop in the near future but it will be only temporary due to a number of factors that are affecting the market. That most affecting element in the residential lands currently are the continuous auctions, which cause a drop in residential lands in a number of areas in eastern Al-Qurain like (Al-Mesayel and Abu-Futaira, and Al-Funaitees), while prices increased again immediately after the auctions were done, he mentioned.

The Kuwait Finance House (KFH) auction partially affected the market, while the prices went up again after two months of the auction, he said.
He expected a stability in prices until the end of this year as a number of auctions will take place, while the real estate market always suffer a relative recession in a a number of deals during the summer period starting from May till August, being an annual travelling season.

Property reports issued lately showed a drop in the total sales of the real estate market during last April by 5.6 percent to reach KD 340 million compared to KD 361 million of the same month in 2013, and of the same declining percentage that was close to 29 percent on an annual base. 

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