Domestic realty sector is currently lackluster due to oversupply and low demand, according to experts.
The local market is likely to witness deeper stagnation in the foreseeable future, largely after a large segment of traders in Boursa Kuwait (formerly Kuwait stock exchange) shifted to the property sector with "random loans from local banks."
Secretary General of the Real-Estate Union Qais Al-Ghanim said in an interview with Kuwait News Agency (KUNA) that the local market usually witnesses inactivity during summer, forecasting some trades in the year's remaining time, when many residents would seek to rent apartment flats.
However, if demand for such residential units does not materialize in November and December, rents may drop by KD 50, considering current hard economic conditions and excessive supply. In such an eventuality, other sectors will be negatively affected too.
Seeing billboards in public offering rented with specific rent "is an indication landlords are not in good condition," he opines. Al-Ghanim added that the sector was also negatively affected when a large number of investors -- inexperienced in the realty business -- in the local bourse shifted to real-estates, taking loans from banks in a random fashion and without sound calculations.
Citing other factors, he mentions recent Government's distribution of large residential complexes to the citizens and expatriate investors' shifting to the business sector.
Moreover, Al-Ghanim advises citizens planning to purchase realty plots to wait till January, when prices are forecast to drop. Meanwhile, Mohammad Al-Musawi, manager of Al-Musawi Property Company, concurred that prices in the housing and investment sectors would drop due to the abovementioned reasons.
Investors are concerned that the Central Bank of Kuwait may issue stringent regulations for property crediting, he says. A residential plot located in the second row of houses close to the beach in the beach-side Sabah Al-Ahmad district used to be traded for KD 190,000, but now its cost ranged between KD 105,000 and KD 90,000.
Many citizens now favor this seaside district for state-owned chalets, he says, adding that Sabah Al-Ahmad district is quite feasible regarding investments because of abundant available services and utilities. He also forecast that rents of residential apartments will drop by 15 percent in the foreseeable future.