Expected summer slow-down of real estate activity exacerbated by advent of holy month of Ramadan in June, saw sales across all realty sectors down by 22 percent from the same six-month period of last year. Experts believe this sales sluggishness is in line with an ongoing gradual correction in the market that has been going on since 2015.
Sales transaction in the residential sector was down 24 percent year-on-year (y/y) while sales in dinar terms dropped by s27 percent y/y to KD 88 million. Home sales accounted for 63 percent of the sector’s transactions while plots made up the remaining 36 percent. The benchmark NBK residential home price index, which has been trending downward since the beginning of 2015, notched 165.2 points down from its peak of 186 points in January 2015.
Meanwhile, the investment-building sales (smaller apartments bought as investment), which accounted for 55 percent of total transactions, had a slight upward momentum with total sales tipping KD73 million. While this was an uptick of 15 percent compared to the previous month, sales were still down 40 percent y/y.
In the commercial sector, though sales were higher than the previous year in dinar terms, it was slightly lower in volume from the same period last year. Sales for the month totaled KD30 million, which was up 15 percent y/y but with this amount coming from sales of five transactions, one less than the same period last year.
Meanwhile, Secretary of Kuwait’s Real Estate Association, Qais Al-Ghanem, said that contrary to what is expected at this time of the year when apartment rents usually go up on the back of the end of summer vacation and schools reopening, this year there has been a rent drop in many arreas.
In Salmiya, rents dropped by an average of KD60 compared to two months ago. Al-Ghanem predicted further drop in rents given a 30 percent decrease in price of investment lands in many areas, including Hawally, Salmiya and Farwaniya, with supply exceeding demand.
“Landlords usually wait for September and October to rent their empty apartments,” Ghanem said, adding that the story is likely to be different this year as rents are expected to see a notable decrease. “The real estate market has been saturated following the boom in construction investment buildings, and rents will eventually go down following years of rent bubbles,” he indicated.