New electronic broker system to transform Kuwait’s real estate market

• Khalifa Abdullah Al Ajeel, Minister of Commerce and Industry, emphasized that the entities linked to the electronic real estate broker’s book are regulatory bodies focused on providing transparent information, reflecting true market prices, and aiding in the fight against money laundering in the sector.

Khalifa Abdullah Al Ajeel, Minister of Commerce and Industry, unveiled the upgraded electronic real estate broker system, marking a significant step towardsadvancing the real estate market, as reported by Q-8 Press.

Al-Ajeel stated at a press conference that “the operation of the new system will begin on December 2, with paper-based procedures ending on January 1. The electronic broker system will facilitate real estate processes by providing a digital platform that streamlines transactions without the need to visit various authorities. It will also reduce the reliance on paperwork, replacing it with efficient and reliable digital procedures, thereby shortening the documentary cycle.”

Al-Ajeel added that “Kuwait has gone through various stages in real estate investment, starting with what was known as ‘lentil documents’ to the current broker’s book system. One of these stages saw a stagnation in the development of mechanisms for buying, selling, and trading real estate. This negatively impacted several aspects of the market. The primary issue was the significant slowdown in real estate transactions, which often took over a month and a half, hindering both investments and transactions.”

Eliminating paper transactions

He further explained that the Ministry of Commerce and Industry, after conducting meetings during that period, identified the real estate broker contract as the root of the problem. “Today, we have eliminated all paper transactions, transitioning exclusively to the electronic real estate broker system. This shift is part of the ministry’s efforts to enhance public services electronically. Currently, the ministry’s records include 2,051 real estate books. This initiative represents a significant change, reducing the duration of sale and purchase processes by 45 working days.”

He clarified that “the only remaining step is real estate registration at the Ministry of Justice, which both parties are working to finalize. These steps align with the directives of His Highness the Amir Sheikh Meshal Al Ahmed Al-Jaber Al-Sabah and His Highness Sheikh Ahmad Abdullah Al-Ahmad Al-Sabah, the Prime Minister to facilitate the business environment.”

Transparent real estate information to customers

The Minister of Commerce and Industry emphasized that the entities associated with the electronic real estate broker’s book are regulatory bodies and are not part of the real estate market. He stressed that these entities aim to provide highly transparent information to customers.

The electronic book will reflect the actual market prices of properties and will contribute to strengthening efforts to combat money laundering in the real estate sector, which has been affected by such issues.

He continued: “Providing sufficient data will allow the market to self-price based on accurate and factual information.” He pointed out that the current data available may be inaccurate and insufficient, as the paper book is not centrally transferred to the concerned authorities. He explained that the electronic ledger would overcome this issue by enabling the creation of a comprehensive database of all transactions.

Al-Ajeel added that the “Current data and studies on the real estate market do not provide exact details of completed deals, creating a gap in the sector. The launch of the electronic ledger is the first step, with more steps to follow, which will be announced when completed.”

He further mentioned that the application of the electronic book would begin early next year, replacing the paper book and providing clearer and more accurate data for customers and the state.

In response to a question about potential system malfunctions, Al-Ajeel said: “Electronic systems and services may always face such challenges, but data will remain intact and secure with the concerned authorities. The Civil Information Authority is responsible for this aspect, and the electronic ledger is considered part of the vast data it maintains.”

Comprehensive view of the property’s condition

For his part, the Undersecretary of the Ministry of Commerce and Industry, Zyad Abdullah Alnajem, encouraged all real estate market participants to share their feedback and suggestions on the new system to ensure its ongoing improvement.

He said: “The electronic real estate broker’s book will provide a comprehensive view of the property’s condition by linking it to various relevant authorities, such as the Ministry of Justice, Kuwait Municipality, and the Public Authority for Civil Information.”

He added that the electronic book would enable parties involved in the sale process to identify any violations, mortgages, or seizures before completing the transaction, which would help resolve many issues faced by real estate sector participants.

Real estate valuation

Regarding the real estate valuation profession, Alnajemstated that the Ministry of Commerce issued a decision earlier this year to regulate the profession by establishing guidelines and training courses for professionals to enhance their skills.

He continued, “Real estate valuation is one of the most important and influential professions in the sector, and the Ministry of Commerce and Industry aims to ensure that the expertise of individuals matches the standards of approved institutions.”

He added that the real estate broker’s book will help display the actual prices of properties by providing real estate information and data with high transparency for customers. As a regulatory authority, the Ministry of Commerce and Industry strives to regulate the market and disseminate real estate information transparently, which will contribute to improving the investment environment.

Benefits of the new real estate broker system

Imad Haider, president of the Federation of Real Estate Brokers, highlighted the benefits of the real estate broker system as follows:

1. Electronic link: The electronic link between the broker, the Ministry of Commerce, Civil and Municipal Information, the Ministry of Justice, and the Real Estate Registration Department will speed up the completion of transactions.
2. Disclosure of property violations: Property violations will be disclosed before concluding the contract. The owner must submit a letter of identification from Kuwait Municipality if the property is for investment, along with a letter from the Kuwait Fire Force. This ensures the property is free of violations, unlike the previous system, which required these documents after the contract was signed, often leading to the discovery of violations later and halting the sales process.
3. Immediate verification: When entering the document number, seller’s name, civil ID, buyer’s name, and civil ID via electronic linking with the Ministry of Justice, an immediate response will confirm whether the property is reserved or tied to a mortgage, determining whether the sale can proceed.
4. Prevention of multiple sales: The electronic contract system prevents the sale of a property through multiple offices by restricting the property. This limits fraudulent activities and ensures the property is not sold or deposited by multiple parties, as was possible with the paper contract.
5. Paper contract issues: A paper mediation contract, which is handwritten, may cause the loss of one party’s rights if the writing is unclear or illegible. In contrast, the electronic contract features clear terms and legal wording, ensuring the protection of both parties’ rights.
6. Remote contract authentication: The use of authentication in the electronic contract facilitates remote contract signing, unlike paper contracts, which require the physical presence and signature of the parties involved.
7. Alignment with state policy: The electronic contract supports the state’s policy of converting all paper contracts to digital and electronic formats.
8. Elimination of fraud: The electronic contract helps eliminate fraudulent intermediaries and prevents the abuse of the real estate market, such as the sale of contracts, which was possible with paper contracts.

Haider explained that one of the most prominent drawbacks is the possibility of system failure, which could disrupt deals worth hundreds of thousands or even millions of dinars. He stressed the need to find solutions and alternatives for such situations, which may be beyond anyone’s control.

Seven advantages of the electronic real estate broker system

1. Moving from paper to an integrated electronic application: Eliminating the need for paper transactions and traditional signatures, as all procedures will be conducted electronically in a simple and efficient manner.
2. Facilitating real estate procedures: Providing an electronic platform that simplifies the completion of transactions, eliminating the need to visit multiple entities.
3. Reducing the documentary cycle: Reducing reliance on paper and replacing it with reliable digital procedures.
4. Verifying the validity of data and documents: Validating civil data through the General Authority for Civil Information, and confirming property ownership and descriptions by linking the system with Kuwait Municipality and the Kuwait Fire Force.
5. Enhancing transparency and credibility: Accurately tracking real estate transactions and trading values, while ensuring proper documentation of real property owners.
6. Stopping fraud and forgery: Ensuring the authenticity of contracts through electronic authentication of parties via the “Easy” application.
7. Providing a database: Creating a central database that allows concerned authorities to more effectively monitor the market.

Full automated link with the municipality regarding the certificate of descriptions

Khalifa Abdullah Al Ajeel stated that, for the first time, a fully automated link will be established with the Kuwait Municipality regarding the certificate of descriptions to ensure that no property is sold until this certificate is completed.

The link will also be extended to the Civil Information Authority. In light of the challenges many individuals face with fake sales and properties being sold to others, this step will help streamline the process of identifying the true property owner by entering the civil number and the certificate of description.