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Changing trends in real estate investment

Investor sentiments within the real estate market fluctuate in response to various economic, social, and political factors, both locally and regionally. Over recent years, significant shifts have been observed in the growth and activity of different sectors within the real estate market. While the residential and industrial sectors have thrived, the investment sector has experienced stagnation and decline in occupancy rates and prices.

Several factors have contributed to the decline in demand for investment real estate. These include increases in electricity and water tariffs in 2017, along with stricter regulations on entry visas and visit cards for expatriate workers’ families, who are key players in this sector, reports Al-Qabas daily.

Additionally, changes in the demographic composition and government policies aimed at protecting residential real estate from speculation and land monopoly have further dampened investment sector demand.

Consequently, many investors have shifted their focus towards the residential sector, which saw significant price increases in recent years, particularly after being exempted from electricity and water tariff hikes. However, recent legislative measures aimed at curbing speculation and facilitating housing construction for eligible citizens have reignited interest in investment real estate.

Government initiatives such as abolishing real estate agencies, preventing land monopoly, and imposing annual fees on large landowners have contributed to the revival of investment sector demand. Furthermore, proposed amendments to residency laws may stimulate demand by expatriates, who form the majority of residential apartment users.

The resurgence of the investment sector is anticipated to exert pressure on residential real estate prices. Unlike residential properties, investment real estate offers advantages such as company registration, mortgage eligibility, and bank financing, making it an attractive option for investors.

Several factors have contributed to the pressure on residential real estate prices, including unprecedented price levels, which have diminished the purchasing power of many citizens. Housing regulations and rising interest rates on loans have further impacted residential real estate prices and liquidity.

Despite these challenges, the residential sector remains a significant contributor to the real estate market, albeit with a declining share of overall market liquidity. As indicated by the National Bank of Kuwait, there are positive expectations for the revival of investment real estate, highlighting the dynamic and evolving nature of the real estate market.



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