Family visa rules to help Real Estate revival

• The decision by the General Directorate of Residency Affairs to allow expatriates to bring their families is anticipated to have a significant impact on the investment real estate sector
• In 2023, the investment sector’s trading reached over 831 million dinars, involving 1149 contracts and agency deals. Real estate investors note a significant surge in demand for investment properties during the past periods

In response to a decision issued by Deputy Prime Minister, Minister of Defense, and Acting Minister of Interior Fahd Al-Yousef, which amended select provisions of Ministerial Resolution 957 of 2019 concerning the Foreigners’ Residence Law, allowing expatriates to sponsor their families – spouses and children – for residency under specified conditions, the General Directorate of Residency Affairs at the Ministry of Interior has initiated the acceptance of applications for family reunification by established guidelines.

The department processed thousands of transactions, ensuring that each adhered to stipulated conditions. Applicants whose submissions did not meet the requirements were requested to complete the necessary procedures, while those meeting the criteria were approved.

The decision to allow expatriates to bring their families is anticipated to have a significant impact on the investment real estate sector. This is expected to result in heightened demand for apartment rentals, potentially driving up occupancy rates and real estate prices.

Following the onset of the coronavirus pandemic (Covid-19), the investment sector experienced a notable drop in occupancy rates. The sector faced major challenges amidst Covid-19 and subsequent demographic-related decisions, including the deportation of many expatriates who constituted a key demographic for this sector.

Occupancy rates in this sector averaged between 84% and 86% since the pandemic until last year. With the recent decision to allow family reunification, many real estate developers anticipate rates to reach 90%. Rental values have been impacted by the decrease in expatriate numbers but are expected to witness a recovery after the rise in demand.

Many real estate investors expect a decline in residential prices if investment sector feasibility improves, as many shifted focus to residential investments during the sector’s downturn.

In 2023, the investment sector’s trading reached over 831 million dinars, involving 1149 contracts and agency deals. Real estate investors note a significant surge in demand for investment properties during the past periods.

A report from the National Bank of Kuwait (NBK) reveals a recovery in demand for investment properties, despite soaring interest rates. This resurgence is attributed to more positive economic outlooks, potentially influenced by anticipated government amendments to residency laws. These changes are expected to streamline processes and stimulate demand from expatriates, who constitute the vast majority of apartment users.

This decision also extends its positive impact to the commercial sector, particularly the retail industry as the presence of fully settled expatriate families translates to rising consumption and spending, providing a major boost to the sector. This comes at a critical time as the sector has faced challenges due to consumer boycotts of numerous international brands following the Israeli aggression on Gaza.

A significant obstacle in the local job market has been the inability of workers to bring their families to reside with them. This change addresses the challenge of fostering a more conducive environment for skilled professionals to thrive and contribute to the local workforce.

The positive security implications of the decision should not be underestimated. The presence of families of labourers enhances security stability, mitigating potential crimes or issues that unmarried individuals might engage in. However, the decision also entails negative aspects, notably increased pressure on state-provided services, and infrastructure, elevated electricity and water consumption rates, and exacerbated traffic congestion.