According to real estate experts speculation about pushing citizens in private housing driven by the demand for the double return achieved from licenses for the cost of electricity and water prices and renting their properties in the unit system, this behavior has ignited prices to record rates, which necessitates intervention to stop it to ensure the safety of real estate transactions in this sector, away from any price bubble.
A local Arabic daily quoting reliable real estate sources said, the Corona crisis has caused significant price jumps in private housing prices, of up to 20% during 2021, driven by the large funds that investors and speculators withdrew from investment and commercial housing after it showed additional attractiveness during the crisis.
It seems that what was presented by the daily published under the title ‘Electricity with (two fils) in one house only’, tested the deep waters, according to citizens affected by the private housing crisis and real estate experts who warned of the repercussions of the continuation of speculation on residential real estate in order to demand a comfortable return even if it was not worth it.
Interacting with what was published by the daily, the large liquidity available in the market, especially in light of the decline in deposit returns in local banks, opened the appetite of investors for the great demand for private rented housing and speculation on it, thanks to the higher return, especially after the increase in the construction percentage from 150 to 210.
In addition, the continuation of subsidizing electricity and water tariffs in the residential sector, even on the second, third and fourth houses, encouraged speculative spirit in this sector, especially amid the leniency in dealing with its violations, saying in light of these data, it has become remarkable the spread of divided residential houses similar to buildings, after many of the owners of these plots resorted to renting them to families and sometimes to dozens of bachelors in one apartment.
In this regard, the real estate businessman, Qais Al-Ghanim, said that the state closes its eyes to many violations that occur in private housing until some typical areas have been turned into rentals, wondering: How can the Municipality allow the owners of plots of 750 square meters to convert them into a large number of studio apartments without supervision that house dozens of bachelors in the midst of model Kuwaiti areas? He also defended the question about how to deliver electricity and water to these violating homes?
He added that silence about this deep-rooted organizational problem for many years gave birth to another, not least of which is the great pressure some Kuwaitis suffer in the area of services — water wastage and subsidized electricity by the state, considering that the proposal to lift water and electricity subsidies on the second house and prevent the disposal of the government house 10 years ago must That they come within a package of solutions that ensure the sustainability and stability of this sector.
Al-Ghanim says “How can the municipality turn a blind eye to the many indications that some plots are rented out in private housing completely, such as the number of cars used for the area and nearby squares, in addition to the change in building divisions, and the high rates of electricity and water consumption due to the huge numbers of people inside.”
Al-Ghanim considered that the solution lies in the root of the problem, which is the housing crisis, as the state must provide an integrated solution by freeing the state’s grip on land in conjunction with the approval of mortgage laws and the real estate developer to meet the existing demand and reduce prices.
For his part, the head of the Real Estate Brokers Association, Abdulaziz Al-Dughaishem, said that the state should not allow renting of private housing areas because this increases their attractiveness in the eyes of speculators and investors, which would curb the rising prices day after day, stressing the need for the state to provide Kuwaitis all the services in the new cities and employ them in their surroundings, to discourage them from migrating to the interior areas, which raises the demand.
He pointed out that speculation on private housing was at its height during the Corona crisis, as the sector witnessed the entry of several investors who exited from other sectors, to take advantage of the higher return in private housing and the support provided for water and electricity in the form of subsidy, adding that speculation has calmed down at the present time because prices have reached record levels, entering now into the real sector is an adventure.