A recent meeting between the Minister of Commerce and Industry, Muhammad Al-Aiban, and representatives of the Real Estate Union, focused on the repercussions of the decision issued by the Real Estate Registration Department of the Ministry of Justice banning the registration of investment and commercial real estate property in the names of real estate companies listed on the stock exchange, partly owned by foreigners, despite the fact that a majority of these companies’ shares are owned by Kuwaitis.
The source said that the meeting with the Minister of Commerce was positive and constructive, since the minister has promised to look into the file and provide an optimal solution to the issue since a large number of real estate companies are suffering from the problem.
The source added the Minister of Commerce has been informed that the decision of Justice Ministry has harmed the real estate companies, especially those listed on the stock exchange since these companies have foreign shareholders, stressing these measures have not only confused the real estate market, but rather the Kuwaiti economy as a whole, because it has created a kind of stumbling block when it comes to attracting foreign capital, and this is inconsistent with the Kuwait Vision 2035 and making the country a global financial center.
He pointed out that the Real Estate Union stressed, during its meeting with the minister, the need to work on what is stated in Article 2 of Law No. 20 of 2000, which stipulates that “the Minister of Commerce and Industry, after the approval of the Council of Ministers, may set controls on the contribution of non-Kuwaitis in the real estate sector.”
According to the source, representatives of the real estate companies were surprised during the meeting to know that banks are allowed to register real estate on the stock exchange market although banks also employ non-Kuwaitis and own shares while the same facility is not available to other listed real estate companies.
If risks are the foremost reason to prevent real estate firms from registering that it should be applicable to everyone without exception. If we accept the application of the law to banks, then we can imagine the extent of the direct and serious damage to the local economy, which may be risky and bring about catastrophic results for the banking and credit sector in Kuwait.
Accordingly, the union expressed its hope that the Minister of Commerce would issue a decision that defines the controls for non-Kuwaiti ownership of real estate, allowing them to own shares only, and prohibiting their ownership of real estate, provided that the decision includes the inadmissibility of companies of all kinds, whether upon their establishment or liquidation, to distribute their assets to shareholders irrespective if they are non-Kuwaitis, otherwise it will be forcibly sold, provided that the foreigner receives cash in exchange for the property, stressing that this decision — if issued — will achieve the required balance between protecting real estate ownership and protecting foreign capital at the same time, and at the same time this will correspond to the great developments in the Commercial Companies Law, the Capital Markets Authority, and the Kuwait Direct Investment Promotion Authority Law.
The Real Estate Registration and Documentation Department at the Ministry of Justice had, during the past period, suspended the registration of real estate in the name of real estate companies, in which foreigners own or contribute, except after submitting a new statement devoid of any non-Kuwaiti shareholder in the company, with the exception of banks listed on the stock exchange.
The Real Estate Union, which represents a large segment of real estate companies, wished the Minister of Commerce to deliver a message to the government and all those concerned of the need to reconsider the aforementioned decision, due to its negative impact on the real estate sector in general, and that prompt and effective measures be taken so that direct damage is stopped which affects the real estate companies.
The source confirmed that work to attract foreign capital in Kuwait is still facing many obstacles, despite the economic developments that have taken place in the country, and the consequent positive changes in the state’s economic policy.
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