Kuwait attaches great importance to meeting the housing needs of its citizens through the government housing program up to 70 thousand dinars according to the Kuwait Financial Center (Markaz) report titled “The Way to Solve the Problems of the Housing Sector in the State of Kuwait,” issued by Marmore, the research arm of Markaz.

The report indicated that the supply of housing units could not keep pace with the increasing demand, as the number of pending housing requests until 2020 at the Public Authority for Housing Welfare has reached 91,794 applications, while the waiting periods between submission of applications and allocation are approximately 10 years, reports a local Arabic daily.

The shortage of supply has also caused private housing prices to rise, reducing the affordability of owning private homes. Markaz pointed out that the affordability of housing in Kuwait is the lowest among the Gulf Cooperation Council countries, with a price-to-income ratio of 15.8, which makes it one of the lowest places in the world where it is possible to own a residential property at reasonable prices.

This rate, which is calculated by dividing the price of a house by the average household income, is nearly three times the rate in Dubai and Abu Dhabi, five times what is found in Saudi Arabia, and surpasses London and New York.

The price of the land, currently equals to 80% of the value of the house, which is well above the international benchmark of 30%.

According to the Markaz report, the main factors that exacerbate the housing problem are:

First: The lack of private sector participation

Second: low-density zoning near urban areas

Third: Limited access to financing

Fourth: The high cost of capital associated with infrastructure development

The government owns 90% of the land, and it regulates residential real estate development through the division and allocation of plots. Kuwaiti laws also prohibit private companies from buying and trading in residential real estate. Restriction in zoning led to the creation of neighborhoods outside Kuwait City that were intended for commercial development only.

Residential areas outside the city require an area of not less than 375 square meters for each plot of land that is allocated as a residential property by the Public Authority for Housing Welfare.

The population density has also been set at 12 units per hectare, which has caused urban sprawling and high residential real estate prices. The problem of obtaining finance is another major obstacle, as the capital of the Kuwait Credit Bank, which is the main source of housing finance, is declining.

The report expected a rapid and sustainable growth in the demand for housing in Kuwait in the near future, in light of the young demographic structure, as three quarters of the population are young people under the age of 39, in addition to the annual increase in new family formation rates.

The report included several recommendations to bridge the ever-widening gap between supply and demand in the government housing program, and to meet the increasing demand for housing resulting mainly from the young demographics of the community and the increasing urbanization in the country.

1- The need to put more land on the outskirts of cities

2- Reducing zoning requirements by increasing the density of residential urban land

3- Improving infrastructure and facilitating access to cities

4- Reviewing the floor area ratio of apartments in order to stimulate the development of high-density residential areas

5- Providing a housing program that meets the needs of families with high and low incomes

6- Enact laws for joint ownership of real estate

7- Increasing affordability through private sector financing

A report issued by the PAHW in June 2021 indicated that the bank could finance only 12,000 plots. Local banks are cautious about loans, because the law limits the possibility of foreclosure on first homes even if they are mortgaged.

As a result of the 100% increase in urbanization and the high population density of 232 people per square kilometer, Kuwait has recently witnessed a focus on developing infrastructure that was not prepared for the current density.

Since there is an urgent need to develop new areas to meet the demand for residential real estate, the financial expenditures required to support infrastructure facilities such as roads, schools, universities and hospitals are expected to be very high

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