Kuwait’s housing crisis remains a significant challenge, driven by a combination of rising prices, real estate speculation, and limited local investment opportunities. While affordability is often seen as the primary concern, the issue runs deeper, requiring structural reforms and strategic interventions.
One key solution lies in empowering real estate developers to play a more active role in housing projects, as their contributions are essential for improving infrastructure and expanding access to suitable housing. The recent emphasis on the Real Estate Developer Law marks a crucial step toward fostering a more stable and regulated housing market.
This initiative marks a significant step toward addressing Kuwait’s housing challenges. By engaging consultancy services to develop three new residential sites, the Public Authority for Housing Welfare is taking concrete action to expand housing availability. With more than 5,000 new units in the pipeline, this move is expected to alleviate pressure on the market and provide much-needed solutions for citizens seeking stable and affordable housing.
Al-Qabas consulted real estate experts, who unanimously emphasized that real estate developers play a crucial role in addressing the housing crisis. They agreed that fostering collaboration between the public and private sectors is essential to overcoming housing challenges and achieving sustainable development that aligns with societal needs.
The experts added that real estate developers have a direct influence on increasing the availability of residential and commercial units, which helps diversify market segments and boost supply. This, in turn, could contribute to stabilizing prices or even driving them down.
Real estate expert Suleiman Al-Dulaijan highlighted that the housing crisis is not merely a result of rising property prices but is driven by deeper underlying factors. He pointed to speculation, a shortage of local real estate opportunities, and challenges in foreign investment, such as taxes and fees, as key issues that have led to an excessive concentration of capital in the housing sector. He noted that the demand for housing will persist, driven by the more than 7,000 marriages taking place annually.
Al-Dulaijan stressed that involving real estate developers in the new residential projects across the three regions is essential, as they play a pivotal role in enhancing infrastructure. While challenges remain, particularly in securing the necessary liquidity for construction, the presence of developers helps expedite project completion and ensures more efficient housing solutions.
Moreover, Al-Dulaijan added that resolving the liquidity shortage at the Credit Bank is a pressing necessity to prevent delays in construction within these areas. He underscored the vital role of real estate developers in driving sustainable development and fulfilling the growing housing demands.
Crisis Handling
The Chairman of the Real Estate Association, Ibrahim Al-Awadhi, stated that the housing sector is facing a crisis due to the rising number of housing applications. He stressed that without private sector involvement in these projects, the state will struggle to meet the growing demand, which is expected to rise further in the coming years due to increasing marriage rates.
Al-Awadhi emphasized that real estate developers play a crucial role in addressing the housing crisis, as inflation and property prices are directly influenced by supply and demand dynamics. He noted that increasing the availability of land would enable developers to create projects that cater to citizens’ needs at reasonable prices, without causing negative effects on real estate values or inflation.
Furthermore, Al-Awadhi highlighted that the biggest challenges facing the private sector in executing projects include:
- Financing requires liquidity and funding sources. Obtaining financing necessitates providing guarantees, but since the state owns the land, the private sector lacks assets that can be pledged as collateral. Many previous government projects involving the private sector faced financing difficulties due to the absence of guarantees available to banks. Therefore, the state must seriously consider a mechanism for financing the private sector.
- The state must take a serious approach to establishing balance in contracts between the public and private sectors, as previous contracts, which were largely one-sided, contributed to the failure of many projects.
- The process of selling the product, identifying beneficiaries, and determining the use of commercial spaces and their impact on residential suburbs developed by real estate developers remains unclear, which may lead to public dissatisfaction. Therefore, the state, through the Public Authority for Housing Welfare, must clarify the mechanism for offering projects and their benefits to citizens.
A Qualitative Leap
Real estate consultant Jihan Maarefi stated that the Real Estate Developer Law marks a significant shift in improving housing quality and promoting social stability across all segments of society, ensuring a better standard of living and making homeownership more accessible at prices aligned with individual incomes.
Maarefi added that real estate developers play a crucial role in increasing the supply of residential and commercial units, which enhances market diversity and expands availability. This could lead to price stability or even a reduction. She emphasized that the quality of supply is directly linked to the private sector’s role in real estate development.
Furthermore, Maarefi highlighted several key challenges facing the private sector, including lengthy documentation procedures, the growing number of real estate developers, competition, rising construction costs, and increased supply. She also stressed the importance of considering the social aspect when developing single-family housing projects for farms. These projects must align with societal principles, laws, and regulatory frameworks to ensure proper public conduct, ultimately contributing to the enhancement of urban city standards.
Maarefi explained that the Real Estate Developer Law has several positive dimensions, serving as the main framework for activating the Single Housing Law mechanism to address single housing challenges. She emphasized that this law is a crucial step in meeting the needs of individuals in modern societies, with its success relying on the establishment of a legal and social environment that supports freedom of choice, ultimately reducing pressure on families.
8 Challenges Facing the Private Sector
Real estate experts stated that the private sector faces several challenges in housing projects, necessitating an immediate and effective response from the state to ensure the success of public-private partnerships and achieve the desired housing objectives.
The most prominent of which are:
- Financing: It is one of the biggest challenges, as the private sector requires liquidity and reliable financing sources.
- Document cycle procedures: The complexity of administrative processes may slow down project implementation.
- Contract balance: The state must ensure fairness in contracts between the private and public sectors.
- Increasing number of real estate developers: Rising competition may create challenges in differentiation and meeting market demands effectively.
- Construction costs: Rising material and labor costs impact the economic feasibility of projects.
- Legal challenges: Establishing clear frameworks and laws to regulate public behavior and ensure the success of housing projects.
- Housing needs for singles: Developing suitable housing solutions with an innovative approach to meet the needs of this segment effectively.
- Identifying beneficiaries: Determining the target beneficiaries and establishing clear mechanisms for selling housing units.
Residential Independence
Maarefi said that the role of real estate developers has become essential in meeting the growing demand for independent housing for men and women by offering innovative solutions that cater to cost and design needs, thereby enhancing the effectiveness of the private sector and supporting the economy.
Price Reduction
Al-Awadhi pointed out that engaging real estate developers, represents an additional approach by the state to address the housing crisis, accelerating the fulfillment of housing demands and potentially reducing real estate prices if this cooperation is leveraged properly.
