Real estate financing without land reform will raise property prices
The Kuwait Economic Society stated that mortgage financing should ease pressure on the deficit-ridden budget, but applying logic to government policies is futile amid decades-old issues, lack of transparency, and ministerial indifference towards justifying the project.

• The Kuwait Economic Society warned that without land liberalization, the real estate financing law will worsen the crisis, drive up property prices, and fail to achieve its intended purpose of balancing supply and demand.
The Kuwait Economic Society stated that it had previously anticipated the impact of ministerial decisions on the housing and real estate financing file, following significant discontent from a broad group of financial and real estate experts.
It noted that after Abdullatif Al-Mishari, the Minister of State for Municipal Affairs and Minister of State for Housing Affairs, affirmed the government’s full commitment to the project, a reassessment of its economic rationale became necessary, the Al Qabasnewspaper reported.
It pointed out in its statement that some issues resemble crosswords—puzzles that logical thinking alone cannot solve. This, it explained, is precisely what applies to the government’s initiatives and past decisions regarding financial and political matters. The ministerial committee’s announcement of the new draft real estate finance law falls within this pattern of complexities.
The Kuwait Economic Society continued, stating that mortgage financing—typically a long-term solution separate from credit banks—is meant to ease pressure on the state’s heavily burdened budget, which suffers from real deficits. However, attempting to apply logic and analysis to government policies is futile when addressing problems that have worsened for over 30 years, particularly given the lack of transparency and the indifference of the ministerial committee tasked with defending or explaining its project.
Land liberalization
The Kuwait Economic Society added that without the release of more land, the real estate financing or mortgage law would only exacerbate the crisis. Basic economic principles dictate that increasing supply is essential to balance demand, ensuring a market capable of absorbing the financial liquidity generated by the law—if implemented correctly with proper regulations. Otherwise, it risks being exploited like previous laws. Without land liberalization, real estate prices will soar, ultimately defeating the government’s intended purpose for the legislation.
It provided a brief overview of the ongoing real estate price surge in Kuwait, explaining that in 2013, the National Assembly approved an electricity price increase while exempting the housing sector. Since then, the residential sector has shifted towards apartment living, contributing to an average price increase of 35%.
Furthermore, the state has been unable to develop new residential cities due to its lack of control over all production lines. As a result, entities that dominate key sectors of the state are unable to fulfill their obligations, a failure that has been evident in the housing crisis for more than 30 years.
It added that the proposed mortgage system, labeled as government financing, would merely resolve the Credit Bank’s liquidity issue rather than provide a genuine housing solution. It essentially transfers debt from an underfunded Credit Bank of Kuwait to commercial banks. The Credit Bank of Kuwait has financing obligations exceeding three billion dinars for completed projects such as Al-Mutlaa and Sabah Al-Ahmad. A mortgage system should prioritize the middle-income segment—the backbone of any economy—by enabling them to own homes instead of renting indefinitely.
If properly implemented alongside land liberalization, the law could stimulate the contracting sector and alleviate employment pressures on the government amid a crippling economic crisis. Setting aside the economic principle of land liberalization, it is illogical that a country with a population of 4.5 million occupies only 15% of its total land area while still facing a housing crisis.
Solutions with land liberalization
The society stated that the solution lies in empowering real estate developers. Historically, during the early 1960s, the government played a crucial role in Kuwait’s economic development, stepping in when the private sector lacked the capacity to do so. As a result, government-led companies spearheaded Kuwait’s modernization and helped establish it as an independent state. However, the government’s role in any economy should be to create a favorable environment that enables the private sector to generate new job opportunities for citizens.
It added that real estate financing is a commendable global concept and an effective housing solution. However, if not implemented with a structured plan to release a substantial number of housing units into the market, it could exacerbate the problem. From an economic perspective, if the goal is to increase liquidity, it must be accompanied by a corresponding rise in supply to prevent demand from driving prices even higher.