Kuwait’s real estate market activity improved significantly despite some volatility during the first half of the year (1H17) compared to the second half of 2016, though it remained down 10 per cent compared to a year before, a report said.
Improved activity was particularly visible in the residential sector, which also helped keep real estate prices mostly steady during 1H17, added the latest Economic Update from the National Bank of Kuwait (NBK).
Activity in June experienced the usual slowdown from the start of summer and the holy month of Ramadan. June sales eased to KD163.6 million ($451.5 million), down 14.6 per cent year-on-year (y/y).
The annual decline was mostly due to weakness in the investment and commercial sectors; however, residential sector activity mitigated further weakness with healthy activity despite the seasonal factors. Real estate price indices continue to hover around their six month averages, except for the residential land price index that has retreated somewhat.
The residential sector maintained a solid performance that supported overall activity in June, with revived interest in residential plots. Growing at 15.7 per cent y/y, residential sales amounted to KD102 million in total on 308 transactions. A total of 161 plot sales were recorded during the month, an 85 per cent increase from the previous year; most activity was in Abu Ftaira and Al-Salam areas. During 1H17, 757 residential plots were sold compared to 629 plots for the same period last year.
Residential home prices remain steady as residential land prices ease slightly. The NBK residential home price index stood at 151.8in June, flat for the month once again; the contraction from a year ago was the slowest in thirteen months at 7.7 per cent y/y.
The NBK residential land index eased to 162.9 in June from 168.0 in May, dragged down by a bulk sale of 49 plots at a relatively lower market price; the pace of decline from a year ago remained steady at 10-12 per cent y/y, a pace that was sustained during the last three months.
The investment sector continues to underperform despite the short-lived surge in activity in May. Sector sales totalled KD50.8 million, down 30.8 per cent y/y. The number of transactions was also down by 25 per cent y/y to 74. Apartment sales continue to carry the investment sector during the current environment. Single apartments bought for investment represented 61 per cent of total transactions.
The NBK investment building price index remained steady in June. The index came in at 190.1 down only 5.6 per cent y/y, an improvement from the double-digit decline rates recorded the previous year.
Housing inflation and investment prices align after the recent inflation revision to the CPI. The rise in vacant apartments and the slowdown in market activity have exercised downward pressure on rents that was not visible in the inflation data until recently. The revision of the consumer price index, which showed housing rents down 2.3 per cent y/y for June were more in line with real estate prices and activity.
The commercial sector posted the lowest activity since October 2016 with total sales amounting to just KD10.9 million. Four transactions were recorded in June, the largest being a commercial plot in Qibla for KD4.95 million. – TradeArabia News Service
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