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The first half of 2023 sees a 41 per cent decline in the number of transactions
July 10, 2023 | Staff Reporter | Kuwait | Real Estate
The real estate sector of Kuwait has been on a low in the first half of 2023 with the prices of real estate transactions going down. To make things worse, this decline is accompanied by a price rate hike especially within Asima and Hawally governorates, as per Ministry of Justice data.
The first half of this current year marked a sharp 41 per cent plunge in the number of transactions within the residential sector with 1,526 deals struck (total value of KD 736 million) compared to 2,592 in the same period last year (total value of KD 1.75 billion). However, the average value of a single deal increased to KD 483,000 per deal from KD 414,000 in 2022, a 16.6 per cent increase in the private residence price increases within Asima and Hawally while prices in other governorates remained intact.
The investments sector was also subject to decrease as 589 deals were registered in first half of 2023 compared to 687 deals in the first half of the previous year, marking a 14.2 per cent decrease. The average value of a single transaction within the investments sector declined by 9.8 per cent from KD 854,000 per deal last year to KD 770,000 this year. The data also showed that the commercial sector plummeted by 74 per cent from 111 deals in first half of 2022 to only 39 deals first half of this current year, whereas average value of single deal shot up from KD 3.513 million to more than KD 5 million.
Commenting on the real estate market, expert Mohammad Al-Sughair attributed the decrease in transactions to the dwindling number of offers and new land plots, which is also the reason behind the increasing prices. Chair of real estate company Al-Moasher Ahmad Al-Nabhan, spoke of the increasing interest rate on Kuwaiti dinar saying this drove brokers in the private residents sector to revert to local bank trusts rather than invest in residential houses and flipping them to apartments for rent.
Al-Nabhan also said that the investments sector in areas further away from the capital, within Al-Ahmadi and Farwaniya governorates, saying that decrease in these areas could be linked to recent government decision relating to visas. As for the next six months, Al-Nabhan said it’s a blurry vision with most investors and observes awaiting whether The American Federal Reserve continues to increase interest rate.
Al-Nabhan stated that the Kuwaiti market could rejuvenate if American interest rate seizes to increase in second quarter of 2024 prompting decrease in local interest rate, thus causing bank trusts to loner appeal to investors and driving them back to the more robust markets of real estate or the stock exchange.
