Midway through the summer season, real estate activity appeared to soften further in Kuwait, with July 2016 sales the lowest in four years. Overall sales across all sectors totalled KD 1.45 billion (US$4.80 billion) year-to-date (ytd), down 25% from the same period last year, a National Bank of Kuwait (NBK) research report said.
Sales in the residential and investment sector are down about one third from last year, while commercial activity is up for the year. July’s price performance, as reflected in NBK’s real estate price indices, continued to reflect an ongoing gradual correction that started in 2015, after a five-year excellent performance. Seasonality continues to weigh on residential sales. The sector registered 196 transactions, down 26% for the month, while KD sales dropped to KD 62.9 million, down 29% month-on-month (m/m).
The residential sector continues to lag behind last year’s transactions and KD sales by 22% and 34% respectively. April and July of this year appear to be the weakest months in five years in terms of KD sales and number of transactions. Residential real estate prices cooled further in July. The NBK residential home price index registered 163.6 points in July, staying relatively flat during the month but retreating by 10.9% y/y.
The NBK residential home price index has been moving downward since the beginning of 2015, when it peaked at 186 points in January 2015. Similarly, the NBK residential land price index retreated in July; at 183.6 points, the index slide by 5.4% y/y, but improved slightly by the end of the month. Land prices were the first to correct, back in 2015, and have shown some signs of stabilizing recently.
Apartment sales continue to carry the investment sector during the current environment. Smaller single apartments (for investment) represented 64% of total transactions. Total sales for the sector reached KD 61 million, half of the sales recorded in July last year. The sector registered 86 transactions, the lowest on record for the month of July in 10 years.
The NBK investment-building price index retreated to 4Q14 levels, erasing earlier year-to-date gains. After making slight price gains since the beginning of the year, the index stood at 192 points in July, slipping below the 200 mark for the first time since October 2014, and down 15.8% y/y. The investment building price index average for the year stood at 208.9 points, supported by solid numbers from January through April. Commercial sector sales cooled down in July following an almost yearlong rally. Sales for the month totalled KD 20.4 million, down 34.7% y/y. This was on only five transactions – the largest transaction recorded was a commercial building in Hawalli for KD 6 million.
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