Kuwait real estate sales soften in January

KUWAIT: Following a stellar performance in December, the real estate market softened in January, as monthly sales fell back below KD 200 million. The value of sales decreased to KD 179.5 million, lagging last year’s performance by 16 percent. This was despite a slight pickup in transaction volumes, which rose by 2 percent year-on-year (y/y). January’s price performance, as reflected in NBK’s real estate price indices, indicated further stabilization in the residential sector and convergence of trends across sectors.

Residential sector sales were steady, remaining close to the 2016 monthly average. January KD sales totaled KD 78.4 million on 240 transactions. KD sales and transactions were both down 13 percent and 4 percent y/y, respectively. A third of the transactions were land purchases, with a high concentration in Sabah Al-Ahmad Sea City, Funaitees and Abu Fatira.
The stability in the residential market’s activity was reflected in the price performance. The NBK residential home price index stood at 151.4, almost flat for the month, but down by 12 percent y/y. The index has been in the vicinity of 151-152 points for the last four months. Meanwhile, the residential land price index inched slightly upward in January to 182.2, though it remains down 3.8 percent y/y. The index has been hovering around the same price level for the last seven months.

Investment sector sales continued to improve in January, though they remained frail compared to 2015 sales. Sales totaled KD 66.8 million, up 5 percent month-on-month (m/m), on 115 transactions. Although the sector’s sales are gradually picking up from a low level of KD 40 million recorded last September, it remains down 31 percent y/y and 65 percent below the average sales recorded in 2015.

The investment building price index erased December’s gain and reverted back to its level in early 2014. The more volatile NBK investment building price index shed six points this month to 182.6, down 15.5 percent y/y. After posting modest gains since the first quarter of 2016, the index has been on a downward trend during the last eleven months. The index has seen some basis effect, coming off record highs seen between June and August 2015.

Small ticket sales dominated activity in the commercial sector in January. Only KD 34.3 million in sales was recorded during the month, a marked decrease from sales realized during the last two months of 2016. However, this was based on 13 transactions; the largest two transactions were a commercial complex in Sabah Al-Ahmad Sea City for KD 6.4 million and a commercial plot in South Khaitan for KD 5.1 million.

NBK ECONOMIC REPORT

This article was published on 28/02/2017