Kuwait: Real estate sales were strong in January, boosted by investment sector

Real estate sales were higher in January 2018 due to continued robustness in residential sales as well as the largest monthly sales figure in the investment sector in years. It was a strong start for the year as overall sales for the three sectors reached KD 226 million in January 2018, a 26% year-on-year (y/y) jump. Transactions, however, grew a mere 1.9% y/y to reach 375. Some of the strength was due to a base effect: the performance in January 2017 was subdued, as it followed very strong figures in December 2016.

Residential sector sales and transactions picked up as prices continued to make progress. Sales were up 11.7% y/y in January 2018 to KD 87.5 million though this was below the KD 96 million monthly average in 2017. Activity rose to 283 transactions, two thirds of which were residential home sales. The most active areas in terms of residential plot sales were Funaitees, Abu Futaira, and the Sabah Al-Ahmad Coastal area.

Residential home prices showed improvement in January 2018 while residential land prices eased after gains in the second half of 2017. The NBK Residential Home price index posted positive annual growth (1.1% y/y reaching 151.9) as sales activity in the sector improved in the second half of 2017 and into 2018. The NBK Residential Land index, however, showed easing prices (down 5.5% y/y to 171.3), but this comes after some decline in land prices in the second half of 2017.

Investment property sales took off in January, as several large deals in buildings and plots came through. Though the number of contracts witnessed a significant decline (24% down to 87), a number of large transactions offset this fall in activity. Sales totaled KD 122.2 million (83% y/y) and half of which came from building sales. The largest sale was for a building in Jabriya for over 4,400 square meters at KD 14 million. There were several sales in key areas such as Salmiya, Hawalli, and Kuwait City. Sabah Al-Salem witnessed a significant pick up in investment plot sales, the largest of which was a 5,600 square meter plot that sold for KD 18.8 million.

Investment sector prices’ appear to be stabilizing as the pace of decline eased. The index reached 177.9 in January 2018, down 1.1% m/m and3.1% y/y. The price index appears to be in line with 2017, showing a steadier performance and a slower pace of easing relative to 2016. Commercial sector sales slowed in January after an active December 2017.January saw sales of KD 16.2 million from five transactions, an improvement from just one transaction in December, and in line with the average monthly performance in 2017. Three commercial buildings were sold in Al-Mirqab at KD 3 million each.

NBK Economic Update

This article was published on 26/02/2018