KUWAIT: The real estate market ended the first quarter on a positive note, with total sales breaching the KD 200 million mark in March amid continued price stability. Real estate sales totalled KD 590 million by the end of 1Q17, down 17 percent compared to the first quarter of last year despite a slight pickup in transaction volumes, which rose by 3 percent year-on-year (y/y). However, March alone saw sales up by 9 percent y/y to KD 255 million, supported by a jump in residential sales. The month saw continued stabilization in prices across both the residential and the investment sectors.
The residential sector was the main driver behind the pick-up in activity in March. Sales reached KD 175 million during the month, on 358 transactions. Of these, 185 were land sales with a heavy concentration in Abu Ftaira and Sabah Al-Ahmad Sea City. Interest in residential land has been low for the last two years, with 90 land sales per month on average in 2016 compared to 300 land sales in 2014 as speculative trading was dominating the market.
Residential real estate prices retreated slightly in March, but continued to show a stabilizing trend. The NBK residential home price index stood at 150.9 point, down 0.6 percent for the month. The index has been in the vicinity of 151-152 points for the seven months, though it is down 13.2 percent y/y. The NBK residential land price index retreated slightly in March to 178.1 points. This index was down 10.2 percent y/y, although it remained relatively stable for ten months.
Investment sector activity softened in March. Sales came in at KD 60 million, down 27 percent y/y. The number of transactions lagged as well, dropping by 30 percent from previous year. The number of less expensive single investment apartments continued to be the sector’s main driver. The shift in the composition of the investment sales towards more single-apartments than buildings resulted in a 30 percent decline in quarterly KD sales from a year ago, while the number of transactions declined by 3 percent y/y in 1Q17.
Investment building prices were flat in March. The NBK investment building price index stood at 183.5 points, up 0.3 percentage point for the month. Though the index is down 15.1 percent y/y, it appears also to have bottomed out in tandem with prices in the residential sector; the index has hovered around similar levels for four months.
Commercial sector activity was weak during the first quarter of the year with only 25 transactions. Sales for the quarter totalled only KD 77 million, down 56 percent compared to 1Q16; some softness was expected as the commercial sector saw an exceptionally strong 2016. The sector recorded sales of KD 20 million in March, including a KD 8.3 million transaction for a building in Salmiya.