Kuwait's real estate sales for the first six months fell to KD1.5 billion ($5.1 billion), compared to last year's figures of KD1.9 billion ($6.5 billion) primarily due to reduced demand caused by high property prices in the residential sector and high interest rates acting as a deterrent to lending, according to Kuwait Financial Centre (Markaz).
The residential sales in H1 dropped to KD736 million ($2.4 billion), compared to KD1.013 billion ($3.3 billion) in H1 2022. The number of transactions also fell by 38% y-o-y in H1 2023.
The Istithmari segment (housing rental market) also declined by 21% y-o-y reaching KD458 million ($1.5 billion) in H1 2023, owing to a slower-than-anticipated recovery in the rental markets, stated Markaz in its report.
Commercial sector sales declined by 46% y-o-y in H1 2023 to KD210 million ($684 million) as compared to KD387 million ($1.3 billion) sales in H1 2022, indicating a weaker demand from the corporate segment.
According to the report, Kuwait’s economic growth is expected to moderate in 2023 to 0.9% as compared to 8.2% in 2022 owing to lower output from the oil sector.
Sluggish demand for oil due to an expected slowdown in global economic activity and supply cuts from Opec+ are expected to lead to a slowdown in Kuwait’s real oil GDP growth. Nevertheless, non-Oil GDP is expected to grow by 3.4% in 2023 supported by stimulus measures from the government and a recovery in employment levels of expatriates, it stated.
Markaz pointed out that Kuwait’s Istithmari sector is seeing a milder recovery since September 2021 with the increase in the expat population post-Covid, the key driver for rental market growth.
The prices in the housing services component rose from 1.44% y-o-y at the end of 2022 to 3.23% y-o-y in June, mainly driven by the housing rents which increased by 3.61% y-o-y in June up from 1.51% y-o-y at the end of 2022.
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