Property sales in Kuwait declined by 31% month-on-month, 26% year-on-year, in October, recording KWD 211 million, on the back of the commercial sector.
During the third quarter of 2019, sales grew 2.8% quarter-on-quarter to KWD 825 million, according to a report released on Saturday by the National Bank of Kuwait (NBK).
“Prices were mixed as of October, with the residential sector continuing to display a positive trend with strong year-on-year gains, while investment prices continued to be moderately negative on an annual basis due to fundamental weakness (surplus of apartments, soft demand),” the report said.
Strong building sales lifts investment sector in October
Investment sector sales surged 17% MoM, 9% YoY, to reach KWD 107 million in October, as building prices grew 4% MoM in the same month.
Meanwhile, sales went down by 16% QoQ, 32% YoY, to KWD 270 million in Q3-19.
“We expect the price trend to remain slightly negative in this sector until the imbalance between softer demand and over-supply starts to subside, as there is good reason to believe that a relatively large number of vacant apartments have yet to be absorbed by the market,” the NBK noted.
Residential sales moderate in October on softer volume
Residential sales fell 26% MoM, 25% YoY, to KWD 104 million in the first month of the fourth quarter of the year, while the number of deals dropped to 314.
However, the residential sector saw solid performance in Q3-19 when sales increased by 13% YoY, registering KWD 359 million.
The report commented: “The residential sector’s solid sales and good liquidity is likely supported by strong demand (given the growing backlog of housing applications and the shortage of government housing), but also due to the rising potential for investment in residential areas, especially newly developed areas that typically carry some upside potential.”
Commercial sector slumps to weakest in nine years
Commercial sector sales marked the lowest level in nine years in October 2019, amounting to KWD 400,000.
On the other hand, the sector was so hot in the third quarter, with sales surging 76% QoQ, 66% YoY, to KWD 197 million.
“The surge in commercial activity observed in 2Q and 3Q reportedly stemmed from the bulk offering of spaces in large newly developed commercial properties in the south of Kuwait, which now seem to have been absorbed by the market given the sharp drop in transactions in October,” the report concluded.