Kuwaiti real estate prices to fall 30% in Q4?

Kuwaiti real estate prices to fall 30% in Q4?

After a seasonal dip in the third quarter, property values in Kuwait could fall a further 30% by the end of the year.

Summary:

  • The third quarter dip in the Kuwaiti property market is expected to continue through the end of 2015
  • Values in Q4 could fall by as much as 30%
  • Many investors are either keeping their funds in fixed-income assets or looking for higher yields elsewhere in countries such as the UAE and UK

Real estate prices in Kuwait could fall by 30% in the final quarter of 2015.

Kuwait-based Alshahed cites real estate experts as saying: “The market will witness a drop in the number of real estate deals during the fourth quarter due to continued fears of the regional situation and [the fact that] 95% of real estate companies were subject to large losses, reaching to 6% of the capital in some companies.”

Many investors are already looking to purchase elsewhere. Other Gulf markets such as Dubai property remain favoured destinations, but some investors are looking beyond the Middle East, diversifying into lower correlation markets such as the UK.

Earlier this year, Former Director General of the Kuwait Clearing Company Tareq Al-Atiqi said an increase in the interest rates on the dinar would lead to a retreat in property prices. Investors would be able to keep funds invested in guaranteed returns’ deposits, instead of investing them in costly residential real estate, which domestically is offering a low income.

The 3rd Quarter Real Estate Report issued by Kuwait International Bank total sales fell by 29% to total 685 million dinar. The investment sector’s sales dropped by 35% quarterly and 43% on an annual basis. The number of deals decreased by 19% quarter-on-quarter to total 373. The average transaction value in the sector was recorded at 734,000 dinar, 20% quarterly and by more than 44% on annual bases.

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