Kuwait Times, Sunday, Jan 16, 2022 | Jamada Al-Aakhirah 13, 1443
Kuwait’s real-estate sector saw price hikes in 2021
Kuwait:
Prices of housing real-estates rose last year in Kuwait, where investors focused
on Kuwaitis’ residential areas dealing in uninhabited plots of land,
capitalizing on government subsidies and transforming residential units into
rental houses. Some residential districts, mainly inhabited by citizens,
witnessed more than 35 percent rise in rates of the plots, leading to record
growth of property assets in the shadow of scarce offered real-estates.
The former director general of Kuwait Clearing Company, Tareq Al-Atigi, said in
an interview that prices in this sector hit unprecedented high level, largely
due to robust activities by traders and brokers, purchasing uninhabited plots of
land in East Al-Gurain in July 2021 and selling them in November, posting more
than 10 percent of profits. Moreover, the investors bought 375-square-meter
houses in Kuwaiti’s residential districts such as Al-Khaldiya and Al-Yarmouk in
May, at KD 500,000 per unit ($1.6 million), and sold them at KD 600,000 ($1.9
million). Value of these units rose by KD 20,000 ($66,267.36) per month for a
five-month period, Atigi said.
Government subsidies
The dealers focused on the Kuwaitis’ residences, buoyed by government subsidies
for utilities namely water and power. Such a beneficial privilege does not exist
in the investment sector – home to apartment buildings that are largely occupied
by non-Kuwaiti residents of the country. Furthermore, the investors have
transformed houses in the citizens’ residential areas into rental apartments. As
to the uninhabited plots, there are no taxes on a citizen who possesses more
than one property. In the meantime, some people own dozens of plots but they
refrain from developing them, thus contributing to pushing prices high due to
low supply.
The former director general expressed his belief that “calming the prices” can
be attained by imposing added taxes on the citizens’ residential areas, in
addition to lifting subsidies for water and power for a citizen who owns more
than one lot. Proposing other ideas, he has mentioned specializing more housing
parcels in new regions and speeding up government housing enterprises. In 2022,
the housing rates may drop by five percent if interest rates are increased on
assets of local banks, he has opined.
Meanwhile, Chairman of the Kuwaiti Union for Real-Estate brokers Abdulaziz
Al-Dghaishem said that the housing sector posted in Q1 and Q2 2021 rises that
exceeded KD 1,500 ($5,000) per square meter particularly in locations in
Al-Assima and Hawally. In addition, the units’ prices in Sabah Al-Ahmad Sea City
rose by 30 percent. Dghaishem has predicted price stability in 2022 unless the
market witnesses major events such as promoting new towns, re-activating realty
mortgages, also affirming that prices can stabilize in the shadow of higher
supply.
Expats’ exodus
Chief Executive Officer of Amtar Global Real-Estate Company Ali Al-Kadhemi said
in the meantime that other causes of the prices’ hike were existence of
liquidity, investors and brokers’ solvency, noting that the investment sector
suffered due to permanent return of many expatriates to their countries in the
shadow of the COVID-19 crisis. He proposed engaging the private sector, where
citizens can purchase built houses at reasonable prices.
Total value of the property transactions in the housing sector, in 2021,
amounted to KD three billion ($10 billion), starkly higher by KD 780 million
($2.2 billion) invested in the investment sector, according to statistics by the
property registration department at the Kuwaiti Ministry of Justice.