Kuwaiti real estate experts agree that the current prices are exaggerated. They emphasize that this trend is unhealthy. And has repercussions for the market. The experts emphasized the impact of the coronavirus pandemic on the Kuwaiti real estate market. It hugely affected commercial and residential investments. Throughout the pandemic threats, Easy Move Kuwait continued to support its clients. Most of the time in very hard circumstances. By experts’ estimation, the trend of real estate value increase will stop. They expect it in the third quarter of 2021. And they all agree that prices in the real estate sector must be corrected.
What is Kuwaiti’s main income source?
Kuwaiti’s economy depends on the two industries. Its economy rests mostly on two products. These are crude oil and steel manufacturing. All other segments depend on these two. The situation is now changing. The economic experts foresee that Kuwaiti’s GDP to grow by 2.5% in 2021. They also expect that the main economic drivers will be from the non-oil sector.
The structure of the Kuwaiti real estate market?
Traditionally, the real estate market in Kuwait is divided into three main segments:
Until now, the residential real estate market was the main growth driver. However, recently the investment sector reached almost half of all transactions. Especially with the ongoing project of Silk City. When completed, it will further boost Kuwaiti’s economy.
However, the recent global economic crises influenced this project too. The majority of the workers in Kuwait are ex-pats. And many ex-pats had to leave. Also, many businesses were closed down. This means that many offices were left vacant. As well as the housing units. There was also a movement restriction due to the pandemic.
Residential real estate market in Kuwait
In Kuwait, the government owns or governs most of the land. It is also controlling its allocation. And passing the laws regulating real estate. Recently, they passed a law allowing ex-pats to buy real estate. Still, ex-pats in Kuwait face many limitations when investing in property. They can buy up to 1,000 square meters. They must prove to have a sufficient income earned in Kuwait. And they must be without any criminal record. By the law, if losing employment or residency status, they must sell the property. About 70% of people living in Kuwait are ex-pats.
Renting residential and commercial real estate in Kuwait
The ex-pats are rather renting than buying property. There are many housing units for renting. They are either furnished or not. And in Kuwait, housing units are spacious. They also have shared areas. All residents can use them. They are made for recreation or rest. Also, many units are designed to meet the needs of the ex-pats from western countries. And, many are made in the style of other countries. So, everyone can find something for himself. Besides, those who start a business, are mostly renting. Especially due to space limitations. They need much bigger spaces.
Ex-pats are coming back as jobs are reopening in Kuwait
After the pandemic, most of the businesses have reopened. So, the ex-pats are coming back. Kuwait is a small country. However, the towns in Kuwait are large. And you need a car to drive to work. Or to go shopping. Do you have your own business? Then, you need a carpool. Many have already used the services of our company. We did vehicle shipping, to their greatest satisfaction. They are hiring us now again. And recommending us for those coming here for the first time.
Is there currently a surplus of apartments and office spaces in Kuwait?
Presently yes. This is giving opportunities to many. People are moving from one apartment to another. Or from one office to another. Either they like them better. Or they are cheaper. Many owners even reduced rent up to 20%, during the crises, to keep the tenants. The trend of changing apartments in Kuwait is a usual phenomenon. With many jobs reopening and ex-pats coming back, there will be fewer apartments for rent. But there are also plans to build many new ones.
How the Government plans for future development are influencing the real estate market?
Kuwaiti Government has already started building a Silk City. They have several more, long-term projects for further expansion. So, with a program called “Vision 2035”, Kuwait is planning to become more open to foreign investment. If you want to expand your Kuwait-based business, now is the right time. The Government intends to transform Kuwait into a world-class financial and commercial center. Projects include several mega construction projects as:
- Underground structures, etc.
By this development plan, the Kuwaiti Government wants to reduce its contribution to projects to 30-40%.
This also means that more ex-pats are coming. The country will need them. And they will be from various walks of life. Also, more apartment units will be built. The Kuwait Real Estate Association predicts that apartments offer will soon exceed demands. Thus, the owners should rethink the existing prices. Also, opening for foreign investments will make changes. It will influence many industries. Including the real estate market.
What elements are influencing prices in the real estate sector?
Various elements are influencing real estate prices. This is a general rule, valid worldwide. Such influences are:
- Internal ( for example, the adoption of new laws)
- The real estate offer and demand rate
- The internal economic conditions of a country (which may be changed due to many circumstances)
Besides, there are also external influences that are affecting the real estate market. The global pandemic is one of them. We just witnessed it in the last two years.
Expectations regarding the real estate market in Kuwait
Kuwait reacted fast to the coronavirus pandemic. This and vaccination are bringing the economy back to the health conditions. The OPEC oil restrictions may slow the recovery, but the VAT implementation delay should offset that. Also, the ongoing building of the Silk City is ongoing. Besides offices and hotel facilities, it will have house units for 7,000 people. And there are many other construction plans. All of them a part of the plan Kuwait vision 2035.
At the present time, the experts of the Kuwait Real Estate Association assess the real estate prices as overvalued. They believe and recommend that the Kuwaiti real estate market should be carefully monitored. And that the accurate evaluations should determine real economic real estate property prices in Kuwait.