KUWAIT: Improvement in real estate activity continues apace as sales posted strong growth figures and prices remained relatively stable. Total real estate sales grew an impressive 46 percent year-on-year (y/y) in October, the highest monthly growth since June 2014, reaching KD 216.9 million, on revived activity in the commercial sector as well as strength from the residential sector sales. Total transactions picked up to 450 units in October, rising 23 percent compared to the same period last year. Prices remained on the recovery trend overall, except for the residential home price index that saw a return to early 2017 price levels.
The residential sector bolstered the real estate market once again in October, continuing the supportive role witnessed throughout 2017. Residential sales jumped 38 percent y/y in October to KD 110.3 million with a healthy 357 transactions. In the first ten months of this year, sales activity in the residential property market as a whole has grown by 25 percent compared to the same period last year. Residential homes made up over 60 percent of transactions. In residential land sales, there was strong activity in the Sabah Al-Ahmad coastal area with 31 plots sold, Abu Ftaira with 30 transactions, and Al-Funaitees with 24 plots.
Residential land prices continued their recovery after the slowdown in the first half of the year, while residential home prices softened slightly. The NBK residential home price index reached 150.2 in October, down 1.5 percent from a year ago. The NBK residential land price index picked up further to 176.7, down only 1.1 percent y/y. The price indices both show progress, given the pace of decline in both indices was more pronounced in the first half of the year.
Investment property sales show pick up but are still lower than the prior year’s monthly average. October sales reached KD 60.1 million, a better performance than the 3Q17 monthly average, but remained below the 2016 monthly average of KD 68 million. Investor interest may be coming back on improved expectations; oil prices have recovered and the government has shown it is committed to the development plan with project awards.
Higher sales in September and October helped reverse the drag on investment building prices. The NBK investment building price index recovered to 181.1 in October, down a mere 2.3 percent y/y (Chart 5). This is a vast improvement from the double digit declines-to the tune of 14 percent y/y on average-witnessed earlier this year and in late 2016.
Commercial sector activity bounced back quickly in October following a short lull in market activity. A total of 7 sales took place in the commercial sector, worth a combined KD 46.5 million, up from the previous month’s KD 7.5 million. The largest transaction that took place was a KD 29.4 million commercial plot in Sharq.
NBK ECONOMIC REPORT