Kuwait’s real estate activity eases in Q2 2023 on softening demand

Kuwait’s real estate activity eases in Q2 2023 on softening demand

KUWAIT: Real estate sales fell in Q2 2023, in a further sign of a market slowdown amid high residential valuations and rising borrowing costs. Sales dropped across all segments on a year-on-year basis, and we expect activity to remain soft during the remainder of 2023. Meanwhile, the government’s recent efforts in resolving the housing crisis could help in reducing the number of outstanding applicants over the medium-to-long term. Overall sales declined for the second consecutive quarter, reaching KD 672 million (-5.8 percent q/q) and the lowest level since Q3 2020.

There were also signs of a slowdown in other indicators, with our real estate price index (incorporating both residential and investment segments) showing price gains decelerating to just 1.4 percent y/y which is the slowest since Q3 2018. In addition, central bank data show real estate-related lending slowing significantly so far this year. Admittedly however, weak sales figures in Q2 2023 may have been impacted by seasonal factors, with activity dropping sharply in April which coincided with the typically slow Ramadan/Eid period. In terms of market segments, residential sector sales saw only a modest decline in the quarter though still fell to their lowest since Q3 2020.

Home sales remained concentrated in