Kuwait’s real estate sales weaken in Q1 on uncertainty

Kuwait’s real estate sales weaken in Q1 on uncertainty

KUWAIT: Real estate sales slipped to KD 714 million in 1Q23, their lowest level since 3Q20, as demand moderated amid high valuations in the residential sector, rising borrowing costs and uncertainty over the prospects for reforming utility subsidies and the distribution of plots and residential units during the current year. Overall real estate prices, as measured by our real estate price index, eased as residential sector prices edged lower. Residential sales activity took a sharp downward turn in 1Q23, falling to its lowest level since 2Q20 at KD 363 million, mainly on lower transaction volumes (-23 percent q/q; -42 percent y/y).

Sales (homes and plots) concentrated in Hawally and Ahmadi governorates accounted for 54 percent of total residential sales. The decline in sales could be due to a combination of lower speculation in residential areas, higher returns on deposits and a cloudier outlook regarding the path of government reforms in the sector.

Meanwhile, our residential price index (based on MoJ data) eased for the second consecutive quarter in 1Q23, with growth moderating to 8.4 percent y/y. In year-on-year terms, home (as opposed to land) prices were still up strongly, reflecting higher recorded valuations especially in the Kuwait City and Hawally governorates. Higher