Kuwait realty sales see significant jump in Feb

Kuwait's real estate sales saw a significant jump in February following a sharp drop the previous month, new data has revealed.

In its economic brief on the monthly statistics of registered real estate contracts issued by the Ministry of Justice, excluding sales conducted through agents, the National Bank of Kuwait reported that 326 transactions were registered in February at a value of KWD101.2 million (Dh1.2 billion).

Transactions and sales value rose by 11 and 28.6 per cent, respectively, from January levels. However, the same figures were down by 61 and 35 per cent year-on-year, NBK said.

Growth in value was led by the commercial sector where sales increased by 207 per cent. Almost all of the KWD23.5m rise in commercial sales came from just two transactions in the Hawalli district, it said.

"It is worthwhile noting that perhaps these transactions were related to a large jump in real estate loans for the month of February. According to Central Bank of Kuwait data, real estate bank lending jumped KWD186.7m, a huge monthly increase that followed two small declines," NBK wrote in its brief.

Elsewhere in Kuwait, the apartment sector saw the lowest sales volume since September 2005 and also fell by 37 per cent from January levels. Real estate activity by companies and businesses slowed down markedly after laws number 8 and 9 were issued last year.

The government passed the laws early last year to prevent companies from investing in residential property and restrict mortgage lending. The decision was supposedly made to check runaway real estate prices.

The effect of the two laws has been quantifiable. An earlier NBK report said that the total number of transactions in the real estate sector for the first 11 months of 2008 dropped almost 35 per cent compared to the same period in the previous year.

The drop was gradual from month to month, but the number of transactions in October fell by more than 56 per cent compared to October 2007.

Analysts have emphasised the importance of repealing the two laws saying they stand in the way of reviving Kuwait's real estate market, especially during the ongoing global economic crisis.

NBK reported yesterday that loans approved by the Savings and Credit Bank (SCB) experienced a slowdown in February with the number and value of loans approved by the bank declining by 17 and 18 per cent month-on-month, respectively.

The SCB approved 420 loans in February, compared with a monthly average of 412 in 2008. Loans approved for purchasing existing homes dropped 44.4 per cent on-month in February.

"However, the trend in SCB-approved loans has been up in recent months and reflects loan demand for new construction. This new construction comes in the wake of a new round of land distribution, by the government, to private individuals a few months ago," NBK said.

Other analysts said Kuwaits real estate market is likely to remain quiet this year with the number of transactions remaining flat and investors looking for yield- or income-generating property. Most transactions are expected to be in cash after banks became conservative about lending to the sector because of the financial crisis and losses from equity investing.

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