Trading, ownership curbs hit Kuwait's realty sector

Trading curbs and ownership restrictions are causing a slowdown in Kuwait's real estate sector at a time when property market elsewhere in the Gulf is booming.

Real estate analysts in Kuwait say the sector could see a further decline if the Kuwait Government does not open the sector to private investors and provide more land for citizens.

New building sites are still ubiquitous in Kuwait, but many local investors are now searching for better opportunities elsewhere in the Gulf. Despite pledges by the government to open up the real estate market, foreigners are still not allowed to own property as in other Gulf states such as the UAE.

Kuwait property sales fell 65 per cent in July, the fourth month of decline, after the state restricted private firms from residential real estate deals, the biggest portion of total property transactions, to tackle record inflation.

"Scarcity of land in Kuwait is the main reason for the problems happening now. Compared with other Gulf countries we have the highest prices for land in Kuwait," said Khaleel Al Abdullah, Chief Executive of National Real Estate Co.

"There are no available opportunities in Kuwait. This is the main reason all real estate firms are expanding outside Kuwait," he said. More than 90 per cent of land in Kuwait is owned by the state, with a big portion controlled by state-owned Kuwait Petroleum Corp for oil exploration and other related projects.

In June, Kuwait's Central Bank Governor Sheikh Salem Abdul Aziz Al Sabah urged the government to give away more land to citizens to curb inflation, which hit 11.1 per cent in May driven mainly by 14.9 per cent rise in housing costs.

Mubark Al Saeedi, manager of real estate department at Tijara and Real Estate Investment Co, said Kuwait's property market could be moving towards a recession if the government does not encourage private investors.

"The government should have given the private sector the chance to develop the residential real estate sector rather than curbing it," Al Saeedi said.