According to the National Bank of Kuwait’s October 2024 Economic Insight, the third quarter of 2024 saw a comparatively stable level of real estate sales, primarily because of a rebound in residential sales from the previous quarter’s low levels and a spike in investment sales that outpaced a decline in commercial activity.
According to the report, residential sales in Q3 reached KD384 million, the highest level in nearly two years. The sector also saw the fastest quarterly (14% q/q) and annual (8.2% y/y) growth since 2021.
The overall trend indicates that real estate market activity is steadily increasing, and the start of the monetary easing cycle in September has improved the outlook.
In terms of pricing, for the sixth consecutive quarter, residential prices declined in Q3, which reduced the value gap with the investment segment and increased demand.
Following Q2’s impressive achievement, government plot distributions completely stopped in the third quarter, which caused the backlog of housing applications to rise to 97,700.
NBK reports that after a robust performance in Q2, total real estate sales in Q3 decreased by a slight 0.8% q/q to KD847 million.
Despite the summer’s seasonal impact, activity was bolstered by robust sales in the residential and investment sectors, with transaction volumes rising.
However, it noted that commercial sales, which had risen to a record high in the second quarter, had dropped precipitously but were still higher than the quarterly average for 2023.
Compared to the post-pandemic low of the previous quarter, Kuwait’s real estate transaction volumes increased by 26% on a quarterly basis and 21% on a year-over-year basis.
According to NBK’s study, around 40% of these transactions were recorded in September, which had the biggest level of activity in 16 months (42% year over year).
The “home” section accounted for 65% of all residential transactions, with the majority of these sales occurring in the governorates of Kuwait City, Hawalli, and Al-Ahmadi. However, it also stated that the Hawalli, Mubarak Al-Kabeer, and Al-Ahmadi governorates accounted for around 90% of all land transactions.
According to NBK, economic factors and a multi-quarter pattern of declining residential prices could both contribute to the increase in demand.
Kuwait City’s real estate prices are still among the most expensive in the GCC, according to the report, and overall prices are still high, particularly in the inner neighborhoods.
Sales for the investment segment, meanwhile, reached a nearly five-year record of KD317 million (42% q/q; 49% y/y). Hawalli, Kuwait City, and the interior governorates accounted for 76% of the total sales.
The NBK stated in its report that although housing rentals increased just 0.7% year over year in Q3 2024 based on the consumer price index readings, underlying demand was underpinned by a continued increase in non-Kuwaiti inhabitants (up 1.4% in H1 2024).
In contrast, the commercial segment’s activities decreased by 50% on a quarterly basis to KD146 million in Q3. It further stated that the quarterly decline was exacerbated by Q2’s record-breaking sales, which are known to be erratic in this industry.
