KUWAIT CITY, Feb 12: Real estate expert and evaluator Suleiman Al-Dulaijan says the enforcement of the mortgage or real estate financing law for private housing will have a major impact on the real estate market, particularly by activating trading in lower-priced residential areas such as Al-Firdous, Al-Dhahr, Andalous, and others. Al-Dulaijan said, “The local market currently suffers from a lack of supply and limited financing options. Any increase in financing sources will drive both demand and prices higher. If sufficient financing is available, it would be better to align the loan amounts with salary categories to prevent individuals from facing difficulties in repaying loans and interest, as occurred in previous years.

It is important to offer more plots with integrated services to accommodate the anticipated demand. It is recommended to consult economic experts and former housing officials to benefit from their expertise in this field.” Al-Dulaijan indicated that he had expected real estate transactions to increase by 10 percent to 15 percent in 2024, but the reality exceeded his expectations, as the growth rate reached 34 percent, and the total number of transactions rose from KD 2.7 billion to KD 3.7 billion. However, he stressed that this increase in trading was not reflected in the private residential housing sector, while trading in the investment real estate sector saw a significant boost, adding that trading in the private residential housing sector declined by approximately 43 percent. Al-Dulaijan stated that the shift towards trading in the investment sector was driven by the imminent implementation of housing laws issued by the previous National Assembly in agreement with the government.

These laws impose fees on undeveloped plots and introduce restrictions on individuals who own more than one property, which prompted speculators in residential real estate to redirect their investments towards the investment real estate sector. He pointed out the lack of new investment opportunities and the conclusion of the real estate trading cycle following the recent surge as reasons behind the shift. Regarding the impact of reducing loan interest rates on the real estate market, Al-Dulaijan explained that the market in the 1980s, 1990s, and until the early 2000s was not as responsive to changes in interest rates, unlike today. This shift is due to the high borrowing costs from banks for investors. A large percentage of traders and investors in the 1990s relied on cash transactions.

However, with the current rise in real estate asset values, where the average value of a single house reaches KD 400,000 and KD 900,000 or even up to one million for an investment residential building, it has become common to rely on real estate bank financing. This is especially true as some investors manage five to six investment plots simultaneously, with the total investment amounting to large sums exceeding KD 6 million.

By Marwa Al Bahrawi
Al-Seyassah/Arab Times Staff