30/09/2024
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30/09/2024
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KUWAIT CITY, Sept 30: Imad Haidar, the head of the Real Estate Brokers Association, recently shared insights into the challenges facing Kuwait’s residential real estate sector. He noted a slowdown in demand that began at the start of last year, attributing this decline to several key factors, including rising interest rates on deposits, peak residential property prices, and the implementation of new regulations that have psychologically impacted market participants.
According to Haidar, the residential real estate market has experienced an average decline of 25 percent since the beginning of 2023, with the most significant drops occurring in outer areas that had previously seen speculative surges in prices. He pointed out that declines vary by region, with some areas experiencing reductions of 20 percent, while others saw decreases of up to 30 percent.
In contrast, inner regions have remained more stable, with some locations even witnessing price increases due to a mismatch between high liquidity and declining demand. Haidar explained that the real estate market typically goes through distinct phases: starting with a calm period, followed by declining demand, market correction, price declines, and finally stagnation, where prices reach their lowest levels. He emphasized the influence of bank interest rates on investment decisions, stating that when deposit rates hover between 2 and 2.5 percent, capital tends to flow into real estate.
However, if rates exceed 3 percent, investors are more likely to favor deposits, leading to further calm in the real estate sector. Regarding future price expectations for residential properties, Haidar expressed uncertainty, noting that much hinges on interest rates, which he anticipates may decrease. He also highlighted the potential impact of legislative changes, such as regulations on land monopolies and measures to expedite housing requests for citizens. If laws are enacted concerning land monopolies or increased utility tariffs for secondary residences, Haidar warned of a potential shift in investment focus from residential properties to investment opportunities. Overall, the insights shared by Haidar indicate a cautious outlook for the residential real estate market in Kuwait, as it navigates economic pressures, regulatory changes, and shifting investor preferences.
