KUWAIT: The Kuwaiti real estate market saw a 50% drop in transactions in the first half of 2022 compared to the same period in 2021.
Some attribute the decline to house price inflation and stagnating purchasing power among Kuwaiti customers, resulting in a large margin between supply and demand.
In the first half of this year, there were 2,470 transactions worth 1.13 billion Kuwaiti dinars (about $3.3 billion), compared to 4,814 transactions worth 1.4 billion dinars during the same period in 2021.
Speaking on the matter, Alaa Behbehani, chief executive of Abraj Behbehani Co., said on Tuesday that price inflation was the main cause of the sharp drop.
Kuwait, like other countries, was affected by the US Federal Reserve’s interest rate hike announcement, Behbehani said, adding that the latter continued to raise interest rates on the dollar. US, which contributed to a withdrawal of liquidity from the global market.
The effects of the Fed’s decision may not be felt in the domestic market for another year, he added, adding that Kuwait was not immune to global economic events and bank deposits had become more attractive to large investors seeking security rather than investing in real estate.
Behbehani warned that the economic tremors that rocked the world’s major economies in the US, Europe, China, Japan, the UK and elsewhere indicated a type of economic depression due to massive connectivity between major markets. .
What happens globally impacts local business, Behbehani said, noting that investments worth 380 million dinars were withdrawn from Kuwaiti real estate and invested elsewhere in early 2022. indicating a lack of interest in investing in the sector.
The second half of the year will continue with the same trend of a lack of housing property transactions, while commercial real estate could see some activity following COVID-19 restrictions, he said.
While residential real estate may not have performed well in the first half of this year, other real estate sectors such as retail and investment have performed well. In the first half of 2022, investment real estate recorded 674 transactions worth 579 million dinars, compared to 587 transactions worth 268 million dinars in the same period last year. Commercial real estate transactions increased by 111 transactions worth 390 million dinars, compared to 59 million dinars in the first half of 2021