Kuwait’s real estate market demonstrated strong performance in the third quarter of 2024, characterized by a balance between stable transaction values and increased deal numbers. While the value of real estate transactions remained stable at $2.76 billion, the number of transactions increased by 24 percent, indicating a focus on smaller transactions, especially in the residential and investment sectors.
Key Trends Shaping the Market
- Rise of Residential Cities: Government housing projects like Al-Mutlaa City and South Saad Al-Abdullah City contribute to modern urban communities and accommodate the growing demand for housing units.
- Infrastructure Investments: Huge investments of around $32.6 billion to develop infrastructure, such as roads, airports, and railway projects, further boost economic and real estate activity.
- Storage Crisis: High demand in the storage sector and the lack of licensed spaces highlight the need for more regulation and investment in this sector.
- GCC Nationals Property Rights: New regulations providing GCC nationals with the same property rights as Kuwaiti nationals are further supporting the real estate market’s growth.
- Tourism Boost: Kuwait expects the number of tourists to increase to 7.4 million by 2028, which will raise demand for the hospitality and retail sectors, further supporting the growth of the real estate market.
Market Momentum and Forecasts
Kuwait’s real estate market momentum is expected to accelerate, supported by strategic government reforms and a positive market sentiment. This optimism is supported by the Markaz Real Estate Macro Index, projecting a 3.5 out of 5.0 score for the second half of 2024, indicating substantial growth potential. Inflation is also expected to ease, with the Consumer Price Index (CPI) moderating to 3.17% year-on-year by April 2024 from 3.37% at the end of 2023.
Residential and Commercial Sectors
Between January and June 2024, real estate contracts hit $5.2 billion, a $365 million increase from the latter half of 2023.
- Exhibitions: 4 contracts totaling $35 million
- Warehouses: A 55.5% jump with 9 contracts worth $54.8 million
- Private Property: 1,496 transactions valued at $2.2 billion (slight dip in volume)
- Investment Properties: 509 contracts worth $1.4 billion (8% decrease)
- Commercial Real Estate: 69 deals totaling $1.3 billion (11.5% decline)
Factors Driving Growth
- Economic Recovery: Post-pandemic rebound is fueling investment.
- Government Initiatives: Policies supporting real estate development are in place.
- Foreign Investment: There is increased interest from international buyers.
- Infrastructure Projects: Boosting property values in key areas.
Evolving Customer Preferences
Customer preferences in Kuwait have shifted towards modern and luxurious properties. Kuwaiti buyers are increasingly seeking high-end residential properties with state-of-the-art amenities and luxurious finishes. There is also a growing demand for commercial properties, particularly in prime locations, as Kuwait continues to attract foreign investment and businesses.
Trends in Residential Real Estate
There is a strong demand for luxury properties, particularly in prime locations such as Kuwait City. Wealthy individuals and investors are attracted to the prestige and exclusivity associated with these high-end properties. Additionally, there is a growing interest in modern and well-designed residential developments that offer a range of amenities and facilities, such as swimming pools, gyms, and communal spaces.
Storage Crisis Impacts Kuwait’s Real Estate Dynamics
The storage crisis in Kuwait, characterized by high demand and a lack of licensed spaces, is a significant trend shaping the real estate market. Businesses face challenges due to the shortage of suitable storage spaces and warehouses, leading to increased rents in permissible storage areas. The infrastructure for warehouses and available land has not kept pace with the growth of Kuwait’s business environment.
Several sources suggest ways to address this crisis:
- The government could establish public warehouses for essential commodities at reasonable prices to prevent exploitation.
- The government could provide new, affordable lands dedicated to warehouse use, possibly in partnership with private companies, to expand storage infrastructure without burdening the state.
- There is an urgent need for storage facilities in urban areas to meet rising demand, with current offerings falling short of international standards.
- Small businesses need smaller storage spaces, which contrasts with the current requirement for large-scale facilities. Revised regulations could allow storage in investment areas under controlled conditions, advocating fair pricing to prevent exploitation.
Kuwaiti buyers also value privacy and security, which has led to an increased demand for gated communities and properties with advanced security systems. One of the key trends in the Kuwaiti real estate market is the development of mixed-use projects, combining residential, commercial, and retail spaces.
