The real estate market saw KD 218 million in sales in February, a 14% y/y drop, said a report by the National Bank of Kuwait on Wednesday.
The fall was mostly due to a drop in residential sales, with decreased sales in the investment segment also contributing to a lesser extent, said the report published on the bank's website. The commercial sector on the other hand saw a y/y improvement in sales, for the fourth month in a row. Residential sector sales reached KD 104 million in February, down 29% y/y. The drop was a result of a sharp fall in the number of transactions; though the average transaction size was actually up 40% y/y. More precisely, the decline in sales was due to fewer transactions for plots of land. February 2012 saw 517 plot sales bringing in KD 92 million, while this year, February saw 217 transactions with a total of KD 53 million. Comparatively, the sale of homes saw a much smaller decline, decreasing by 52 transactions and KD 6 million only, said the report.
The investment sector - which is made up mostly of apartments and buildings intended for rental - recorded sales totaling KD 93 million in February, a small 4% y/y drop and a 24% m/m increase. The y/y slowdown does not necessarily reflect a broader cool off in the performance of the sector. In fact, both the sales of plots and buildings - where most of the sector's value comes from - saw y/y increases. However, the sale of a complex in Ahmadi governorate worth KD 18 million in February of last year offset these y/y increases, said the report.
The investment sector saw 138 transactions in February, 42% of which were for single apartments. Though this type of transaction has become more common over the years, the relatively small average transaction size means it does not contribute much to the value of total sales. Note that apartments had a 3-month (Dec - Feb) average price of 656 KD/m2 in February. Conversely, whole buildings made up 29% of the transactions, recording a 3-month average price of 1343 KD/m2.
Commercial sector sales totaled KD 21 million, double the amount of February 2012. This is the fourth consecutive month of y/y increases. But unlike previous months, the increase was not skewed by a single exceptionally large transaction, but rather all transactions were of a relatively large size. The Savings and Credit Bank (SCB) approved KD 24.2 million worth of housing loans in February. These came from 393 approved loan applications, about three quarters of which were for new constructions, while the purchase of existing homes and loans for additions and renovations took 14% and 13% respectively, said the report. The government has also recently approved various changes to size and conditions on loans approved by the SCB. These changes - which were adopted in an effort to keep up with rising construction costs - were effective in March.
- Women housing loan (targeted for widows and unmarried women): from KD 45,000 to KD 70,000 - Renovation (private housing) loan: from KD 30,000 to KD 35,000 - Renovation (government housing) loan: KD 25,000 to 30,000 - Housing loan (pending): increased from KD 70,000 to KD 100,000 - Wafra area housing loan: was KD 45,000, now matches regular housing loans - Minimum house size for 'existing home' loans: Decreased from 360 m2 to 280 m2 - Marriage loan: increased from KD 2,000 to KD 4,000 (plus the unchanged KD 2, 000 bonus) Note that the housing loan ceiling increase (from KD 70,000 to KD 100,000) requires further legislative and bureaucratic measures, said the report on the bank's website.