Real estate sales declined for the second month in a row, to level at KD 250 million in August, a drop of 6.7 percent month-on-month (m/m), a specialized economic report showed Friday. The report, by the National Bank of Kuwait (NBK), clarified that the real estate activity is traditionally muted in August when much of the country takes its annual summer vacation. The declines came after a record June, and August sales were still up by 12 percent year-on-year (y/y).
"Sales in the residential sector totaled KD 112 million in August, an increase of 6.5 percent y/y. The number of transactions during the month dropped by 2 percent y/y to 511. The average transaction size increased by 8 percent y/y to KD 218,000.
"However, it is interesting to note that for the last four consecutive months, the average transaction value (per m2) for plots of land has shown a decline. This is not an indication of softer prices but rather a reflection of the fact that, in recent months, plot transactions have been heavily dominated by sales in the Sabah Al-Ahmad area (over 50 percent of August plot sales). In that area, prices are well below other regions and have thus pulled the overall average down over the last 3 months," reads the report.
As per the report, the residential activity was heaviest in the Ahmadi governorate, which, with 363 transactions, accounted for 71 percent of all residential transactions in Kuwait during August.
"The Mubarak Al-Kabeer and Hawalli governorates each accounted for 8 percent of all transactions, while the Jahra governorate witnessed 6 percent. In the residential sector, 74 percent of all transactions involved the purchase and sale of land or vacant plots." Meanwhile, NBK report unveiled that the sales in the investment sector stood at approximately KD 125 million in August, more than double the value of sales in August 2013. 96 transactions took place during the month, an increase of 35 percent y/y. The average transaction size also increased to KD 1.3 million.
The data also showed that the investment sector, apartments accounted for 42 percent of all transactions. Whole buildings followed, comprising 26 percent of all transactions.
"The Ahmadi governorate once again recorded the bulk of activity. The largest transaction, however, involved the sale of a plot for KD 15 million in Kuwait City. Transactions involving vacant plots accounted for 25 percent," it stated.
"Sales in the commercial sector were up to KD 14 million from KD 3.4 million in July. Sales were down by 78 percent y/y, however. Only four transactions were recorded during the month, two of which were over KD 4 million. Sales in this sector are fairly volatile from month to month."