Sales in Kuwait's real estate market were down in January for the second month in a row, to KD 312 million on slower residential and investment sector activity, the National bank of Kuwait (NBK) said in a report on Monday.
Compared to the same month last year, however, sales were up slightly, by 2 percent, the NBK said in its latest monthly, noting that the commercial sector continued its steady growth as demand for retail space increases according to market talk.
A Kuwaiti dinar equals USD 3.353.
In contrast, the residential and investment sectors remained sluggish for the month, the latter likely a reflection of subdued investor sentiment in the context of the current environment of low oil prices.
According to the report, January sales in the residential sector totaled KD 146 million, marking an increase of 9 percent year-on-year). 389 residential transactions were recorded during the month, the lowest since February 2014.
Activity was once again heaviest in the Ahmadi governorate, which accounted for 38 percent of all residential transactions during the month. This, however, is a significant drop from August 2014 when Ahmadi accounted for a substantial 71 percent of all transactions, the NBK said.
Moreover, the average transaction size in January was KD 376,000, up 5 percent month-on-month, which could because some lower-priced units from Sabah Al-Ahmed Sea City are now out of the picture.
Meanwhile, the report said, sales in the investment sector totaled KD 122 million in January, a decrease of 13 percent year-on-year. The sector has been going through slight correction of late, with investors concerned that high prices are putting pressure on investment returns.
In terms of the number of transactions, 94 were recorded during the month, the lowest since October 2013. The average transaction size was KD 1.3 million, supported by a single transaction worth KD 22 million in the Capital governorate.
Whole buildings accounted for 53 percent of all transactions while apartments constituted 37 percent of all transactions, the NBK report stated. The Ahmadi governorate once again witnessed the bulk of activity, with 44 percent of all transactions, while Farwaniya accounted for 25 percent.
On commercial properties, the report said that their sales increased by 38 percent year-on-year to reach KD 44.3 million in January. The commercial sector witnessed three large transactions worth over KD 25 million in total in the Farwaniya governorate. In total nine transactions were recorded in January.
The commercial sector was the only one to record month-on-month gains in January, increasing by 15 percent over December 2014, the report pointed out. The sector's improving performance in recent months is believed to be supported by a large demand for retail space in the country.
On the Kuwait Credit Bank (KCB), the report said that it had approved 408 housing loans of approximately KD 20.7 million in January, a drop of 22 percent year-on-year. Again, this was largely due to a base and seasonal effect.
Disbursed loans totaled KD 18.9 million, an increase of 24 percent year-on-year. Loans disbursed by the KCB are expected to continue to grow on the back of a commitment made by the Public Authority for Housing Welfare (PAHW) to distribute 12,000 units by the end of March 2015, the NBK report concluded.