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Kuwait Real Estate Report Q3 2011
Business Monitor International, June 2011, Pages: 53
Business Monitor International's Kuwait Real Estate Report provides industry professionals and strategists, corporate analysts, real estate associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Kuwait's Real Estate industry.
The outlook for Kuwait’s property sector remains reasonable with the strength of the economy underpinning the sector. Kuwaiti financial institution Kuwait Finance House reported that the total volume of real estate transactions in the country rose by 5.3% quarter-on-quarter in Q111. The result follows steady growth in the sector since mid-2009, which has been greatest in the residential property sector due to government housing distribution. Overall transaction volume is forecast to continue to rise in 2011.
We believe Kuwait's economic outlook remains robust, with a strong energy sector combi
ned with a government willing to spend massively on infrastructure projects underpinning our positive view on growth potential in 2011. We believe that Kuwait's economy will be only minimally affected by the political tensions that erupted in the start of 2011 and forecast growth to remain robust at 3.4%, averaging 4.0% through to 2015.
The government is attempting to direct investment in the non-hydrocarbon sector, targeting a host of new infrastructure projects along with investment in healthcare and education. Plans also include the construction of the business hub Silk City at an estimated cost of US$77bn, as well as a new railway and metro system. In addition to this, the government has already begun the construction of three more hospitals and 15 new clinics, encouraged by the development of the Kuwait Health Assurance Company, which will coordinate a private medical insurance system.
Our sources expect that the fortunes of Kuwait’s commercial real estate market will reach a turning point in 2011. One particular challenge for the real estate sector is over-supply. This is true for all three cities from which we gather data – Kuwait City, Salmiya and Al-Jahara – and all sub-sectors. According to various industry sources, a large supply of office space in Kuwait is expected from the end of 2011 onwards, with an estimated 350,000m2 set to hit the market over the next 24 months. Almost 60% of this (Al Hamra, Kuwait Business Town, and United Tower) is expected to be completed by the end of 2011. It is expected this supply will put some pressure on rental levels.
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