CBK: Kuwait local banks can provide 8.5bn Kuwaiti dinars real estate credit

Local banks in Kuwait can provide around 8.5 billion Kuwaiti dinars (KD) (USD 30.2 billion) in credit facilities for the real estate sector, Governor of the Central Bank of Kuwait (CBK) Dr. Mohammad Al-Hashel said Sunday. Al-Hashel said up to KD 34 billion could be used at a time total assets in local banks amount to KD 60 billion. He was addressing the second session of Kuwait Housing Conference about the financial conditions of local banks and their abilities to offer credit for the real estate and housing sector. Al-Hashel said there was a solid relation between real estate and financial stability on one side and other economic sectors on the other. "If the real estate is more active, the other sectors become active too." He said the international financial crisis resulted from mortgage problems in the US and lack of rules regulating this important sector. CBK, added the governor, placed housing loans regulations in the mid-1990 that linked the instalments with amount of salary in a drive to maintain a balanced relation between the lender and borrower. He underscored that the CBK and local banks were playing a key role in providing suitable environment to solve the housing problem. He said the CBK's monetary policy aimed at boosting monetary stability and tackling inflation. Al-Hashel said every family was spending an average of 49 percent of its income on housing needs while inflation in housing services in 2013 reached around 3.9 percent. The governor said the development of the housing sector on sound and sustainable basis would trigger economic revival. Al-Hashel said the housing loan "might be the most important financial decision of the family because of its high cost and the subsequent huge financial commitments." Therefore, he added, the housing loan decision should be based on methods that would restrict financial trouble for the borrower. Hence, said Al-Hashel, the CBK was implementing monitoring policies to prevent trouble from happening. For his part, head of the technical body to study development projects and initiatives Adel Al-Roumi said the body's mandate was to create investment opportunities for the private sector in order to alleviate the burden on the government. He said transparency was important to guarantee involvement of the local and foreign privat sector in housing projects. Ahmad Baqer, former Commerce Minister and Member of the Surpeme Planning Council, said housing laws failed to acknowledge the red tape, corruption and inability to implement. He called for the reconsideration of housing policy as well as the contribution of the private sector in addressing the housing problem away from the red tape. He said the government should establish shareholding housing companies.