Kuwait's real estate sales hit KD 4.3bn in 2014

The Kuwait's real estate market closed 2014 on a positive note, as the year saw record sales of KD 4.3 billion, a specialized report showed Monday.
The report, by the National Bank of Kuwait, stated that the positive end came despite a drop of 11 percent year-on-year (y/y) in sales in December to KD 355 million.
"This was largely attributed to underperformance in the investment sector since both the residential and commercial sectors performed strongly on a y/y basis," reads the report.
December sales in the residential sector totalled KD 181 million. This was an increase of 16.5 percent y/y. 509 residential transactions were recorded during the month.
Residential activity was once again heaviest in the Ahmadi governorate, which accounted for 36 percent of all residential transactions during the month. More specifically, 40 percent of all transactions represented sales of plots in Sabah Al-Ahmed Sea City. The average transaction size in December was KD 357,000, up 13 percent month-on-month (m/m), which could possibly signal a slowdown in the sale of lower-priced units from Sabah Al-Ahmed Sea City. Meanwhile, the Mubarak Al-Kabeer and the Capital governorates accounted for 20% and 17 percent of all transactions, respectively.
Comparing the sector's full year performance in 2014 with the previous year, total residential sales were up by 5 percent to KD 1.9 billion while total transactions dropped by 6 percent to 5803. This was perhaps an indication of the current shortage of supply in the market. Not surprisingly, Sabah Al-Ahmed Sea City constituted 40 percent of all residential transactions in 2014, placing Ahmadi governorate first among governorates in transaction activity.
In December, sales of KD 134 million were recorded in the investment sector, a decrease of 35 percent y/y.
The drop is most likely a result of a base effect as sales in December 2013 were relatively high. In terms of the number of transactions, 115 were recorded during the month, a decline of 42 percent y/y. The average transaction size was KD 1.1 million.
Apartments accounted for 46 percent of all transactions. Whole buildings followed, with 44 percent of all transactions. The Ahmadi governorate once again witnessed the bulk of activity, with 47 percent of all transactions. The Hawalli governorate accounted for 28 percent.
Compared to 2013, total investment sector sales during 2014 were up by 30 percent to KD 1.8 billion. Total transactions, on the other hand, contracted slightly, by 1 percent y/y to 1718. December's sales of commercial properties showed an increase of 9 percent y/y to reach KD 38.5 million. The commercial sector witnessed two large transactions of over KD 7 million apiece, and both in the Hawalli governorate. Nine transactions in total were recorded in December.
The sale of plots for commercial use in Sabah Al-Ahmed Sea City during 2014 helped commercial sector sales top KD 557 million over the year and record two consecutive years of growth in the value of transactions: 57 percent in 2013 and 40 percent in 2014.
The two biggest commercial transactions of the year both took place in Sabah Al-Ahmed Sea City, with a combined value of KD 133 million.
The Kuwait Credit Bank (KCB) approved 357 housing loans of approximately KD 21.8 million in December, a drop of 28.5 percent y/y. Again, this was largely due to a base and seasonal effect. Disbursed loans totalled KD 21.6 million, an increase of 35 percent y/y.
The KCB approved over 5000 loans in 2014 with a total value of KD 304 million. The value of approved loans dropped 23 percent compared to 2013 when the KCB approved an extraordinary KD 395 million. In 2013, the disparity between loans approved and disbursed was clear. However, in 2014, backed by the decision of the Public Authority for Housing Welfare (PAHW) to disburse 12,000 units, the KCB disbursed more loans than it approved (i.e. acted on approvals from prior years). The total value of disbursed loans in 2014 reached KD 205 million, up 43 percent y/y.