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KUWAIT: The Kuwaiti housing real estate market saw a 50 percent drop in transactions in the first half of 2022 compared to the same period in 2021.
Some attribute this decline to real estate price inflation and stagnant purchasing power on the part of Kuwaiti clients, resulting in a large margin between supply and demand.
In the first half of this year, there were 2,470 deals worth 1.13 billion Kuwaiti dinars (approximately $3.3 billion), compared to 4,814 deals worth 1.4 billion dinars in the same period in 2021.
Speaking on the subject, Alaa Behbehani, director general of Abraj Behbehani Co., stated on Tuesday that price inflation was the primary cause of the sharp decline.
Kuwait, like other countries, has been affected by the US Federal Reserve’s interest rate increase announcement, said Behbehani, adding that the latter has continued to raise interest rates on the US dollar, which has contributed to a withdrawal of liquidity from the global market.
The effects of the Fed’s decision may not be felt in the national market for a year, he added, going on to say that Kuwait was not immune to global economic events, and that bank deposits had become more appealing to major investors seeking security rather than investing in real estate.
Behbehani warned that the economic tremors that jolted major world economies in the US, Europe, China, Japan, the UK and elsewhere were pointing to a type of economic depression because of the massive connectivity among major markets.
What happens on a global scale has an impact on local affairs, said Behbehani, noting that investments worth 380 million dinars were taken out of Kuwaiti real estate and invested elsewhere in early 2022, indicating a lack of interest in investing in the sector.
The second half of the year will continue with the same trend of a lack of housing real estate deals, while commercial real estate may see some activity following the COVID-19 restrictions, he said.
While housing real estate may not have performed well in the first half of this year, other real estate sectors such as commercial and investment have performed well. In the first half of 2022, investment real estate saw 674 deals worth 579 million dinars, compared to 587 deals worth 268 million dinars in the same period last year. Commercial real estate transactions increased by 111 deals worth 390 million dinars, compared to 59 million dinars in the first half of 2021
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