Kuwait’s real estate market witnessed strong performance during the third quarter of 2024, with a balance between stability in the value of transactions and growth in the number of deals. Although the value of real estate transactions remained stable at $2.76 billion, the number of transactions increased by 24 percent, indicating a focus on smaller transactions, especially in the residential and investment sectors.
The latest report from online real estate platform Sakan also revealed that investment property sales grew by 49.5 percent in Q3 compared to the same period last year. This strong growth reflects increased interest from buyers in investment apartments, compensating for a weaker commercial property performance.
6 key trends shaping Kuwait’s property market
The report highlighted six trends shaping Kuwait’s real estate market including the rise of residential cities. Government housing projects, such as Al-Mutlaa City and South Saad Al-Abdullah City, contributed to the creation of modern urban communities and accommodated the growing demand for housing units.
Meanwhile, huge investments of around $32.6 billion to develop infrastructure, such as roads, airports and railway projects, further contributed to boosting economic and real estate activity. Another trend shaping the market is the storage crisis. The high demand in the storage sector and the lack of licensed spaces highlight the need for more regulation and investment in this sector.
Kuwait also implemented new regulations to provide GCC nationals with the same property rights as Kuwaiti nationals which further supported the real estate market’s growth. However, the country still applies strict conditions for other nationalities seeking to buy real estate.
Another factor supporting the property market’s growth is the strong tourism boost. Kuwait expects the number of tourists to increase to 7.4 million by 2028 which will raise demand for the hospitality and retail sectors, further supporting the growth of the real estate market.
In the office sector, Kuwait is witnessing a shift towards higher quality offices that cater to the needs of businesses seeking better working environments.
New residential developments propel growth
Housing and infrastructure projects played a vital role in boosting the performance of Kuwait’s real estate market. Ongoing major housing projects including Mutlaa City, Jaber Al-Ahmad City and South Saad Al-Abdullah are contributing to the creation of sustainable housing opportunities and stimulating economic growth.
Apartment rental prices in Kuwait showed clear disparities between governorates and regions, reflecting the diversity of housing options and demand for different properties.
The Capital Governorate topped the list of highest rents, with the average rent for a two-bedroom at KWD643 per month and a three-bedroom apartment reaching KWD888 per month. The capital is considered the most attractive due to its proximity to business centers and services.
The Hawalli Governorate came in second with rents reaching KWD550 per month for a two-bedroom apartment and KWD693 for a three-bedroom apartment. Investment yields for apartments based on median prices were estimated at 7.6 percent for two-bedroom properties and 9.1 percent for three-bedroom properties in the Hawalli-Salmiya area.
In addition, they reached 6.9 percent for two-bedroom properties and 8 percent for three-bedroom properties in the Sabah Al Salem area.
Read: Oman’s real estate trading surges 28.1 percent to over $8 billion in November 2024
Industrial growth to propel demand for commercial properties
Meanwhile, the commercial real estate sector in Kuwait shows promising growth in the industrial front, where demand for warehouses has caused fluctuations in rates amid low supply.
In the office sector, the supply of competitively priced semi-fitted offices in Kuwait has been putting pressure on rents. Data from Sakan shows that semi-fitted offices averaged at KWD11.3 per sqm per month in Sharq, KWD10.1 in Qibla and KWD12.3 in Mirqab.
On the other hand, shops reached an average of KWD23.6 per sqm per month in Sharq, KWD23.9 in Qibla, KWD23.5 in Mirqab and KWD25.3 in Hawalli. With retail sales forecasted to grow by 3.1 percent annually until 2028, the retail property sector is likely to see a positive performance in the coming years.
