Prices for private residential property and apartments are expected to rise in Kuwait next year as the country recovers from economic collapse, and the attendant exodus of international apartment owners. As in Dubai, surplus is likely to cause a continued drop in value for commercial real estate, yet Kuwait is anxious to distance itself from its Middle Eastern neighbor’s debt woes. For more on this, see the following article from Property Wire for more on this.
Private residential land prices in Kuwait are predicted to rise by up to 10% in 2010 while apartment prices could increase by up to 15% as the economy see a strong recovery, it is claimed.
Property transactions are expected to see a sustained revival in 2010 helped by economic and lending growth, according to a new report from the Kuwait Financial Centre (Markaz).
‘We expect moderate price recovery in the range of 5 to 10% in the private residential sector as the economy bounces back, leading to demand for housing from the affluent,’ it said.
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Overall prices for private residential land plots, which are bought by Kuwaiti nationals, fell by 20 to 30% from peak levels in early 2008, the report said. But by 2015 there is likely to be a demand for another 64,000 more homes added to the 92,000 pending housing applications and more residential projects would be announced, it added.
Prices for apartments, which cater mainly for foreign residents, fell by as much as 30% since early last year as the financial downturn led many foreigners to leave the country, and resulted in a shortage of home financing, the report also found.
In the commercial sector office prices are expected to decline by a further 15 to 20% from current levels due to the release of further supply, it said.
‘The office segment in Kuwait is comparable to Dubai in terms of higher current vacancies and a short term future marked by a spurt of supply. However, the economy of Kuwait is in much better shape than that of Dubai,’ it said.
Office prices fell by 25 to 50% from the market’s pre-crisis peak at the start of 2008 due to oversupply, which is comparable to the average price fall in Dubai, the report added.
Meanwhile the Malaysian unit of Kuwait Finance House has pulled out of a $270 million deal to buy part of an office tower from a local property developer. Malaysia’s YNH Property Bhd said it will seek damages over the decision.
The YNH tower was to be constructed in the Malaysian capital and the deal was signed almost a year ago. Kuwait Finance House has said that it is not exposed to the debt problems of Dubai state-owned conglomerate Dubai World or its property unit Nakheel, which have undermined investor confidence and thrown a spotlight on weak commercial real estate markets worldwide.
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