Housing Prices Fall As A Result Of Price Inflation

Kuwait's residential real-estate market saw a 50 percent drop in deals in the first half of 2022 compared to the same period in 2021. There was a wide margin between supply and demand in Kuwait due to price inflation of real estate and static purchasing power on the part of clients.

In the first half of this year, there were 2,470 deals worth KD 1.13 billion (around USD 3.3 billion) compared to 4,814 deals worth KD 1.40 billion (around USD 4.6 billion) in 2021. A local real-estate expert and Director General of Abraj Behbehani company, Alaa Behbehani, told KUNA Tuesday that the sharp decline was due to price inflation. Behbehani said Kuwait, along with other countries, was affected by the increase in interest rates announced by the US Federal Reserve, which led to the withdrawal of liquidity from the global market.

Behbehani explained that the effects of the Federal Reserve's decision might not be felt now, but in one year. Further, he expressed Kuwait's vulnerability to inflation, noting that bank deposits had become more appealing to major investors who prefer security over real estate.

Due to the great connectivity among major markets, Behbehani warned that the economic tremors shaking the world's major economies were pointing towards an economic depression. According to Behbehani, global affairs have an impact on local affairs, since investments worth KD 380 million were taken out of Kuwaiti real estate in early 2022 and invested elsewhere, indicating a lack of interest.

Despite COVID 19 restrictions, the expert predicted that the second half of the year would see a bit more activity in commercial real estate than the first half. The housing market might not have scored high numbers in the first half of this year, but commercial and investment real estate did.

The investment real estate market saw 674 deals worth KD 579 million (around USD 1.9 billion) in the first half of 2022, compared to 587 deals worth KD 268 million (around USD 884 million) last year. In the first half of 2021, there were 59 million KD (around USD 195 million) worth of deals in commercial real estate.

Comments Post Comment

Leave a Comment

Submit