Investors In Real Estate Achieve 85.4% Occupancy

Kuwait had 394,942 thousand housing units for investment purposes at the end of the second quarter in 2023, according to a real estate report. Out of this number, 337,083 thousand units were rented, leaving approximately 57,859 thousand units vacant, as reported by sources cited in Al- Rai daily. The report, a collaborative effort between Aayan Real Estate Company and ESTATER Company, highlighted that while there is a growing demand for investment housing, the potential for increasing the supply is limited.

There are a limited number of residential investment lands available in Kuwait, which is the reason for this limitation. The report revealed that there are only 2,205 lands, comprising a mere 14.7 percent of the total residential investment properties in the country. This percentage is notably low compared to neighboring regional markets, where the proportion often exceeds 40 percent.

The average rental rate in the residential investment real estate sector is projected to decrease by 8.5 percent in 2023 to 4.42 dinars per square meter, according to a report prepared by Aayan Real Estate Company in collaboration with ESTATER. This decrease is expected to be due to an increase in occupancy and rental rates in the coming years. This is attributed to growing demand in 2022 and 2023, with potential for continued growth in 2024. Looking ahead, the report anticipates that the average rental rate in the investment sector in 2025 will be approximately 4.55 dinars per square meter. This is the highest average since 2021. Across all regions and types of units, including studios, one-room apartments, and two-bedroom apartments, this rate applies to all categories (first, medium, and low degree).

The construction industry has become increasingly active in various parts of Kuwait over the past 4-5 years, focusing on investment housing in Sabah Al-Salem, Mahboula, Mangaf, and other areas. However, no new residential investment areas or vacant lands have been added to the market. The Jaber Al-Ahmad and Sabah Al-Ahmad regions possess a limited number of lands suitable for building investment housing complexes, and only a few real estate developments have been established there.

Kuwait's lack of investment lands creates clear supply constraints that could have significant implications in the future. The report points out that many of these lands suitable for investment housing could instead be used for developing commercial real estate, such as clinics and offices. Consequently, supply restrictions within the investment housing sector are expected to result in increased occupancy and prices as demand rises.

With 393 vacant investment lands, Salmiya has the highest number, followed by Sabah Al-Salem with 247, Fahaheel with 245, Jleeb Al-Shuyoukh with 230, and Mangaf with 203. In terms of occupancy rates, the report reveals that by the end of the second quarter of 2023, the real estate investment sector achieved an 85.4 percent occupancy rate. This is a slight improvement from the 85.1 percent recorded in 2022. According to the report, occupancy rates will gradually increase over the next few years, reaching 85.5% by the end of the year, 86.5% in 2024, and 87.5% in 2025.

 

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