A report issued by Kuwait Finance House (KFH) stated that the value of real estate transactions during the past month of July amounted to 407 million dinars, compared to 413 million in June 2021. The rise in investment property transactions and the presence of a remarkable demand for distinguished properties overlooking the coastal strip contributed to the stability of transactions and their return to pre-crisis levels. It appears that transactions in some sectors have returned to 2019 levels before the crisis, while a decline in transactions in private housing, commercial real estate and industrial real estate was noted during the month.
The volume of demand for real estate declined significantly on a monthly basis during July, while it improved on an annual basis, as reflected in the number of real estate transactions. The number of private and investment residential transactions increased, while the commercial transactions decreased on an annual basis from their exceptionally limited level at the beginning of the crisis, while the number of industrial real estate transactions decreased.
The value of real estate transactions remained relatively stable in June and July 2021, with a slight decrease in July by a small monthly percentage that did not exceed 1%. However, the average transaction value increased during July compared to the previous month. The return of some aspects of economic life contributed to a monthly improvement during July for investment real estate transactions, while other real estate sectors declined compared to June.
The number of transactions witnessed a monthly decrease of 42%, recording 750 deals, with a monthly decrease in the number of investment property deals and all other sectors except for industrial property, which recorded an increase.
The average total transaction value index rose to 69% at the end of July on a monthly basis. A monthly increase in this index is noted in private housing and investment property, while it declined in commercial and industrial property. The index also witnessed an increase in private housing and investment property, while it declined significantly in the rest of the real estate sectors on an annual basis.
Transactions in various real estate sectors declined on a monthly basis at the end of July in terms of value and most other indicators, driven by a decrease in the value of private housing transactions on a monthly basis compared to their pre-crisis levels in some real estate sectors.
Market share according to property type
Private residential transactions maintained their top ranking among sectors despite a month-on-month decline in July, with their share falling to 62% in July compared to one of their highest levels when they accounted for 76% of transactions in June.
The contribution of investment property transactions increased to approximately 28% of property transactions in July, compared to 15% in June, driven by a significant increase in the value of its transactions on a monthly basis.
The share of commercial real estate decreased by approximately 1% of real estate transactions during July and 3% in June, and the contribution of the commercial sector to total transactions continues to fluctuate.
Transactions in industrial properties accounted for 8.21 TP3T of total transactions in July, compared to approximately 51 TP3T in June. Transactions in coastal strip properties and chalets were limited, representing 0.21 TP3T of total real estate transactions in June.
The average total value of a real estate transaction rose to 543,000 dinars in July, an increase of 69% compared to June.
The rate remains volatile. While the number of transactions increased by 7% year-on-year, the number of real estate deals traded decreased to 750 in July, compared to 1,287 in June, a drop of 42%. Only 446 deals were recorded in July of last year.
Private housing transactions
Private housing transactions decreased by the end of July to about 252 million dinars, with a monthly rate of 20%. The value of transactions in the sector is moving in a clear upward direction, driven by increased demand.
The average transaction value in private housing rose to approximately 392,000 dinars, an increase of 451,000 TP3T month-on-month, after declining by 21,000 TP3T month-on-month in June. Year-on-year, it increased by 591,000 TP3T in July.
The number of transactions traded in the private residential sector decreased to 642 transactions in July, down 45% from 1,166 transactions in June, compared to 380 transactions last July.
Commercial transactions
The value of commercial real estate transactions in July decreased to 5.5 million dinars, a monthly decrease of 61%, after reaching 14 million dinars in June. It remains at limited levels after commercial real estate transactions had been on an upward trajectory, driven by exceptional performance in some months. Its value in July is also 90% lower than its value in July of last year.
The average transaction value in commercial real estate declined to 916,000 dinars, a decrease of 41% from the average transaction value in June, and lower than the average of 2.7 million dinars during the past year. It is the lowest on an annual basis, at 69%, compared to an average of 2.9 million dinars recorded at the end of last July. Commercial real estate transactions recorded only 6 deals in July 2021, a decrease of 33% from 9 deals in June and an annual decrease of 67%.
Warehouses and craft properties
Transactions in the industrial real estate sector reached 34 million dinars in July, including approximately 7.6 million dinars in nursery properties. This led to a monthly increase of 791 TP3T for industrial and craft real estate transactions, compared to approximately 19 million dinars in June, exceeding the average value of 10 million dinars over the past year. Consequently, industrial real estate transactions in July increased by 421 TP3T compared to the previous July.
116 million dinars in investment property transactions
The value of investment property transactions rose to 116 million dinars in July, a monthly increase of 931 TP3T compared to 60 million dinars in June, recording in July the highest value in a year and a half. The value of investment property transactions has been witnessing a slow upward trend in the past ten months, but it has not yet reached the high levels of the past two years, and is 3 times its value in July 2020.
The average transaction value in investment property rose in July to 1.6 million dinars, compared to 639,000 dinars in June, marking the third highest level since 2012.
The number of transactions traded in the investment property sector fell to 74, down from 94 in June, which is lower than the average number of transactions of 78 over the past year.
Compared to only 40 deals in July 2020, since then we have observed an upward trend in the number of investment property deals until March of this year when the decline began.
700,000 dinars in coastal strip transactions
Trading on the coastal strip in July reached 700,000 dinars, down from 6 million dinars in June.
Demand declined in July, recording only one transaction compared to three in June, while coastal strip real estate transactions recorded only one transaction during July of last year.
