The real estate report of Coldwell Banker International - Kuwait Branch addressed the growth in the volume of real estate financing during the first half of this year, where its growth rate amounted to 1.38 percent, reaching 6.447 billion dinars compared to 6.359 billion in the same period of 2009.
The report explained that this growth recorded by the volume of financing directed to the real estate sector, although slight, but it reflects the beginning of a future activity expected for the sector in all its uses, especially after local banks abandoned some of their strict conditions that were an obstacle to many real estate financing operations, except that the last three months witnessed a group of moves by banks that took upon themselves to finance major real estate projects, so we found financing provided by Kuwait Finance House for the second phase of the «Avenues» project, another from the National Bank of Kuwait for Al Hamra Tower, and a third from Ahli United Bank for Kuwait Real Estate Company and other operations of the Kuwait Real Estate Company and other operations in the first half of the current year. The report emphasized that the situation in the local market began to witness signs of improvement in terms of the movement of financing real estate projects, as companies went through a period when there was no hope for the return of financing for projects, but now there is hope, especially in light of the cases that have been approved for financing to complete the stages of their projects.
The reasons for real estate companies obtaining financing varied between completing the stages of real estate projects or entering into new projects and seizing some favorable opportunities now in the local market, in addition to some of the financing operations that took place for the purpose of paying off the obligations of companies and restructuring their old loans.
The report indicated that the growth in lending rates to the real estate sector during the first half of this year also comes within the framework of the movement and recovery that the real estate sector began to witness since the last months of 2009, especially at the level of the investment and residential sectors, in addition to the return of financing to the residential real estate sector, which represents more than 50 percent of the volume of real estate transactions in general.
The report pointed out that some banks took advantage of the need of companies to finance and raised the interest margin taken above the price of the
discount, which made the decline in the base price which made the decline in the basic discount rate approved by the Central Bank as if it were not there. The report called on banks to take into account the dire economic situation that real estate companies are going through now and the decline in the volume of their sales at the level of various real estate projects, which negatively affects revenues and the ability of companies to repay, calling on local banks not to exaggerate this margin so as not to increase the cost of financing on companies while they are still suffering from the negative repercussions of the global financial crisis.

The report stated that there are currently moves in the local market to reschedule a number of real estate loans obtained by companies
real estate loans obtained by real estate companies during the period before the global financial crisis, converting them from short-term loans to long-term loans for a period of three to four years. The report expected that the pace of growth of financing for the purchase of real estate will continue in the coming months and until the end of 2010, especially in light of the existence of excellent real estate opportunities in the local market that came as a result of the decline in prices to low levels not reached for more than three years, as most real estate companies will seek to seize these opportunities, which will contribute to further growth in the volume of real estate financing in the market.

Real estate financing in the market.