In Q4 2024, the Kuwaiti real estate market saw significant recovery. Sales rose nearly 28% quarter-on-quarter (q/q), reaching KD 1,082 million, the highest level in over two years. This surge was driven by robust demand in the investment and commercial segments, particularly in the Al-Ahmadi and Hawally governorates. Residential sales also recorded strong growth, reaching KD 456 million, the highest in two years. However, this sector continued to lag behind the investment and commercial markets.
Key Drivers of the Q4 Growth:
- Investment Segment: Investment sales soared to a six-year high of KD 433 million. This was due to higher rental yields, especially after regulations were tightened around apartment overcrowding following a fire in Al-Mangaf in mid-2024.
- Commercial Sales: Commercial sector sales rebounded to KD 193 million, fueled by large transactions. Nevertheless, it was still lower than the Q2 2024 peak.
- Residential Market: The residential segment saw a more moderate increase of 7.1% in 2024, recovering from a steep decline in 2023. However, it remained well below the 2021 peak and faced challenges like high valuations and regulatory changes.
Real Estate Prices:
The real estate price index registered its highest growth in 10 quarters. It rose by 3.8% q/q in Q4, mainly due to increased investment property prices. On a yearly basis, prices softened, with a decline of 3.0%, following strong post-pandemic growth in previous years. Despite the overall price drop, residential prices remained above 2021 levels.
Government Housing and Financing:
Government housing plot distributions were on hold in Q4 2024, awaiting the new distribution strategy and approval of the real estate financing law. This pause contributed to an increase in housing applications, reaching 98,099 by October 2024. Meanwhile, Kuwait Credit Bank loans for government plots dropped, while loans for distributed plots saw a 15% rise q/q.
Outlook for 2025:
The outlook for 2025 remains optimistic, driven by:
- Economic Recovery: Growth in the non-oil economy and potential interest rate cuts are expected to support real estate demand.
- Legislative Reforms: Upcoming changes in residency laws and real estate ownership regulations could further boost investment and commercial real estate demand.
- Real Estate Financing Law: The potential approval of a real estate financing law, with expanded loan options and more favorable terms for homeownership, is expected to stimulate the residential market.
However, risks such as slower economic growth or the upcoming tax on undeveloped vacant land in 2026 could temper the market’s momentum. Despite these potential challenges, the broader trend points to a positive recovery and growth trajectory for the Kuwaiti real estate sector in 2025.
