Kuwait Residential Market

Residential Real estate market in Kuwait witnessed a steady growth in the recent years due to a positive economic sentiment and rising oil prices. The residential segment comprises of both investment housing (Istithmari) and private housing. The Investment housing segment witnessed a stable trend in the recent years. The Pandemic caused an overall slowdown in 2020-21. However, 2022 witnessed a slight recovery with the fading aftereffects of pandemic.

The inventory in the Kuwait stood around .4 million units in 2021, which remained at similar levels in 2022. Occupancy levels dropped from 87.3% in 2018 to 84.3% in 2021. However, there was a marginal increase in the occupancy levels in 2022 with the fading out of pandemic impact on the sector. The occupancy levels in the coming years are expected to increase gradually with the improving market sentiments.

Lease rates for the investment segment considering all the unit types decreased from a high of KD 4.83( per m2 per month) in 2018 to KD 4.46 in 2022. The lease rates is expected to bottom out in 2023 at around KD 4.42. However, a slight increase in the lease rates is expected since 2024 owing to an expected increase in occupancy levels.

Top investment clusters with prime properties market include Kuwait City, Bneid Aal Qar, Daiya and Shaab, Salmiya, Hawalli and Jabriya, Sabah Al Salem, Fintas, Mahboula, Abu Halifa, Mangaf and Fahaheel.

The Prime investment market also witnessed a downtrend during pandemic with the occupancy rates going down from 88% in 2018 to 83.6% in 2022. The average lease rate also dropped marginally from KD 8 in 2019 to KD 7.7 in 2021. However, the lease rates are again expected to bounce back to KD 8.1 in 2022.

Key demand drivers for prime properties in Kuwait include waterfront properties, east access to the gulf street and coastal road. There are very few vacant waterfront investment lands. The land value for these land parcels goes as high as KD 2,000 to KD 2,800 per m2. Due to high land value, investors prefer to develop them as commercial properties (F&B plazas, medical centres) owing to higher lease rates as compared to the investment properties. Limited supply is expected in this segment in the coming 4-5 years, which makes the segment lucrative for prime investors.