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Building a Data-Driven Real Estate Investment Strategy for Kuwait Real Estate

March 27, 2023 | Estater, Kuwait Real Estate, Kuwait Retail Sector | No Comments

Despite the challenges posed by the global geo-political uncertainty and a budding financial crisis in 2023, Kuwait’s real estate market has remained resilient. In fact, it continues to be a lucrative investment opportunity for both local and regional investors alike. However, as with any investment decision, it’s important to have a solid strategy in place. That’s where building a data-driven real estate investment strategy comes into play.

By leveraging market intelligence, investors can make informed decisions that increase their chances of success and minimize risk. In this blog post, we’ll explore how to build a successful real estate investment strategy in Kuwait using market intelligence, how to gather and analyze market data, identify investment opportunities, and develop a data-driven investment strategy with this guide.

Importance of Market Intelligence in building a Data-Driven Investment Strategy

Any effective data-driven investment strategy must include market intelligence. It aids in the trend identification, competitive analysis, and investment decision-making processes for investors. Market information can assist investors understand market trends and create plans to increase their profits. Market intelligence can be used to assess the state of the market, find prospective business opportunities, and assess potential risks. Investors can create a realistic picture of their investment portfolio and make wise decisions about where to put their money by comprehending the fundamental elements influencing market performance. Also, it can assist them in creating plans to optimize risks while seizing market possibilities.

Gathering Market Intelligence in Real-estate

Gathering market intelligence in real estate is more crucial than ever today. With the advancement of technology, it is now easier than ever to gain access to market data and make informed judgements. This information can be used to better understand real estate trends, uncover prospective investment possibilities, and assist purchasers in finding the best property for their needs. Market information is increasingly being used by real estate brokers to assist them make better decisions and provide better services to their clients. They can gain a better understanding of the market and how it affects their customers’ assets by analysing data from diverse sources such as public records, surveys, and analytics tools. Let’s divide this section into 3 categories:

1. Finding the sources of market intelligence in Kuwait real estate:

Finding reliable sources of market intelligence is essential for making informed decisions in the Kuwait real-estate market. Knowing the right sources of information can help investors and developers stay up to date on the latest trends, regulations, and opportunities in this rapidly changing market. To find the best sources of market intelligence, it is important to look at both public and private sources. Public sources include government websites, local newspapers, and industry reports. Private sources include real estate agents, brokers, and industry professionals who have access to insider knowledge about the Kuwait real-estate market.

2. Key factors to analyse the market:

When studying the Kuwait real-estate market, several major elements must be considered. Economic conditions, population studies, government regulations, infrastructural development and availability of capital, etc.. Many of these factors influence the market for real estate in Kuwait and can assist investors in making sound investment selections. By carefully comprehending and analysing these critical aspects, investors can acquire insights into the current health of the Kuwait real-estate market and prepare accordingly for future investments.

3. Analysing of demographic and economic trends:

Many demographic and economic variables influence demand and supply dynamics in Kuwait’s real estate market. Kuwait’s population growth has been a major source of demand for housing and commercial spaces, resulting in an increase in property prices. Development of new cities such as Mutla, South Sabah AL Ahmad, Nuwaiseeb, etc. offer scores of new investment opportunities. Furthermore, expatriates make up a sizable section of Kuwait’s population, that opens up several opportunities in Investment Areas.

Determining the Investment Opportunities

While investing in Kuwait real estate, various considerations must be considered. They include the location of the property, the supply and demand equation, possible rental returns and capital appreciation, the legal and regulatory environment, and so on. Let’s see how to determine investment opportunities in Kuwait’s real estate market:

  1. Identifying the potential investment areas in Kuwait:

For investors wishing to diversify their portfolios, Kuwait’s real estate industry is an appealing investment possibility. With a burgeoning population and a thriving economy, the country provides a diverse range of prospective investment opportunities. There are numerous chances for investors to profit from, ranging from residential properties to commercial buildings. Before making any decisions, investors should evaluate the current market trends. While analysing potential investments, consider factors such as population growth, economic stability, and government laws. Furthermore, investors should examine the dangers connected with investing in Kuwait’s real estate market, such as political uncertainty and rising interest rates in 2023. Investors can make informed decisions about where to invest their money to optimise returns by considering these aspects. We have detailed this in one of our blogpost.

2. Evaluating investment opportunities using market intelligence:

The Kuwait real estate market presents several investment opportunities that can be evaluated using market intelligence. Gathering and analysing data from numerous sources to get insights into industry trends, demand and supply dynamics, and price patterns is what market intelligence entails. This information can be used by investors to estimate the possible risks and rewards of investing in the Kuwait real estate market. Population increases, economic development, and government regulations can all have an impact on market performance. Investors can find the most attractive investment possibilities by examining existing and future demand for real estate. Furthermore, market intelligence can assist investors in making educated selections about the types of properties to invest in, such as residential, commercial, or industrial properties. Estater’s MI platform delivers the most updated reports, data visualisations, data tables, catchment and demographic analyses, and benchmarking studies suited to your target investment.

Building a strong Data-Driven Strategy for Investments

Developing a strong data-driven strategy for real estate investments necessitates a systematic approach that includes defining investment objectives, gathering and analysing relevant data, developing investment hypotheses, testing these hypotheses, developing an investment strategy, and monitoring and refining the strategy over time. Following these stages allows investors to make informed decisions based on market trends and patterns, find opportunities for long-term capital appreciation or regular income streams, and efficiently manage risk. A data-driven strategy can assist investors in navigating difficult market conditions, identifying emerging trends and opportunities, and making more informed decisions that are in line with their investment goals.

1. Developing a real estate investment strategy based on market intelligence:

Creating a real estate investment strategy based on market intelligence is critical for real estate success. It entails acquiring and analysing data on numerous real estate market elements such as supply and demand, demographics, catchment study, economic trends, and local legislation. An investor can use this information to uncover possible possibilities and make informed judgements about where to put their money. Market information, for example, might assist an investor in identifying neighbourhoods that are undergoing expansion and have a strong demand for rental properties. Using this information, an investor can devise a plan for acquiring and managing properties in these areas.

Estater Meter will keep you up to date on economic, expansion, demographic, and developmental changes in your target neighbourhoods, as well as provide instant estimates on target properties. Our market intelligence solution MI on the other hand will provide you with the most recent reports, data charts, data tables, catchment and demographic analytics, and benchmarking studies tailored to your target investment.

2. Setting real estate investment goals and objectives:

Establishing real estate investment goals and objectives is a vital element in developing a successful investment strategy. Objectives should be specific, measurable, achievable, relevant, and time-bound (SMART). Investment goals could include generating a specified level of cash flow, achieving a specific return on investment, or acquiring a certain number of properties within a specific timeline. Goals, on the other hand, are the exact steps that an investor takes to achieve their goals. Doing market research, evaluating prospective investment opportunities, examining financial data, and negotiating with sellers are all examples of objectives.

Estater assists you in achieving your investment objectives by using scientific and super flexible financial models. We can match your investment strategies and provide you with consulting services.

3. Developing a real estate investment risk management plan:

Creating a risk management strategy is an essential component of investing in the real estate market. The plan should identify potential hazards and provide mitigation actions. Market fluctuations, property damage or loss, tenant default, and changes in zoning rules or regulations are all common risks in real estate investing. To mitigate these risks, investors can diversify their portfolio, undertake comprehensive due diligence before purchasing a property, seek insurance coverage, and keep enough financial reserves. Also, investors should watch and analyse market developments on a regular basis and alter their approach as needed to keep ahead of potential threats. Investors can reduce their exposure to potential losses and assure the long-term success of their investments by implementing a well-thought-out risk management plan.

How Estater helps for the real estate Investments in Kuwait?

Estater consultancy and advisory services provides detailed and comprehensive reports on different real estate sector in Kuwait that can provide intricate details in these trends related to:

  1. Market insights: Inventory build-up and occupancy trends.
  2. Location analysis: Market gaps and catchment analysis.
  3. Competitor Benchmarking: Estater can help businesses understand their competition and make strategic decisions.
  4. Financial Modelling: Estater can provide you highly flexible financial model which can be easily modified based on your inputs.
  5. Leasing Trends: Lease rate and tenant mix analysis.
  6. Demographic analysis: Combining sectoral data with demographics of the areas, Estater can help businesses understand their target audience.
  7. Consultancy: We offer consulting services for many aspects of real estate reports, such as financial modelling, benchmarking, demographic analysis, catchment analysis, and so on. Our Estater Meter and Market Intelligence solutions will provide you with customised results depending on your preferences.

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By Estater

Artificial Intelligence Impact on Real Estate Investment

March 21, 2023 | Bahrain Retail Sector, Estater, Kuwait Real Estate | No Comments

Real estate investment is one of the most traditional and prominent investments in the world. The real estate market is constantly changing and adapting to new technologies and economic trends. Various market disruptions in the past have now led to a more research backed approach in real estate. Artificial Intelligence (AI) has eased the process of real estate investment, in ways that were unimaginable a few decades ago.  Technological developments like AI market research, automated property recommendations and automated valuation models etc. are leading to a transformation in the real estate industry. In this blog, we’ll explore the impact of AI on real estate investment.

What is AI?

Before diving into the impact of AI on real estate investment, it’s essential to understand what AI is. AI is a technology that involves the development of intelligent machines that can perform tasks that would typically require human intelligence. These tasks include things like decision-making, problem-solving, and natural language processing.

Artificial Intelligence (AI) is revolutionizing various industries across the globe, and real estate is no exception. With AI, real estate investors can make data-driven decisions, automate tasks, and gain insights that were previously not possible. Here’s a closer look at how AI is impacting real estate investment:

How will AI lead to Improved Decision-making in real estate investment?

Real estate investment involves analyzing large amounts of data to make better decisions. AI algorithms can analyze data quickly, accurately, and in real-time. This enables investors to make decisions based on market trends, property value, and other key factors. With AI-powered decision-making, investors can identify opportunities and make informed choices to maximize their returns. This will lead to a reduction in decision making timelines.

For example, let’s say a company has an empty land area in the city of Jeddah and it is thinking of building an amusement park. With the help of AI, collecting and analyzing population data (age groups, families income rates and children number), and competition benchmarking of similar amusement projects might be done within a very fast time and at a fraction of the cost (compared to traditional feasibilities that take several months and may cost a lot).

How AI can help in Predictive Analytics in Real Estate?

AI can predict trends in real estate, enabling investors to make proactive decisions. With predictive analytics, investors can set their objectives, anticipate market trends, identify potential risks, and adjust their investment strategies accordingly. AI-powered predictive analytics can assist investors to spot market opportunities before others and optimize risk in their portfolio.

For example, AI collecting property’s location, size, age, and condition, as well as recent sales data for similar properties in the area would help the predictive model suggest how property values are likely to change in a certain area. Investors might choose to buy a property in that area in order to take advantage of potential future gains. Alternatively, if the model predicts a decline in property values, an investor might choose to sell a property in that area in order to avoid potential losses.

Smarter Property Valuation with AI

AI-powered tools such as automated valuation models (AVMs) use machine learning algorithms to evaluate a property’s value based on various hundreds of factors such as location, size, age, and other characteristics. This enables real estate investors to get accurate and reliable property valuations and make better investment decisions.

For example, an AI tool like ( Estater Meter) can analyze a vast amount of data, such as historical property prices, recent sales data, and demographic information, to provide a more accurate estimate of the property’s value.

The AI-powered valuation tool can factor in various features of the property and its surrounding location that may impact its value, such as proximity to schools, shopping centers, public transportation, and crime rates. By analyzing these factors, the AI tool can provide a more comprehensive and accurate valuation of the property.

Enhanced Customer Experience with AI in Real estate 

 AI-powered virtual assistants can provide real-time customer support and help investors address their queries and concerns promptly. This can improve the customer experience, increase customer satisfaction, and build stronger relationships with investors.
For example, a large real estate company with hundreds of clients would use an AI virtual assistant loaded with lots of answers and suggestions to help customers.

Can AI provide Personalized Investment Recommendations?

AI can provide personalized investment recommendations based on an investor’s financial goals, risk tolerance, and investment history, making it easier for investors to find properties as per his requirements. AI will reduce the efforts that need to be put in to find a suitable property or location.

For example, Mohamed wants to invest in real estate. AI algorithms can analyze Mohamed’s investment preferences based on his past income, the type of properties he has shown interest in, his online search history and his risk tolerance level. The AI can then recommend properties that align with Mohamed’s investment preferences.

How AI Detects Fraud?

AI algorithms can also detect fraudulent activity, such as fake property listings or false claims by potential tenants. Ruling out fraud or duplicate listings would be easier with the help of predefined algorithms. This can reduce the risk of deception for real estate investors.
For example, AI can use Natural Language Processing (NLP) techniques to analyze text data, such as emails.
For example, AI can identify certain keywords or phrases that are commonly used in fraudulent messages, such as “urgent” or “act now.” Or use Behavioral Analysis if a user suddenly logs in from a different location or device, the AI may flag this as potential fraudulent behavior.

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By Estater

The Avenues Mall

March 21, 2023 | Estater, Kuwait Real Estate, Retail Sector | No Comments

Kuwait’s The Avenues mall is a prime shopping center that has quickly become a destination for both local and international brands. The mall is well known for its excellent shopping experience, first-rate facilities, and diverse entertainment options. The Avenues is the largest shopping mall in Kuwait and one of the largest in the GCC region. The mall is located in Al Rai neighborhood, which is connected by the Fifth Ring Road on the south and Al Ghazali Street on the north.

The mall has several distinct sections such as 1st Avenue, 2nd Avenue, Prestige, Grand Avenue, etc.. Several national and international restaurants and shops, including those serving British, French, Dutch, Turkish, Swiss, and Arabic cuisine, can be found in the mall. The mall has the first Carrefour in Kuwait, and offers great dining at upscale outlets including P.F Changes and The Cheesecake Factory. Also, there are all the amenities like ATMs, restrooms, children play area, open seating area etc. Here’s a quick rundown of what you can expect from your visit to Kuwait’s The Avenues Mall.

  1. Shopping in The Avenues: With over 1,800 retail stores spread across three levels, the Avenues Mall is a shopper’s paradise. There’s something for everyone, from high-end luxury brands to low-cost fashion options. Local and international labels are available, including well-known brands such as Chanel, Gucci, Zara, H&M, and many more.
  2. Food & Beverages in The Avenues: The Avenues Mall’s food court is a popular destination for foodies, with a variety of options to choose from. You’ll find everything from fast food chains to upscale restaurants offering international cuisines. Whether you’re in the mood for sushi, burgers, or Italian food, it’s all available here.
  3. Entertainment Places in The Avenues: The Avenues Mall is more than just a place to shop; it’s got great places to have fun. There are several entertainment options available, including two cinemas, bowling alley, virtual reality games, and arcade games. There is also a children’s play area, making it an ideal destination for families.
  4. Amenities in The Avenues: The mall is designed for comfort and convenience, with amenities such as clean restrooms, prayer rooms, and plenty of seating areas. There is also plenty of parking, both indoor and outdoor.

Interesting Facts About Avenues Kuwait:

1.  Estater estimates that the total Gross Leasable Area (GLA) of Avenues is more than 350,000 m2. This makes The Avenues the largest mall (outside Dubai) in the GCC region.

2.   Fashion, Shoes, and Accessories stores account for 26% of GLA.

3.   IKEA, Carrefour, and CenterPoint that are key anchor stores account for about 11% of total GLA.

4.   Starbucks occupies nine units in The Avenues Mall.

5.   There are over 10,000 parking spaces in total.

Visit The Avenues Entertainment Places for a Memorable Experience

The Avenues offers a variety of entertainment options for visitors of all ages. Here are some of the fun and exciting destinations you can find in The Avenues:

  1. Magic Planet in The Avenues Mall – Magic Planet is an indoor amusement park located on the first floor of the mall. It offers a range of rides, games, and attractions, including a roller coaster, bumper cars, and arcade games.
  2. KidZania in The Avenues Mall – KidZania is an interactive children’s theme park located on the first floor of the mall. It allows children to explore different careers and role-play different jobs in a fun and educational environment.
  3. Bowling Alley in The Avenues Mall – The Avenues also has a bowling alley, which is a great place to hang out with friends and family.
  4. Cinema & Theatres in The Avenues Mall – The Avenues Mall in Kuwait houses two cinemas. One of the popular cinemas in The Avenues is the Cinescape, which offers a range of movies from different genres. The Cinescape is located on the first floor of the mall, and it has multiple screens with seating capacity of over 1,000 viewers. There is Vox Cinemas, which is located on the first floor of the mall. Vox also offers a range of movies and has multiple screens. Both Cinescape and Vox offer comfortable seating and state-of-the-art technology for an enjoyable movie-watching experience. They offer snacks and refreshments for movie-goers to enjoy during the movie.

Shopping at The Avenues Mall

Fashion, Shoes, and Accessories stores account for 26% of GLA in the Avenues Kuwait. While looking for a variety of goods and services in one convenient location, The Avenues Kuwait is the top choice. This upscale mall features everything from clothing stores to electronics stores and home appliances. Customers can expect ease and quality from their shopping experience at The Avenues Kuwait, which offers more than 150 international brands.

From fashion accessories like handbags and shoes to groceries like fresh fruits and vegetables, you will undoubtedly find something to suit your budget and taste preferences. Furthermore, by participating in ‘The Avenues Rewards Program,’ visitors receive special discounts on select purchases as well as extra points every time they shop, allowing them to save money while exploring various outlets within the mall complex itself! Some of the big shopping stores in The Avenues are:

  1. IKEA in The Avenues Mall – IKEA is a Swedish furniture and home décor retailer with stores all over the world, including Kuwait. The store sells a wide range of furniture, home decor, and household items that are both functional and fashionable. IKEA’s most popular items include beds, sofas, chairs, tables, kitchen cabinets, lighting fixtures, and textiles. Furthermore, IKEA in Avenues Kuwait has a restaurant where customers can enjoy Swedish-inspired food and beverages. For a fee, the store also offers delivery and assembly services.
  2. Carrefour in The Avenues Mall – Carrefour in the Avenues Kuwait sells a wide variety of goods, including groceries, household items, electronics, appliances, clothing, and other items. The hypermarket is well-known for its right prices and frequent sales, making it a popular shopping destination for both locals and expats alike. The hypermarket is open seven days a week, from 9:00 a.m. to 12:00 a.m., and is located on the ground floor of the Avenues Mall, with easy access from the mall’s entrances and parking lots. Customer service has been praised as friendly and helpful, with employees going above and beyond to ensure customers have a pleasant shopping experience. In addition, their store is conveniently located within the mall complex, making it accessible from anywhere. Customers’ value when they shop here is further increased by their loyalty programme, which rewards customers who accrue points based on purchases made at other stores and can avail discounts on subsequent purchases. Carrefour continues to provide one of the greatest shopping experiences in The Avenues Kuwait thanks to its fantastic advantages for both locals and visitors looking for high-quality items at affordable prices.
  3. CenterPoint in The Avenues Mall – CenterPoint in the Avenues Kuwait offers a wide range of products, including clothing, shoes, accessories, cosmetics, and home goods. The department store is known for its trendy and fashionable merchandise, catering to both men and women. The departmental store is open seven days a week, with operating hours from 10:00 am to midnight and is located on the ground floor of the Avenues Mall, and visitors can easily access it via the mall’s entrances or parking lots.

Enjoy Delicious Cuisine at The Avenues Kuwait – Cafes, Fine & Bistro Dining

The Avenues Kuwait is a well-liked spot for dining, shopping, and entertainment, offering a variety of cuisines to suit all preferences and price ranges. Let’s look at The Avenues Kuwait’s cafes, fine dining, and bistro options for dining.

Cafes in The Avenues Kuwait:

  1. Starbucks in The Avenues Mall – Starbucks is a popular coffeehouse chain that serves a variety of coffee, tea, and snacks. The cosy atmosphere and delicious coffee make the cafe a popular spot for catching up with friends or taking a quick break.
  2. Caribou Coffee in The Avenues Mall – Caribou Coffee is another coffeehouse chain that sells coffee, tea, and bakery items. The cafe’s welcoming atmosphere and friendly service make it an ideal spot for a casual chat or a quick caffeine fix.
  3. Paul in The Avenues Mall – A variety of mouth-watering pastries, bread, and sandwiches are available in the French bakery and cafe known as Paul. The cafe is a wonderful choice for a relaxing breakfast or a mid-afternoon snack because of its exquisite decor and delectable food.

Fine Dining in The Avenues Kuwait:

  1. The Cheesecake Factory in The Avenues Mall – The Cheesecake Factory is a popular American restaurant that offers a range of pasta dishes, burgers, and, of course, cheesecakes. The restaurant’s elegant decor and attentive service make it a perfect place for a fine dining experience.
  2. P.F. Chang’s in The Avenues Mall – P.F. Chang’s is a Chinese restaurant that combines Chinese and American flavours. Signature dishes at the restaurant include Mongolian Beef and Chang’s Spicy Chicken.
  3. Le Pain Quotidien in The Avenues Mall – Le Pain Quotidien is a French bakery and café that sells organic bread, pastries, and sandwiches. The restaurant’s inviting atmosphere and tasty cuisine make it an excellent choice for a relaxed fine dining experience.

Bistro Dining in The Avenues Kuwait:

  1. Fauchon Cafe in The Avenues Mall – A variety of delightful French pastries, sandwiches, and salads are available at the Fauchon Café in France. The café is a great choice for a casual eating experience because of its stylish atmosphere and great food.
  2. Elevation Burger in The Avenues Mall – Elevation Burger serves organic burgers, fries, and shakes in a fast-casual setting. The restaurant’s dedication to employing high-quality food and environmentally sustainable processes makes it a popular choice among health-conscious guests.
  3. Bouchon Bakery in The Avenues Mall – A variety of exquisite pastries, sandwiches, and salads are available at the bakery and cafe known as Bouchon Bakery. For a quick snack or casual dinner, the cafe’s welcoming ambiance and helpful staff make it a great choice.

Overall, the Avenues Mall in Kuwait is a must-see for anyone looking for a fun shopping and entertainment experience in Kuwait. It’s the ideal place to spend a day with its diverse retail, dining, and entertainment options. 

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By Estater

Key Factors to Consider for Maximizing Returns in Kuwait’s Real Estate Market

March 14, 2023 | Estater, Kuwait Real Estate | No Comments

Overview of the Kuwait Real Estate Market and its Investment Opportunities

For many investors, investing in Kuwait’s real estate is a lucrative option, but it comes with its fair share of risks. For maximising returns and optimize risks, it is essential to understand various important elements while investing in this market. Here are the macro drivers of real estate in Kuwait:

Oil Prices have Outsize Impact on Real Estate Returns in Kuwait

The oil price has direct impact on the macro-economic growth and on real estate returns. High oil prices like what is witnessed in 2022 and 2023 allow the Government to invest in infrastructure and creates demand for private sector. This results into employment growth and in turn pave ways for healthy returns from real estate.

High Disposable Income of Kuwaiti Families Create Solid Demand Base

Kuwait has one of the highest per capita incomes anywhere in the world. This creates a solid base for real estate demand across all sectors.

Availability of Vacant Lands in Kuwait is a Supply Side Constraint

While the overall size of Kuwait is substantial for its population size, the urbanized land (especially for commercial properties) remains in short supply. This shortage of land is a key reason for high real estate prices that is the most important factor governing the returns from real estate. The Government is mindful of this and has taken several steps to correct it in the last 10 years but a lot more is required before the shortage is fully addressed.

Political Instability Hampers Kuwaiti Government’s Ability to Undertake Bold Economic Reforms

The frequent political instability in Kuwait curtails the Government’s ability to initiate bold economic reforms in the country that can create long term growth potential. The private sector in the country is very enterprising and is capable of competing with global companies if it is given right policy environment. Private real estate companies have already done several landmark projects such as The Avenue Mall, 360 Mall, Al Hamra Tower, etc. that show they are capable to developing the best properties in the region.

No Tax on Income or Capital Appreciation in Kuwait

Unlike most countries in Europe, America or Asia, Kuwait does not have any income tax or wealth tax. This allows investors to enjoy tax free returns from real estate.

Despite many challenges, the Kuwaiti real estate sector offers promising returns to investors. Kuwait’s population has grown by around 5% per annum over the last 10 years; this growth has benefited Kuwait real estate market, making it one of the most lucrative markets in the Gulf region.

Key Factors to Consider When Investing in Kuwait Real Estate Market

It’s crucial to consider several factors when investing in Kuwait real estate. These include property location, supply and demand equation, potential rental yields and capital appreciation, legal and regulatory environment, etc.

You may make wise investment decisions and maximise your returns by doing thorough research and keep yourself up to date with the market conditions. If you’re considering investing in Kuwait real estate market, read on to understand how to maximize your returns:

Choosing a Right Location and Neighbourhood:

It is one thing to keep repeating the term “location” when considering real estate, it is another to define your objectives properly and pick a good “location”. The location of the property is essential since it can affect both the rental income and the capital appreciation. The type of property and its intended usage determine the right location. A residential property for self use need to satisfy your aspiration for social status and your daily places of commute. Another property for investment need to satisfy local market dynamics such as occupancy, prices and understanding of consumer profile. A thorough market research with comparison across several locations can help you make the right choice.

Always Estimate Rental Yield of Investment Properties:

The rental yield is one of the most crucial aspects to take into account when making real estate investments. This represents the expected rental income as a percentage of the property value. Rental yields underpin the value of all investment properties. It is important to benchmark the rental income of the subject property to the incomes of comparable properties nearby to avoid any miscalculations. At times, there are traps in the market where rental income for a property is far higher than what is available on comparable properties nearby. If such a property is bought at “unfairly high” valuation, it presents high risk of devaluation and potential losses. Rental returns in Kuwait vary according to the area, type of property, and several other considerations.

Long Term Capital Appreciation Potential of the Property:

The capital appreciation potential on a property depends on several factors such as the local physical & social infrastructure, status of the neighbourhood, accessibility to various places of interest, availability of vacant lands for new properties, etc. Detailed information on each of these factors is difficult to obtain for most consumers but Estater can help bridge this information gap easily. Information has been built up using cutting edge analysis of satellite images, yearly land development rates, type of road network in every neighbourhood, accessibility matrices for business districts, retail & entertainment, etc. Consumers can benefit tremendously from this information base and create a real estate portfolio that can generate substantial long term capital appreciation.

Real Estate Inventory Demand and Supply:

Knowing the current market dynamics of inventory, demand and supply of properties is critical when making investment decisions. Quality information can help you avoid making bad choices and reduce the risk of potential losses. Real Estate sector has traditionally suffered from lack of transparent data however, the situation is changing rapidly with several PropTech companies (such as Estater) now working to provide timely and quality information to real estate investors. Modern technology of artificial intelligence, data science, remote sensing and GIS applications allow dissemination of market information fast to its users.

Manage Your Property Financing To Avoid Pitfalls of Rising Interest Rates:

While investing in Kuwait’s real estate market, having a suitable financial plan is crucial. A suitable financing plan doesn’t mean high leverage…on the contrary it needs to be adjusted based on type of property. A rental income generating property has high ability to cover financing payments and thus, the leverage can be higher. On the contrary, a vacant land or self-use properties does not generate any income and thus, requires you to cover the financing from other income sources (such as employment or business). The world in 2023 has high inflation and high interest rates; in such conditions the property values often decline and thus, any short term investments for speculation can be very risky.

Maintaining & Managing the Property:

It is crucial to have a detailed property maintaining and management plan to increase its shelf life and improve its value. Investors should be aware of all expenditures related with property maintenance throughout its ownership period. These may include utility bills, facility management, cleaning, periodic repair and maintenance, etc.
Prior to purchasing a piece of land or a building, you should conduct due diligence to ensure that you understand what kind of maintenance is required. Having a property management systems in place from the start may go a long way towards ensuring everything goes smoothly.

Real Estate Legal and Regulatory Environment:

Before investing in real estate, it’s important to understand the legal and regulatory environment. Make sure you have a good understanding of the laws and regulations surrounding property ownership, rental agreements, management obligations, etc. There are many properties for which where freehold ownership is not available but these may offer excellent returns. Locations such as Shuwaikh Industrial, Freezone, etc. have commercial properties on 50 year lease from the Government. These properties are very high in demand and offer high rental yields.

How Estater Helps You on Maximizing Returns in Kuwait Real Estate Market?

Estater have detailed and comprehensive data on different real estate sector in Kuwait that can provide intricate details in these trends.

  1. Market insights: Inventory build-up and occupancy trends.
  2. Location analysis: Market gaps and retail catchment analysis.
  3. Competitor Benchmarking: Estater can help businesses understand their competition and make strategic decisions.
  4. Financial Modelling: Estater can provide you highly flexible financial model which can be easily modified based on your inputs.
  5. Leasing Trends: Lease rate and tenant mix analysis.
  6. Demographic analysis: Combining retail sector data with demographics of the areas, Estater can help businesses understand their target audience.

Consultancy: We offer consulting services for many aspects of real estate reports, such as financial modelling, benchmarking, demographic analysis, catchment analysis, and so on. Our Estater Meter and Market Intelligence solutions will provide you with customised results depending on your preferences.

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By Estater

Covid19 pandemic Impact on Kuwait Real Estate

April 1, 2020 | Kuwait Real Estate | No Comments

With the outbreak of Covid19, the Governments in the GCC region, rightly so, introduced several lockdown measures. These tough measures adopted by the Governments will have considerable impact on real estate values. In such times when markets will be full of rumors, we bring some historical perspective.

During 2008 – 2009 period, the region saw severe impact of global financial crisis. While the origin of the financial crisis was totally different from the current Civid19 crisis, the market conditions are similar and therefore comparable.

Based on the comparison of thousands of transactions of houses between 2007 and 2013, we show in Chart 1 that the average prices of private houses decline by 1.6% in 2008 (over 2007) and further by 16.5% in 2009 (0ver 2008). In total the house prices declined by 17.9% before these started gradually improving. By 2011, the average house price was higher than the house prices in 2007.

Without doubt the price behavior varied a lot from location to location. Some locations posted decline of more than 30% also; however, the overall trend was as shown in Chart 1.

Chart 1: Average Transaction Prices for All Kuwait

Chart 2 shows the comparison of transactions of residential investment properties across Kuwait. The average price increased somewhat in 2008 but declined sharply by 27.7% in 2009 (0ver 2008).  Once again by 2011, the average investment property prices were higher than the prices in 2007 and 2008.

Chart 2: Average Transaction Prices for All Kuwait

The real estate market is likely to react negatively to the economic shock of Covid19 and the property values will most likely decline. Many real estate market conditions are different in 2020 than these were in 2008. However, the two charts above put things in perspective as to how much decline can be expected and for how long the prices will remain low.

Estater (part of REMI) is the largest real estate intelligence platform in Kuwait and Bahrain. With wide raging database on properties across all sectors, Estater use sophisticated Geographical Information Systems and data science to map and predict real estate market behavior.

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