LOC12:42
09:42 GMT
KUWAIT, April 30 (KUNA) -- Heightened oil market volatility, combined with wider fiscal deficits and potential hikes in utility charges and fees, all seemed to impact the real estate market in 1Q16.
A report prepared by the National Bank of Kuwait (NBK) said that real estate sales are still off the pace of 2014-2015, except for the commercial sector. Prices, on the other hand, appear to be holding well amid the subdued activity. Real estate market sales totalled KD 705 million by the end of the first quarter of 2016, down 18% compared to the first quarter of last year, as the market continues to correct amid growing uncertainty. March alone saw sales down by 29% year-on-year (y/y) to KD 235 million. Real estate price indices posted mixed results, reflecting investor caution regarding the sector's outlook, it added.
Activity in the residential sector was weak despite a somewhat better performance in March. The sector registered 307 transactions during the month, worth KD 97 million; activity was up by 25% compared to February. Despite the monthly pick up, the quarter's performance was weak, recording a 47% drop y/y.
Residential real estate price indices provided more evidence of firming in 1Q16. The residential-home price index stood at 173.5 points, 4.2% lower than the previous year. Despite price growth slipping slightly in March, it has shown slow but steady improvement since November 2015 when it bottomed at 6.8% y/y. Prices of residential-land showed a more robust improvement, recording their fastest pace of growth in 19-month at 9.9% y/y after spending most of 2015 in negative y/y territory.
After experiencing a mild correction in 2015, and after stabilizing the second half of the year, prices are showing firmness so far in in 2016.
In the investment sector, sales softened in March, recording KD 81 million in sales for the month, down 35% y/y. March's number of transactions lagged as well, dropping by 29% from previous year.
Although accounting for 70% of the value of sales, whole buildings accounted for only 32% of the sector's 104 registered transactions in March. In other words, the number of less expensive single apartments (foe investment) continued to be the sector's main driver in recent months.
The shift in the composition of the investment sales towards more single-apartments than buildings resulted in a 20% decline in quarterly KD sales from a year ago while the number of transactions improved by 3% y/y in 1Q16, it said.(end).
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