Real estate sales in Kuwait declined for the second month in a row to KD250 million ($862.5 million) in August, a drop of 6.7 per cent month-on-month, a report said.

Real estate activity is traditionally muted in August when much of the country takes its annual summer vacation, added the latest Economic Update released by the National Bank of Kuwait (NBK).

The declines came after a record June, and August sales were still up by 12 per cent year-on-year (y/y).

Sales in the residential sector totalled KD112 million ($386.5 million) in August, an increase of 6.5 per cent y/y. The number of transactions during the month dropped by 2 per cent y/y to 511.

The average transaction size increased by 8 per cent y/y to KD 218,000. However, it is interesting to note that for the last four consecutive months, the average transaction value (per m2) for plots of land has shown a decline.

This is not an indication of softer prices (the charts do not represent a price index) but rather a reflection of the fact that, in recent months, plot transactions have been heavily dominated by sales in the Sabah Al-Ahmad area (over 50 per cent of August plot sales). In that area, prices are well below other regions and have thus pulled the overall average down over the last 3 months.

Residential activity was heaviest in the Ahmadi governorate, which, with 363 transactions, accounted for 71 per cent of all residential transactions in Kuwait during August, the report said.

The Mubarak Al-Kabeer and Hawalli governorates each accounted for 8 per cent of all transactions, while the Jahra governorate witnessed 6 per cent. In the residential sector, 74 per cent of all transactions involved the purchase and sale of land or vacant plots.

Meanwhile, sales in the investment sector stood at approximately KD125 million ($431 million) in August, more than double the value of sales in August 2013. Ninety-six transactions took place during the month, an increase of 35 per cent y/y. The average transaction size also increased to KD1.3 million ($4.5 million).

In the investment sector, apartments accounted for 42 per cent of all transactions. Whole buildings followed, comprising 26 per cent of all transactions. The Ahmadi governorate once again recorded the bulk of activity. The largest transaction, however, involved the sale of a plot for KD15 million ($51.7 million) in Kuwait City. Transactions involving vacant plots accounted for 25 per cent.

Sales in the commercial sector were up to KD14 million ($48.3 million) from KD3.4 million ($11.7 million) in July. Sales were down by 78 per cent y/y, however. (Chart 6.) Only four transactions were recorded during the month, two of which were over KD4 million ($13.8 million). Sales in this sector are fairly volatile from month to month.

August also saw one ‘Handcraft’ transaction and one ‘Showroom’ transaction with a combined value of KD2.2 million ($7.6 million). Both properties were located in the Mubarak Al-Kabeer governorate. These transactions tend to be infrequent as they are uniquely classified and of high value.

The Kuwait Credit Bank (KCB) approved 382 loans worth approximately KD23 million ($79.3 million) in August. – TradeArabia News Service