Sales across Kuwait’s three main real estate sectors totalled KD256 million ($845 million) in May, down 28 per cent from a year earlier, a report said.

This shows softening of the real estate market for a second month in a row, after a slight recovery in March, added the latest Economic Update from the National Bank of Kuwait (NBK).

Despite the slowdown in activity, the transaction size maintained its strength during the first five months of the year, hovering around 2014’s record-high average transaction size, and likely helped by stabilising oil prices.

“The market’s current softening in activity is expected to continue in coming months as we approach the summer break and we enter the holy month of Ramadan, periods of low economic activity,” NBK said in the brief.

Sales in the residential sector were down 30 per cent year-on-year (y/y) to KD119 million in May. The sector registered a 28 per cent y/y decrease in the number of transactions. The average transaction size in May slid slightly to KD358,000, down 2.7 per cent y/y but remains seven per cent higher than 2014 average transaction size of KD334,000.

For a second month in a row, activity was heaviest in the Mubarak Al Kabeer governorate accounting for 32 per cent of all residential transactions. Ahmadi governorate came in second, accounting for 24 per cent of transactions, possibly signalling a cooling down of plot sales in Sabah Al Ahmed Sea City.

The investment sector also underperformed in May (again compared to a strong May 2014). Total sales in May reached KD115.2 million, a 21 per cent y/y drop. The number of transactions, however, recovered from April’s drop registering 141 transactions, a 3.7 per cent y/y increase.

In terms of the average transaction size for the first five months of the year, it remains strong and 19 per cent higher than last year. Apartments accounted for 54 per cent of all transactions while whole buildings constituted 38 per cent of all transactions.

The Ahmadi governorate once again witnessed the bulk of activity, with 48 per cent of all transactions. The largest transaction, on the other hand, took place in Salmiya for a building sold at KD16 million.

Sales in the skittish commercial sector dropped in May but continue to show resilience compared to last year. Sales of commercial properties reached KD22.5 million in May, down 44 per cent y/y as it registered only five transactions.

Two transactions for buildings in Salmiya accounted 70 per cent of sales. The sector is known for its lumpy and volatile sales. However, in year-to-date sales, May sales were up five per cent compared to the same period last year, as sector’s activity is believed to be up on the back of good demand.

Kuwait Credit Bank (KCB) approved KD24.7 million loans in May. The value of approved loans during the month was down 25 per cent y/y, while disbursed loans were up by 80 per cent y/y totalling KD28 million.

The Public Authority for Housing Welfare (PAHW) announced a new timetable for distributions for the 2015/2016 fiscal year, which includes the distribution of another 12,000 units starting in August, primarily in the South Mutlaa City, where infrastructure work has yet to begin. – TradeArabia News Service