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Real Estate Trading Developments April 2019 Economic Reports

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Real Estate Trading Developments April 2019 Economic Reports Real Estate Trading Developments April 2019 Economic Reports – Group Strategy and Corporate Relations Kuwait Finance House KFH Data Classification: Internal Use Only Strategic Studies, Reports and Corporate Relations Kuwait Finance House Page 1 of 17 This report covers monthly real estate trading developments. It incorporates analysis of all types and levels of trading: private, investment, commercial, storage as well as total real estate sales, thus aiming to monitor periodical changes in local real estate market. Real estate Sales and Average Transaction Value Real estate sales increased in April to KWD 385 million by more than 33% than March, driven by the significant increase in the value of sales in the commercial sector, bearing in mind that both residential and investment sectors have also recorded a remarkable monthly increase compared to the ratios recorded in the last 2 years. Real estate number of transactions have recorded a remarkable monthly increase in April to reach one of the highest levels since 2014 thus recording 819 transactions i.e. an increase by 31% while the number increased significantly in all real estate sectors. Real estate sales increased in April on annual basis by 15%. Also, the number of transactions increased on annual basis by 14.2%, driven by the significant increase in the number of transactions in both commercial and residential sectors while it declined in the investment sector. Accordingly, sales value in the residential sector recorded an increase while commercial and investment sectors recorded a decline on annual basis. Average transaction value index increased by 2% in April on monthly basis and 1% on annual basis. Average transaction value in investment sector increased significantly on monthly basis while it declined in other real estate sectors. This performance has reflected positively on the index value at the end of April compared to the same month last year. private residence sector has recorded a slight annual increase while the investment sector recorded a significant increase. The commercial sector recorded significant decline. Sales value increased in most of the real estate sectors in April. The value increased in private residence sector by 16% and increased in number by 21%. Average transaction value in this sector decreased by 4% on monthly basis. Investment sector sales value increased by 67% and by 44% in number. Average transaction value increased on monthly basis in this sector by 16%. Sales value in commercial sector increased by 34%. The number of transactions in KFH Data Classification: Internal Use Only Strategic Studies, Reports and Corporate Relations Kuwait Finance House Page 2 of 17 this sector doubled 3x the number in March, yet average transaction value declined by 62% on monthly basis. On annual basis, average transaction value increased in the residential sector by 1%, investment sector by 66% and declined in the commercial sector by 79% on annual basis. Gross Real Estate Sales Real estate sales value reached KD 385 Million at the end of April, thus continuing its escalating trajectory which it started 2 years ago. It has reached third highest level in 5 years with a monthly increase exceeding 33% driven by variable increases in the sales of residential and investment sectors. Coast real-estate sector has recorded an increase for the third time respectively and reached a high level. The handcraft sector declined slightly and limited the forward movement of the real estate sales. This performance has impacted the annual performance of real estate sales which has recorded an increase by 15% compared to one of its highest levels which recorded KD 336 Million in April last year. Declepment on Gross RealEstate sales transactions Agencies KD million Contracts 600 35.8 65.0 500 12.6 400 16.2 16.8 14.0 16.5 4.5 25.4 300 26.0 11.5 3.1 512.4 200 476.5 3.7 372.8 319.5 308.8 291.5 288.9 275.2 273.6 100 256.8 210.3 210.1 132.6 0 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr 2018 2018 2019 2019 Source: Real estate Registration and Authentication – Ministry of Justice, KFH Average daily real estate sales value index recorded KD 17.5 Million per day in April i.e. a remarkable increase by KD 3.2 Million or 27.2% compared to KD 13.8 Million per day in March. The number of trading days has increased slightly to 22 days during April compared to 21 days in March. Daily average transaction value index increased in April by 14.8% compared to KD 15.3 Million for the same month 2018. KFH Data Classification: Internal Use Only Strategic Studies, Reports and Corporate Relations Kuwait Finance House Page 3 of 17 Distribution of Sales based on Contracts and Proxies Real estate sales (contracts) approximated KD 373 Million in April i.e. an increase by 35% compared to KD 275 Million in March and increased by 17% on annual basis. Sales value (proxies) declined to reach KD 12.6 Million in April i.e. a decline by 10% on monthly basis and 22% on annual basis. Real estate sales and market share based on Real estate type Private residence sales have maintained its first rank since the beginning of 2019 for the fourth month respectively commanding 49% of the real estate sales in April. The general trend of this index continued its escalating trajectory since reaching its lowest level 26% of sales in mid-last year. Investment real estate sales contribution increased to reach 36% in April compared to 29% in March which was one of its lowest levels. This sector comes in second rank among real estate sectors for the fourth time respectively. The share of this sector has declined after a long period of high contribution last year, thus exceeding 60% at the end of that year. Commercial sector sales formed 9.3% of all sector sales in April maintained the same share level in March. Continuing a fluctuating trend in the share of this sector of total sales value. Industrial and handcraft sector sales formed 3.5% of all sector sales in April compared to an exceptional share 5% in March. The share of coast real-estate sector in total real estate sales in April at 2.1% and was limited for the third month respectively compared to 0.50% in March. KFH Data Classification: Internal Use Only Strategic Studies, Reports and Corporate Relations Kuwait Finance House Page 4 of 17 Development on Relative Weight of Various Real estate Sales Share Sector wise Real estate Sales Value April 2019 70% 4% 2% 60% Residental 9% 50% Investment 40% 49% Commercial 30% 36% Industrial 20% 10% Coast Strip 0% Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr 2018 2018 2019 2019 Residental Housing Investment Commercial Source: KFH Average Transaction Value Average real estate transaction value witnessed a slight improve when reached KD 471 Thousand in April, compared to the lowest level reached in March i.e. a limited monthly increase by 2%. The index ascending trend has slowed down. The monthly change ratio of the average transaction value is witnessing clear fluctuation. Average transaction value witnessed slight increase by 1% compared to April last year. annual change ratio witnessed a fluctuation escalating trajectory in this index. Transaction Value/ Total Transactions KD Thousnad 900 60% % 800 51 50% % % 700 45 40% 42 600 % 30% 29 % 500 % 20% 21 19 % 400 % 10% 6 787 % % 7 737 % 11 1 300 637 0% 626 622 - 0.5 566 535 475 471 468 463 459 200 440 -10% % 100 % -20% 24 22 - 0 - -30% Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr 2018 2018 2019 2019 Source: KFH KFH Data Classification: Internal Use Only Strategic Studies, Reports and Corporate Relations Kuwait Finance House Page 5 of 17 Number of total real estate transactions increased to reach 624 transactions in April (784 contracts – 35 Proxies) which is the highest level recorded within 5 years i.e. a significant monthly increase by more than 31% compared to March. The number of transactions has increased by 14% on annual basis. There is a clear fluctuation in the annual change ratio of the number of real estate transactions during the last few months. Average daily number of transactions increased to reach 37 transactions per day i.e. an increase by 25% compared to 30 transactions per day in March. Also, it increased by 14% on annual basis compared to average number per day in April 2018. Number of Gross Realestate transactions Transactions Agencies Contracts 900 35 800 38 20 27 43 700 31 600 48 16 18 14 500 23 9 400 11 784 706 697 683 300 645 593 479 474 456 450 200 449 368 100 299 0 Apr May Jun Jul Aug Sep Oct Nov Dec Jan 2019 Feb Mar Apr 2018 2018 2019 Source: Real estate Registration and Authentication – Ministry of Justice, KFH Distribution of Real estate Sales Governorate wise Sales value in Ahmadi governorate increased to reach KD 67.4 Million which represents 17% of monthly sales, consolidated on weekly basis, compared to KD 38.2 Million which represented 12% of to the value of all governorates sales in March 2019. This recorded value comes along with a remarkable increase in the number of transactions to reach 246 transactions representing 30% of the number of all governorate transactions in April compared to 147 transactions which represented 24% of the number of transactions at all governorates level in March. KFH Data Classification: Internal Use Only Strategic Studies, Reports and Corporate Relations Kuwait Finance House Page 6 of 17 Sales value in capital governorate reached KD 65 Million representing 17% of monthly sales in April.
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