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

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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

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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 4.5 25.4

300 26.0

11.5

3.1 3.1 512.4

200 476.5

3.7 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.

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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.

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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%

19 %

400 % 10%

787

737

11 1

300 637 0%

626

622

0.5

566

535

475

471

468

463 459

200 440 -10% %

100 % -20%

22 - 0 - -30% Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr 2018 2018 2019 2019

Source: KFH

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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 35

800 38

20 20

27 27 43 43 700 31

600 48

16 16

18 18 14 14

500 23 9 9

400 11

784 784

706 706

697 697 683 683

300 645

593 593

479 479

474 474

456 456 450 450

200 449 368 368 100 299 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.

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Sales value in capital governorate reached KD 65 Million representing 17% of monthly sales in April. These indicators witnessed an increase comparing to 48.3 transactions formed 17% of total sales values in March, the number of transactions reached 90 transactions representing 11% of the number of transactions compared to 61 transactions which represented 10% of the number of transactions in March.

Sales value in Hawalli governorate reached KD 89 representing 23% of the value of all governorate sales in April i.e. an increase by KD 9 Million compared to 28% of the value of sales in March. The number of transactions reached 128 transactions representing 16% of total number i.e. an increase by 12 transactions compared to 20% in March.

Sales value in Mubarak Al-Kabeer governorate doubled to KD 103 Million representing 27% of the value of all governorate sales in April compared to KD 52 Million representing 18% of sales in March. The number of transactions reached 239 transactions representing 29% of all transactions in April compared to 169 transactions representing 25% of total transactions in March.

Sales value in Farwaniya governorate declined to reach KD 42.6 Million in April compared to KD 60 Million in March. Accordingly, the sales share declined to 11% of total sales compared to 21% in March. The number of transactions reached 78 transactions representing 9.3% of total number in April compared to 13% in March.

Sales value in Jahraa governorate doubled to reach KD 18 Million in April compared to KD 9.6 Million in March. Its share represented 5% i.e. a slight increase compared to 3% in March. The number of transactions doubled also to 40 transactions in April comparing to 14 transactions in March representing 5% of the real estate transactions in April compared to 2% in March, consolidated on weekly basis.

Private Residence Sales Value

Private residence sales value increased to reach KD 191 Million which is the highest in 2 years. Sales have taken an escalating trajectory since mid-2015, thus recording in April 2019

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a significant monthly increase by 16%. However, sales value is still witnessing monthly fluctuations. The robust monthly performance has contributed to the achievement of an annual significant increase by 48%. Annual change ratio in sector sales has fluctuated even though it has taken the escalating trajectory.

Private Residental RealEstate value transactions

KD million Agencies Contracts 250

200 10

7 12

150 26

3 9

100 2

180

153

139

137

127

120 114

50 110

106

102

81 61 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 transaction value indicator of private residence recorded KD 321 Thousand in April i.e. a decline by 4% compared to March value which was the highest value recorded by the index in one year. This index has taken the escalating trajectory during the said period while it continued its fluctuation on monthly basis. Average transaction value increased by 1% on annual basis in April. This increase is the second annual increase respectively despite the decline witnessed in most of the months last year with a continued fluctuation on annual basis.

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Average of Private Residence transaction value

KD Thousnad

340 15%

% 9

330 %

% 10%

8 9 320 5%

310 %

1 %

0 0%

0 %

300 %

334

% 333

- -5%

327 -

290 323

321

318

% %

315 Source: KFH, Real estate 9

309 -10%

10 304

280 303

- Registration and

294 291

270 % -15% Authentication – 16 - Ministry of Justice 260 -20% Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr 2018 2018 2019 2019

Private residence sale transactions increased to reach 594 transactions in April, reaching the highest level in 4 years (562 contracts and 32 proxies) i.e. an increase by 21% in April compared to 492 transactions in March. Transactions number has taken the escalating trajectory in this sector despite the continued fluctuations in the monthly change ratios. The number of transactions in this sector increased by 64% in March on annual basis accompanied by a strong escalating trajectory of the annual change ratios for this sector and the residential sector.

Number of Private Residence real estate transactions Agencies Transactions Contracts 700

600 32

26 26

500 29

17 10

400 10 13

300 8

562

469

464 457

200 430

389

344

342

335

329 295

100 266 210 0 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr 2018 2018 2019 2019

Source: KFH, Real estate Registration and Authentication – Ministry of Justice

Distribution of Private Residence Sales Governorate wise

Private residence sales value, consolidated on weekly basis, was concentrated in certain governorates during April. Mubarak Al-Kabeer governorate has recorded the highest value, KFH Data Classification: Internal Use Only Strategic Studies, Reports and Corporate Relations

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followed by Capital, Ahmadi governorates then Hawalli, and finally Farwaniya and Jahra governorates. Private residence sales value in Mubarak Al-Kabeer governorate approximated KD 59 Million in April compared to KD 45 Million in March and which represents approximately 30% of the private residence sales in all governorates. The sales value was focused in certain areas e.g. Masayel KD 30 Million, Funaitees KD 11 Million, Abu Fatira KD 9.6 Million and Sabah Al-Salem by KD 2.6 Million.

Sales value in Capital governorate reached KD 43 Million in April representing 23% of the sector sales i.e. a remarkable increase compared to KD 27.6 Million which represented 18% of the governorate sales in March. Sales value was focused in some areas e.g. Abdullah Al- Salem recorded the highest values of KD 5.8 Million, Qurtuba and Yarmouk KD 4.6 Million each, Jaber Al-Ahmed KD 3 Million.

Private residence sales value in Hawalli governorate declined to reach KD 29 Million which represents 15% of the sector sales in April compared to KD 33.3 Million which represented 22% of the sector sales in March. Sales were mainly focused in Hitteen area KD 3.7 Million, Bayan and Rumaithiya KD 3.4 Million each, Salwa KD 3.2 Million, Salam KD 2.5 Million, Jabriya and Salmia KD 2 Million each.

Sales value increased in Ahmadi governorate to reach KD 31 Million representing 16% of sector sales in April compared to KD 25.4 Million consolidated on weekly basis and represents 17% of the value of all sector sales in all governorates in March. Sales were focused in certain areas. Sabah Al-Ahmed Marine and Residential area reached KD 13.5 Million followed by Sabahiya KD 2.9 Million and Fahaheel KD 1.5 Million.

Investment Real-estate Sales Value

Investment real estate sales value increased in April to reach KD 67 Million compared to its value in March which has witnessed a limited level. Accordingly, the general trend of the sales value has taken escalating trajectory which has started last 1.5 years ago, due to the sales increase of this sector in April, while fluctuations continue in the monthly change ratios. Sector sales have witnessed an annual decline ratio for the fourth year respectively i.e. a KFH Data Classification: Internal Use Only Strategic Studies, Reports and Corporate Relations

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decline by 4% even though it is less in April compared to the preceding months. Also, the annual change has enhanced the escalating trajectory in late 2018. However, the change is still fluctuating.

Investment RealEstate value transactions

Agencies Contracts KD million

300 10

250 7

200

4 2 7

150 2

251

1 0

100 215

157

140 136

50 124

108

74 63 0 Apr 2018 May Jun Jul Aug Sep Oct Nov Dec Jan 2019 Feb Mar Apr 2019 2018 Source: KFH, Real estate Registration and Authentication – Ministry of Justice Average transaction value index in investment real estate sector increased to reach KD 844 Thousand in April. This level is accompanied by an increase by 16% on monthly basis compared to KD 730 Thousand in March. The escalating trajectory of this index has maintained its course for two years despite the strong fluctuation in the monthly average change of transaction value. On annual basis, average transaction value increased in this sector by 66% in April i.e. a remarkable increase following a 3 month continued decline.

Average of Investment Real estate Transaction Value

KD Thousnad

1,800 150%

% %

1,600 %

128

114 %

1,400 112 100% 90

1,200 %

66 % % 50%

1,000 46

41 %

800 %

% %

6 0%

1,553

% 45

600 10

1,279

1,130

981 -

400 1,062 41

844 -50%

784

763

747

742

730 515 200 507 0 -100% Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr 2018 2018 2019 2019 Source: KFH, Real estate Registration and Authentication – Ministry of Justice

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Investment real estate transactions increased to reach 163 transactions (161 contracts – 2 proxy transactions), thus reaching a high level compared to most of the months during the last two years. This is the second increase recorded on monthly basis. Transactions increased by 44% in April following a significant decline by 20% and more than 37% in February and January this year. The number of transactions in investment sector has taken the escalating trajectory since the beginning of the year accompanied by a fluctuating monthly change of this index. Meanwhile, the number of transactions declined on annual basis by 42% in this sector for the second time in one year.

Number of Investment real estate transactions

Transactions Agencies Contracts

300 1

250

5 8

200

1 5

150 1

282

2 0

100 1

201

196

191

161

143

119

118 112

50 112

85 85

0 Apr May Jun Jul Aug Sep Oct Nov Dec Jan 2019 Feb Mar Apr 2018 2018 2019 Source: KFH, Real estate Registration and Authentication – Ministry of Justice

Distribution of Investment Real-estate Sales Governorate Wise Investment real estate sales, consolidated on weekly basis, were focused in certain governorates in April. Hawalli governorate recorded the highest value, followed by Farwania, capital, and Mubarak Al-Kabeer governorates. Jahra governorate is still recording the lowest transaction value.

Hawalli governorate recorded KD 56 Million representing 41% of sector sales in all governorates in April compared to KD 38.2 Million in March which represented 46% of sector sales. Sales value was focused in Salmiya KD 30.2 Million, Hawalli KD 21.6 Million and minor sales in Shaab by KD 1.9 Million.

Sales value in Farwania approximated KD 19 Million for investment real estate, representing 14% of all governorates sales in April compared to KD 19.9 Million which represented 24%

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of the sector sales in March. Sales were focused mainly in Farwania governorate exceeding KD 10 Million as the value of several investment buildings, followed by Jaleeb Al-Shoyoukh KD 5.3 Million and Khaitan more than KD 1.9 Million.

Sales value, consolidated on weekly basis, exceeded KD 36 Million in Ahmadi governorate, representing 25% of investment real estate sales in April compared KD 12.8 Million representing 16% of the sector sales in March. Sales were mainly focused in Fintas KD 14.5 Million including 4 investment land transactions of KD 2.5 Million each. Next comes Mahboula area KD 9.4 Million, Mangaf KD 4.5 Million covering investment apartments and buildings, Fahaheel KD 3 Million covering investment apartments and Abu-Halifa KD 2.5 Million in April.

Sales values increased at Capital governorate to KD 15 Million representing 11% of sector sales in all governorates in April compared to KD 4.5 Million in March which represented 5% of sector sales. Sales value was focused in Sharq KD 12.6 Million including one investment building for KD 10 Million, sales in Benied Al Qar reached KD 2.3 Million including one vela amounted KD 1.7 Million, and the rest of sales value for investment apartments.

Commercial Rea estate Transactions Value

Commercial real estate sector sales increased to reach KD 36 Million i.e. lower than most of the exceptional levels at the end of last year and the beginning of this year. However, sales recorded a monthly increase by 34% compared to one of its lowest levels when it reached KD 27 Million in March. Accordingly, monthly change fluctuations continue for sales in the commercial sector. Fluctuation was also noticed remarkably in the sales value and the annual change ratios of the sales value in this sector. Despite the remarkable increase in the commercial sector sales yet the value declined in April by 17% compared to the same month last year.

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Commercial RealEstate value transactions Agencies KD million Contracts 160 19 140 18 120 100 80

60 127 112

40 100

48 45

20 40

8 10 0 3 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr 2018 2018 2019 2019

Source: KFH, Real estate Registration and Authentication – Ministry of Justice Average transaction value reached KD 915 Thousand in April i.e. a monthly decline by 62% compared to the limited level reached in March KD 2.4 Million. This index has witnessed a fluctuating trend since the beginning of last year. On annual basis, average transaction value has declined in April by 79% compared to April last year. Fluctuation in annual change was clearly noticed in this index.

Average of Commercial Real estate Transaction Value

KD Thousnad

10,000 350% %

9,000 300% 305 8,000 250% 7,000 200% 6,000 150%

5,000 % 100% 33

4,000 9,190 50%

% %

3,000 3 0%

6,106

5,675

- 57

2,000 % -50%

4,829

4,323

4,320 4,319

- 3,200

1,000 - -100%

2,805

2,516

2,478 2,422

0 915 -150% Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr 2018 2018 2019 2019

Source: KFH, Real estate Registration and Authentication – Ministry of Justice

Commercial real estate transactions reached 39 transactions in April i.e. 4x the value in March, reaching significant levels compared to previous months for the last two years. Fluctuation is noticed clearly in the number of commercial sector transactions which has still taken the escalating trajectory. Monthly change in the number of transactions was clearly

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noticed since the beginning of 2018. The number of transactions in this sector increased to reach 3x the number for the same month last year.

Number of Commercial real estate transactions

Transactions Agencies 50

20 Source: KFH, Real 39 estate Registration and

10 27 Authentication –

10 10 10

7 Ministry of Justice

4 3 0 1 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr 2018 2018 2019 2019

Commercial sector sales were focused in certain governorates e.g. Capital governorate KD 7.3 Million in April compared to the highest value between all governorates recorded in March KD 16.3 Million. Sales were focused in Qibla area being the value of a commercial land KD 4.2 Million and a value of a commercial building in Sharq area KD 3.1 Million. Sales in Hawalli governorate reached KD 3.2 Million in April i.e. lower than half the value KD 7.9 Million in March. Sales were mainly focused in Hawalli area by KD 3.2 Million being the value of a commercial building. Mubarak Al-Kabeer governorate recorded the highest sales value KD 20 Million in April comprising KD 7.2 Million as the value of a commercial complex and KD 12.9 Million as the value of a concrete skeleton building KD 12.9 Million in Funaitees. Sales value in Jahra governorate reached KD 3 Million as the value of 2 commercial buildings in Jahra area in April this year.

Warehouses and Handcraft Real Estate Transactions Value

Handcraft real estate sales value declined in April reach KD 13.5 Million i.e. a decline by 10% compared to third highest level recorded in 2 years when it exceeded KD 15 Million in March. Sales value in this sector is still fluctuating. Monthly change ratios have also

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fluctuated in this sector. Sales value in the handcraft sector declined by 19% compared to April 2018. Annual change in the sales value has continued its fluctuations clearly.

Industrial and Handcraft RealEstate value transactions

KD million Agencies

30 2 25

0 0

15 1

1 27

10 1

13 12

5 11

1 1 0 1 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr 2018 2018 2019 2019 Source: KFH, Real estate Registration and Authentication – Ministry of Justice Average handcraft real estate transaction value reached KD 1.2 Million i.e. a monthly decline by 43% compared to the third highest level reached three years ago when it recorded KD 2.2 Million in March. Despite this performance, the index maintained its clear escalating trajectory and fluctuation continued in the monthly change ratio. Transaction value increased on annual basis in this sector by 18% compared to April last year.

Handcraft real estate transaction number increased to reach 11 transactions in April i.e. a significant monthly increase by 57% compared to March. However, the number of transactions has recorded an annual decline for the third time respectively by 31% compared to April last year.

Sales in this sector were mainly focused in 2 governorates, Farwania and Mubarak Al-Kabeer. In Farwania governorate, sales were focused in Ardiya Handcraft area which has recorded KD 3.3 Million representing the value of 2 lands, one of them approximating KD 1.2 Million. The value covers also value of a building in the same area by KD 1.3 Million. Sales value in Mubarak Al-Kabeer governorate reached KD 10.2 Million being the value of 8 industrial plots in West Abu-Fatira Handcraft area.

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Average Industrial and Handcraft Real estate Transaction Value

KD Thousnad

2,500 % 500% 462

% 400% 2,000 371 300%

1,500 % 200%

84 % 106 100%

1,000 %

2,151

% 8

1,694 0%

37 38

500 42

1,242

1,227

1,220

982

911

77 1,039

1,003 -100%

807

800

680 510 0 -200% Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr 2018 2018 2019 2019

Number of Wharehouse and Handcraft real estate transactions Agencies Transactions Contracts 25

10 21

11 11

5 9

7 7

1 1 0 1 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr 2018 2018 2019 2019

Source:Source: KFH, RealKFH, Realestate estate Registration Registration andand Authentication Authentication – Ministry – Ministry of Justice of Justice Coast Strip Transactions

Sales value recorded in this type of real estate approximated KD 8.1 Million covering the value of several transactions on the coastal strip including a land in Rumaithia area – Hawalli governorate by more than KD 1 Million. The value covers also several transactions in Mubarak Al-Kabeer governorate – Abu-Fatira area KD 5 Million. This value covers KD 1.9 Million for a house at the coastal strip, KD 1.2 Million for 2 lands in Al-Hasania, KD 900 thousand for a land in Masayel. This type of real estate has recorded sales for the seventh time in one year and the third time respectively.

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