PRIVATE HOUSING MURSHID 2014 Brief on Real Estate Union

Real Estate Association was established in 1990 by a distinguished group headed by late Sheikh Nasser Saud Al-Sabah who exerted a lot of efforts to establish the Association. Bright visionary objectives were the motives to establish the Association. The Association works to sustainably fulfil these objectives through institutional mechanisms, which provide the essential guidelines and controls. The Association seeks to act as an umbrella gathering the real estate owners and represent their common interests in the business community, overseeing the rights of the real estate professionals and further playing a prominent role in developing the real estate sector to be a major and influential player in the economic decision-making in Kuwait. The Association also offers advisory services that improve the real estate market in Kuwait and enhance the safety of the real estate investments, which result in increasing the market attractiveness for more investment. The Association considers as a priority keeping the investment interests of its members and increase the membership base to include all owners segments of the commercial and investment real estate. Summary Private housing segment is the single most important segment of real estate industry in Kuwait. The land parcels zoned for private housing account for 78% of all land parcels in Kuwait and the segment is the main source of wealth (as family houses) for most of the households. This report is written with an objective to provide a comprehensive analysis of this segment with the historical trends of prices, rental activities, and impact of land features on property prices. Kuwait has 185,456 private housing land parcels of which 141,418 are already developed into houses and the remaining 44,038 are vacant. The vacancy ratio is quite low at 23.7%. 1. Of the total vacant land parcels, around 61% are concentrated in the four areas of Sabah Al Ahmad Residential, Sabah Al Ahmad Marine City, North West Sulibikhat and Jaber Al Ahmad City. These are the new areas under development. 2. Just 16,981 vacant land parcels are available outside of these four new areas. 3. If we exclude these four areas and calculate the vacancy ratio of all private housing areas in Kuwait, the ratio is just 10.8%. We have tracked the price of houses in each area and with that we have been able to put a value of all houses in Kuwait. The average house price at the end of 2014 was KD 414,443. The combined value is KD 55.1 billion. Similarly, values were assigned to each vacant land parcel also and the combined value is KD 15.5 billion. In total, the combined value of all private housing real estate is around KD 70.6 billion or USD 250 billion. This is more than the GDP of Kuwait in 2014. House Prices Trends and Sustainability The prices of land and houses remain one of the key issues in the market with little clarity on their historical trends and sustainability. The average land price was KD 334 per sq.m. in 2007 that increased to KD 698 per sq.m in 2014. This price is 109% higher than the average prices in 2007. The compounded annual growth rate (CAGR) of land prices between 2007 and 2014 is 11.1%. • The average house price was around KD 219,000 in 2007 that has increased to KD 414,000 by the year 2014. • The rate of house price increase was very high during 2011 till 2013. Particularly in 2013, the house prices went up by 28%. The growth rate has moderated somewhat in 2014 with 9% increase. • Overall, the house prices increased by 90% between 2007 and 2014 – CAGR of 9.6%. In the period of 2007 till 2014, the price of land for private houses increased at an annual rate of 11.1% while the house prices increased at an annual rate of 9.6%. This is due to the fact that the vacant land parcels in Kuwait are very few and there is high demand for housing. • Doha topped the list with a CAGR of 18.0% over the period of 2007 till 2014. This is quite phenomenal rate of appreciation, as the rate is nearly double the rate for Kuwait as a whole. • This is followed by Khaitan that experienced 15.2% CAGR, Qasr 14.4% CAGR, Ahmadi 14.1%, Fahaheel 13.6% and Firdous 12.8% CAGR. • The areas with lowest growth rates in house prices are Yarmouk, Jabriya, Abdulla Al Salem, Mubarak Al Abdulla, Shamiya and Shaab. All these areas are in Capital Governorate and Hawalli Governorate. Are House Prices Overvalued in Kuwait? Globally, one of the most important factors to assess if the house prices are overvalued or correctly valued is to compare the average house price to the average household income data. Since the primary source of funding a house purchase is household income, the house prices must maintain a close relationship with the household disposable incomes. • The ratio of house prices to family annual income was around 7.08 in 2007, which increased to 7.67 in 2008. As the house prices dropped in 2009, the ratio dropped back to 5.95. • By 2011, the ratio recovered back to 7.62 and by 2014 the value is 9.83. In simply terms, a household needs to set aside nearly 10 years of full income to be able to buy a house. • The ratio is 5.07 for UK and 3.20 for the US. In Western Europe, Switzerland has a ratio of 3.27 where the monetary authorities are comfortable with its level. In Germany, the ratio is 5.35 and there are concerns raised by most financial institutions about the possibility of a bubble in house prices. • Australia has a ratio of 4.69 and after concerted effort by the Central Bank to reduce activities in the house prices. Against these ratios in the world, Kuwait’s ratio of 9.82 appears very high. • We have compared the same ratio of house prices to annual incomes of prominent cities and urban clusters in Europe and the US. • We see the values of the ratios at city levels in the US, UK and Europe are in the range of 9 to 20. For example, the ratio for the City of London is 18.94 and Paris is 15.15 for the year 2014. • New York houses are trading at 9.04 times income and Zurich houses are trading at 7.94 ratio. • Kuwait with its urban area of around 1,000 sq km population of 4 million and GDP size of around USD 200 billion is comparable to a large city in Europe or the US. Thus, it is advisable to compare the ratio of house prices to income in Kuwait to the ratios of these cities. • When seen against the city ratios, the value of the ratio in Kuwait doesn’t appear to be closer to a crisis level. Rental Activities in Private Housing Areas in Kuwait Given the acute shortage of private housing in Kuwait, several families are living in rented places in private housing areas. Two types of rental stock exists in private housing areas of Kuwait: 1. Several houses have a few apartments constructed on different floors. The property owner remains the primary occupant of the property and these apartments are leased to family and friends. In many cases, these are also leased to unrelated Kuwaiti families. 2. There are thousands of houses that are made as apartment blocks with apartments on all floors. In most of such cases, the owner does not live in the property and the apartments are leased to Kuwaiti and non-Kuwaiti families. The second type of properties are covered in details in this report. We have comprehensive coverage of 895 properties across various areas in Kuwait and further 3,476 properties were counted across all areas in Kuwait. • We have information on 4,371 properties that are made as apartment blocks. There are 51,058 apartments in these properties. We believe that we have covered nearly 90% of this segment for all areas of Kuwait. • We believe that the market has another 50,000 apartments that of first type as described above. Therefore, the total inventory of apartments in private housing areas is around 100,000. This is around 30% of the inventory of apartments in the investment areas in Kuwait. • During our field surveys, we found 1,347 vacant apartments. The occupancy of this segment is 97.4%, which is higher than the occupancy ratio of around 95% for the investment areas in Kuwait. Such a high occupancy ratio clearly points to high demand relative to the supply in the market. • The average monthly of an apartment is KD 371, which is substantially higher than the average rent of KD 313 for the investment section. The higher rental is due to the presence of large apartments in the mix. Index

Introduction

House Prices Trends and Sustainability

Rental Activities in Private Housing Areas in Kuwait

Effect of Land Parcel Features on Prices

Private Housing Trends and Statistics of Different Locations in Kuwait

Appendix 1 – Definitions of Terms 6

164 Introduction

Private housing segment is the single most important segment of real estate industry in Kuwait. The land parcels zoned for private housing account for 78% of all land parcels in Kuwait and the segment is the main source of wealth (as family houses) for most of the households. This report is written with an objective to provide a comprehensive analysis of this segment with the historical trends of prices, rental activities, and impact of land features on property prices. Kuwait has 185,456 private housing land parcels of which 141,418 are already developed into houses and the remaining 44,038 are vacant. The vacancy ratio is quite low at 23.7%. The combined area of all these land parcels is 109.1 million sq.m. that gives the average area per land parcel of around 588 sq.m. The average house price at the end of 2014 was KD 414,443; we have a complete section on the house prices and their historical trends later in this report. We have several important observations to make here: 1. Of the total vacant land parcels, around 61% are concentrated in the four areas of Sabah Al Ahmad Residential, Sabah Al Ahmad Marine City, North West Sulibikhat and Jaber Al Ahmad City. These are the new areas under development. 2. Just 16,981 vacant land parcels are available outside of these four new areas. 3. If we exclude these four areas and calculate the vacancy ratio of all private housing areas in Kuwait, the ratio is just 10.8%. We have tracked the price of houses in each area and with that we have been able to put a value of all houses in Kuwait. The combined value is KD 55.1 billion. Similarly, values were assigned to each vacant land parcel also and the combined value is KD 15.5 billion. In total, the combined value of all private housing real estate is around KD 70.6 billion or USD 250 billion. This is more than the GDP of Kuwait in 2014. We note that the combined area of 109.1 million sq.m. does not include roads, service areas and any public utility areas provided by the government. This is the net area of all the land parcels that are owned by the households.

Table 1: Spread of Private Housing in Kuwait (2014) Total Private Housing Land Parcels in Kuwait * 185,456 Private Houses in Kuwait 141,418 Vacant Land Parcels (with Private Housing Zoning) 44,038 Vacant Land Parcels in Sabah Al Ahmad Residential 10,827 Vacant Land Parcels in Sabah Al Ahmad Marine City 8,429 Vacant Land Parcels in Jaber Al Ahmad City 6,231 Vacant Land Parcels in North West Sulibikhat 1,570 Vacant Land Parcels in All Others Areas 16,981 Combined Area of All Land Parcels 109,188,154 sq.m. Average Parcel Size 588 sq.m. Average House Price KD 414,443 Combined Value of All Houses KD 55.1 Billion Combined Value of All Vacant Private Housing Parcels KD 15.5 Billion Combined Value of Private Housing Real Estate KD 70.6 Billion * Some very large size land parcels have been removed from this data to adjust for outliers Being the largest part of Kuwait real estate, the private housing spreads over more than 70 locations. The prominent locations are shown in Table 2 along with the number of houses in each area. Most of these areas are covered in a separate section of this report for the house price trends and other important details.

6 Table 2: Prominent Areas of Private Housing in Kuwait .Sr. No Area No. of .Sr Area No. of Houses .No Houses Ahmadi Governorate 40 Firdous 3,532 1 Abu Halifa 226 41 Khaitan 887 2 Coastal Strip C 100 42 Omariya 1,119 3 Dhaher 2,472 43 Rabiya 1,047 4 Ahmadi 2,633 44 Rehab 1,275 5 Egaila 1,348 45 Sabah Al Nasser 1,986 6 Fahad Al Ahmad 1,968 Hawalli Governorate 7 Fahaheel 1,058 46 Bayan 3,444 8 Fintas 439 47 Coastal Strip A 173 9 Hadiya 1,161 48 Hitteen 1,813 10 Jaber Al Ali 2,963 49 Jabriya 2,945 Sabah Al Ahmad Marine 11 City 579 50 Mishref 2,168 12 Mangaf 2,033 51 Mubarak Al Abdulla 885 13 Riggai 2,332 52 Rumaithiya 2,717 14 Sabahiya 3,070 53 Salam 2,222 15 Umm Al Haiman 3,737 54 Salmiya 517 Capital Governorate 55 Salwa 3,808 16 Abdulla Al-Salem 1,146 56 Shaab 311 17 Adiliya 859 57 Shuhada 1,440 18 Daiya 645 58 Siddiq 213 19 Dasma 1,000 59 Zahra 2,109 20 Doha 1,392 Jahra Governorate 21 Faiha 1,024 60 Naeem 912 22 Kaerawan 1,555 61 Naseem 1,132 23 Khaldiya 775 62 Oyoun 1,904 24 Kifan 1,554 63 Qasr 1,672 25 Mansouriya 397 64 Saad Al Abdulla City 7,519 26 Nahda 413 65 Sulaibiya 5,525 27 Nuzha 737 66 Taima 4,134 28 Qadsiya 1,045 67 Waha 1,778 29 Qurtuba 1,991 Mubarak Al Kabeer Governorate 30 Rawda 1,557 68 Abu Ftaira 1,033 31 Shamiya 816 69 Al Adan 3,500 32 Shuwaikh 313 70 Al Qurain 2,677 33 Sulaibikhat 1,221 71 Al Qusour 3,060 34 Surra 2,211 72 Coastal Strip B 407 35 Yarmouk 1,279 73 Fnaitees 17 Farwania Governorate 72 Messila / Masaeil 283 36 Abdulla Al Mubarak 4,896 75 Mubarak Al Kabeer 3,549 37 Andalus 2,481 76 Sabah Al Salem 5,866 38 Ardiya 1,969 77 South Wista 247 39 Ashbilia 1,464

Note: There are several other several areas with few houses such as areas in Kuwait City, Jaber Al Ahmad City, Wafra Residential, etc. The total houses in all these other areas is 2,733 that are not

7 included in the table Report Content and Data Coverage This report is an extension of a previous report published in February 2014 when a private housing strategy conference was organized by the Real Estate Association and sponsored by the Parliament of Kuwait. That report addressed issues of shortage in private housing in Kuwait and identified some of the key factors behind it. It also suggested a number of possible strategies to deal with the growing shortage of private housing, which, if not tackled immediately, could spiral out of control over the next few years. The current report updates some parts that were covered in the previous report but newer topics are given more prominence in this report: 1. Topics covered in the previous report such as private housing stock and wait list status are updated in this report. 2. House prices is one of the most important topics covered in this report. There are anecdotal evidences that show that house prices have gone up sharply over the last few years and there may be a risk of overvaluation. This topic is analyzed in details in this report. 3. Several private housing areas have considerable stock of apartments for rent. This segment has been largely unexplored by any research. This report covers this segment in details with estimates of apartment inventory, occupancy ratios, prevailing prices and rental yields. 4. The location variables such as number of access streets, corner plot, frontage length, etc. have sizeable effect on the value of a house. These are analyzed in details and their effect is documented. 5. A snapshot of all the prominent private housing areas are provided for historical house price trends, rental market dynamics and other important factors.

Data collection for this report was quite challenging because obtaining historical transactions prices is difficult. Chart 1 shows the number of transactions covered for writing this report for various years. We note that the transactions cover both the houses and land parcels in private housing areas.

1. Care has been exercised to have random data that adequately represents all the locations in Kuwait and thus avoids any sampling bias. 2. The maximum coverage is for the year 2007 when we have data for 4,943 transactions. The minimum coverage is for the year 2008 when 2,211 transactions data was captured. On average, 3,188 transactions per year were covered. 3. Total transactions covered were 25,500 for the period of eight years. While we had information on several thousand more transactions, these could not be included due to insufficient information on either the property or its location. 4. We note that these 25,500 transactions cover 19,567 properties because some properties were transacted multiple times during the period of our analysis. 5. Of the total 25,500 transactions, 42% of the transactions were in land parcels and the balance 58% in houses. 6. We note that the variations in transactions coverage is also due to the market conditions. For example, in 2007 hundreds of transactions took place in locations such as Abu Ftaira and therefore our data coverage reflects high transactions activities. 7. In 2008, the number of transactions went down due to the onset of the financial crisis. This is reflected in a sharp drop of coverage in Chart 1.

8 Chart 1: No. of Private Housing Transactions Data Used in this Report

4,943

3,700 3,419 2,999 3,086 2,806 2,211 2,336

2007 2008 2009 2010 2011 2012 2013 2014 For the rental apartments in the private housing areas, we carried out complete field surveys of 895 properties that are made as apartment blocks. Further, 3,476 such units were counted to estimate the total supply of rental apartments in the private housing areas. Thus, collectively this report is based on data of nearly 25,000 properties and 30,000 transactions. This is the largest sample size that has been used to write a report by the Real Estate Association. Housing Continues to Remain in Short Supply in Kuwait Housing supply in Kuwait continues to be significantly short of the requirement. Table 3 shows the number of Kuwaiti families and the number of private houses in Kuwait from the year 2000 till 2014. The same table was originally included in the housing conference report that was published in July 2013. The data for the year 2013 and 2014 are updated in Table 3. 1. The number of Kuwaiti families increased from 153,587 in the year 2000 to 260,372 families by the end of 2014. 2. Over the same period, the number of private houses in Kuwait increased from 105,803 to 142,237. As a result, the housing shortage stands at 118,135 at the end of 2014. 3. As per the website of Public Authority of Housing Welfare in Kuwait, the total number of outstanding applications for housing as on January 2014 were 110,306. 4. On average, 8,500 new applications are submitted every year and thus, the number of applications in 2015 should be very close to the housing shortage figure show in Table 3.

Table 3: Estimates of No. of Kuwaiti Families and Private Houses in Kuwait Year Kuwaiti Families Private Houses Housing Shortage 2000 153,587 105,803 47,784 2001 164,107 111,202 52,905 2002 178,215 115,152 63,063 2003 189,042 115,663 73,379 2004 198,413 121,307 77,106 2005 204,170 123,386 80,783 2006 210,569 125,466 85,103 2007 217,006 127,545 89,461 2008 223,787 129,624 94,162 2009 230,240 131,704 98,536 2010 236,300 133,783 102,517 2011 243,465 135,862 107,603 2012 249,484 137,942 111,543 2013 255,508 140,021 115,487 2014 260,372 142,237 118,135

Source: Calculations based on CSB and PACI Data

9 In the report in July 2013, we projected the number of new housing applications until the year 2033. These projections were made based on the population pyramid (age wise distribution of Kuwaiti population) and historical marriage trends. These projections are shown in Chart 2 below.

• The total new housing applications add up to 234,672 for the 20 year period from 2014 till 2033. Add to it the existing housing shortage of 115,487 till the end of 2013.

• If the government wants to eliminate all the housing shortage by 2033, they need to supply more than 350,000 new houses in Kuwait over the next 20 years. This is around 17,507 new houses every year.

Chart 2: Projected No. of New Housng Applications till 2033

16,000

14,000

12,000

10,000

8,000

6,000

4,000

2,000 -

2014 2015 2016 2017 2018 2019 20202021 2022 2023 2024 2025 2026 2027 2028 2029 20302031 2032 2033

Against the current housing shortage and the future requirements, the government housing delivery record is shown in Chart 3.

• Except for the year 2001, the delivery of houses (and plots) by the government agencies has been grossly inadequate.

• For the period of 2000 to 2013, the total number of houses and plots distributed by the government were 31,522. The yearly average is 3,152.

• We have established through the analysis that if the housing shortage has to be removed completely over the next 20 years, the government needs to deliver on average 17,507 houses every year.

• Clearly, the current strategies to address the housing shortage are not adequate and newer strategies need to be employed to correct the situation.

10 Chart 3: Governmment Housing Delivery Record for the Period 2000 - 2013

8,875

3,369 3,611 2,892 2,481 2,277 2,388 1,799

562 601 781 652 705 529

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

The government has constituted several high powered committees to study the issue in complete details and several new measures are being planned. In the previous report on the subject, we have suggested a number of possible strategies and analyzed the full costs of building a new house and then the annual subsidies related to it. Those points are beyond the discussion of this report.

Suffice to say here that the housing remains in acute short supply in Kuwait and with each passing year, the shortage is increasing. This is creating a severe imbalance between the demand and supply, which is responsible for the rapid rise in house prices over the last few years. We have analyzed the house price trends in the next section.

11 House Prices Trends and Sustainability

The prices of land and houses remain one of the key issues in the market with little clarity on their historical trends and sustainability. In this section, we have tried to analyze this issue in comprehensive details. Chart 4 below shows the trend in land prices (in per sq.m.) in all the private housing areas in Kuwait for the years 2007 till 2014. It also shows the number of transactions in each year. We note that the number of transactions in each of these years are more than what we have included in our calculations. We have explained the reasons for omitting several transactions in the calculations. • The average land price was KD 334 per sq.m. in 2007 that increased in 2008 to KD 413 and then dropped back to KD 330 in 2009 when the financial crisis hit Kuwait real estate market badly. The decline was 20% in 2009 over the previous year.

• The land prices recovered from there sharply in 2010 when the prices went up to KD 385 per sq.m. which is a jump of 17%.

• After increasing marginally in 2011, the land prices started increasing at a very rapid rate from 2012 till 2014.

• In 2014, the land price is KD 698 per sq.m., which is 109% higher than the average prices in 2007.

• The compounded annual growth rate (CAGR) of land prices between 2007 and 2014 is 11.1%. We draw the attention of the reader here that we prefer to use CAGR to calculate annual returns over simple average growth rate because CAGR is the true measure of annual returns. The simple annual growth rate of land prices is 15.6% between 2007 and 2014 but it overstates the annual returns. For detailed definition of CAGR and simple average growth rate, please see appendix 1.

• Maximum number of transactions in our database were 2007 in the year 2007. The number of transactions dropped sharply in 2008 and the recovered to around 1,400 in the year 2010 and 2011. The transactions have dropped moderately since then.

Chart 4: Trend of Land Prices (per sq.m.) in Private Housing Areas (2007 to 2014) KD 698

KD 564 KD 475 KD 413 KD 385 KD 400 KD 334 KD 330

2007 522 1237 1410 1490 1156 1084 753 2007 2008 2009 2010 2011 2012 2013 2014

No. of Transactions Land Prices

12 Chart 5 shows the data of house prices in Kuwait for the period of 2007 till 2014. Note the house prices are shown as their absolute value. Also shown are the number of transactions in each year that are included in our calculations.

• The chart shows that the average house price was around KD 219,000 in 2007 that has increased to KD 414,000 by the year 2014.

• Showing a trend similar to the land prices, house prices increased from 2007 to 2008 and then dropped in 2009. The rate of correction in house prices in 2009 at 21% was comparable to the correction in land prices of 20%.

• The rate of house price increase was very high during 2011 till 2013. Particularly in 2013, the house prices went up by 28%. The growth rate has moderated somewhat in 2014 with 9% increase.

• Overall, the house prices increased by 90% between 2007 and 2014 – CAGR of 9.6%. We once again note that the simple average annual growth rate of house prices between 2007 and 2014 is 12.8% but it overstates the annual growth rate. The correct measure is CAGR value, which is 9.6%.

• In the period of 2007 till 2014, the price of land for private houses increased at an annual rate of 11.1% while the house prices increased at an annual rate of 9.6%. This is due to the fact that the vacant land parcels in Kuwait are very few and there is high demand for housing.

Chart 5: Trend of House Prices (2007 to 2014)

KD 450k KD 414k 5000 KD 381k KD 400k 4500 4000 KD 350k KD 297k 3500 KD 300k KD 255k KD 268k KD 219k KD 222k 3000 KD 250k KD 201k 2500 KD 200k 2000 KD 150k 1500 KD 100k 1000 KD 50k 500 2450 1487 1461 1695 1589 1663 1482 1358 KD 0k 0 2007 2008 2009 2010 2011 2012 2013 2014

No. of Transactions Average House Price

Table 4 shows six areas with the highest and six areas with the lowest house price CAGR for the period 2007 – 2014.

1. Doha topped the list with a CAGR of 18.0% over the period of 2007 till 2014. This is quite phenomenal rate of appreciation, as the rate is nearly double the rate for Kuwait as a whole.

2. This is followed by Khaitan that experienced 15.2% CAGR, Qasr 14.4% CAGR, Ahmadi 14.1%, Fahaheel 13.6% and Firdous 12.8% CAGR.

3. The areas with lowest growth rates in house prices are Yarmouk, Jabriya, Abdulla Al Salem, Mubarak Al Abdulla, Shamiya and Shaab. All these areas are in Capital Governorate and Hawalli Governorate.

4. The CAGR in these areas ranges between 3.8% and 6.5%.

13 Table 4: The Areas with Highest and Lowest House Prices Appreciation Rates Areas CAGR of House Prices 2007 - 2014 Areas with Highest Appreciation Rate Doha 18.0% Khaitan 15.2% Qasr 14.4% Ahmadi 14.1% Fahaheel 13.6% Firdous 12.8% Areas with Lowest Appreciation Rate Yarmouk 6.5% Jabriya 6.1% Abdulla Al-Salem 5.7% Mubarak Al Abdulla 5.1% Shamiya 4.1% Shaab 3.8% We have given complete details about house prices trends in each area in Kuwait in a later section of this report. House Price Inflation versus Consumer Price Inflation in Kuwait While the house prices are not included in the calculation of the consumer price inflation, there remains a close relationship between house price trends and consumer price inflation. Even though houses are not bought and sold daily by households, the changing prices of houses determine how much a household needs to save in order to buy a house. If the house price increase sharply, households need to save higher proportion of their annual income to be able to buy a house that put pressure on their ability to spend on other day-to-day items. Chart 6 compares the land price and house price growth trends with that in consumer price inflation in Kuwait over the period 2008 – 2014. • Over this period of 7 years, the consumer price inflation has mostly remained below the growth rate of land prices and house prices. • The exception is the year 2009 when the land and house prices fell by 20% each but consumer inflation only slowed down compared to the previous year but the inflation was not negative. Generally, it is quite rare for the consumers price inflation to register an outright drop but the real estate prices can go and down sharply. • Over the full period, the compounded annual growth in consumer price index is 4.9%. Against this, the house prices have grown by 9.6% and the land prices have grown by 11.1%. • This is very substantial difference between house prices and consumer prices growth rates. If continued, this can become unsustainable as the consumer affordability of houses may be eroded significantly. Chart 6: Comparison of Consumer Price Inﬂation and Land & House Price Growth Rates (2008 - 2014)

40.0%

30.0%

20.0%

10.0%

0.0% 2008 2009 2010 2011 2012 2013 2014 -10.0%

-20.0%

-30.0%

Consumer Price Inﬂation Land Price Growth House Price Growth Source: CSB Kuwait for Consumer Price Inflation Data

14 Are House Prices Overvalued in Kuwait? Globally, one of the most important factors to assess if the house prices are overvalued or correctly valued is to compare the average house price to the average household income data. The explanation of this is as follows: 1. Since the primary source of funding a house purchase is household income, the house prices must maintain a close relationship with the household disposable incomes. 2. Over a long period, house prices and household incomes must grow at similar rates. While the growth rates may fall out of sync for few years but these must fall back to sync over long term. 3. Such a realignment indicates that the housing is used by end users. If the house prices grow at a faster pace than the household income for a prolonged period of time, it may indicate that housing sector is attracting investor capital and housing is being used as an investment and not entirely for the end use. 4. With the investment money coming into the housing sector, several households are priced out of the market, as they do not have adequate income to afford a house. 5. Thus, the relationship between the house prices and household income is followed worldwide by the policy makers and by the market participants to read the valuation of houses in any market. 6. The ratio that is tested for this relationship is the ratio of average house price to average household income. There is no magic value of this ratio and it is generally seen in comparison to its historical value and in relation to its value in similar markets worldwide. 7. We note that such an analysis is generally applicable to cities and is not applied to individual locations within a city. When data on various cities of a country is available, it can be clubbed to make data for a whole country. For Kuwait, the Central Statistical Bureau carries out household income and expenditure surveys for Kuwaiti and non-Kuwaiti families. The survey is not carried out annually but is done once every 5-6 years. The data from this survey is available for the year 2007 and then for the year 2013. In the year 2007, the average family monthly income of a Kuwaiti household was KD 2,574, which grew up to KD 3,351 in 2013. We note that this household income includes the following six main sources. 1. Income from employment 2. Income from business activities 3. Income from financial investments 4. Income from non-financial investments (such as properties) 5. Transfers from the government 6. Others The percentage share of these sources for the year 2013 are shown in Chart 7. Chart 7: Sources of Income for Kuwaiti Household (2013) 2% Income from Employment

21% Income from Business Activities

Income from Financial Investments 2% 0% Income from Non-Financial 3% Investments

Transfers from the Government

72% Others

Source: Central Statistical Bureau Source: Cen tral Statistical Bureau

15 As shown in Chart 5, we have yearly data on average house prices. However, for the average Kuwaiti household income we have data for the year 2007 when the average monthly income was KD 2,574 and for the year 2013 when the average monthly income was KD 3,351. The average income grew by 30.2% for this period 6 years. To estimate the yearly data on average Kuwaiti household income, we used the trends in consumer price inflation. It is interesting to note that for the period of 2007 till 2013, the consumer price index grew by 33.6%, which shows that the Kuwaiti family income grew very similar to the inflation. Since the consumer inflation trend is similar to the household income trend, the yearly levels of Kuwaiti family income can be derived using the inflation data. Table 5 shows the yearly trends in Kuwait family income from 2007 till 2014 using this method. Also shown are the average house prices and the ratio of house prices to annual income (monthly income multiplied by 12). • The ratio of house prices to family annual income was around 7.08 in 2007, which increased to 7.67 in 2008. As the house prices dropped in 2009, the ratio dropped back to 5.95. • By 2011, the ratio recovered back to 7.62 and by 2014 the value is 9.83. In simply terms, a household needs to set aside nearly 10 years of full income to be able to buy a house. • Normally, households are able to set aside one third of their annual income towards buying a house. This is the same proportion used by several banks when they offer mortgage to households to buy a house. If we consider this, a normal household needs 30 years of savings to buy a house.

Table 5: Relationship of Houses Prices in Kuwait with Household Incomes (Kuwait Households) 2007 2008 2009 2010 2011 2012 2013 2014 Household KD KD KD 2,811 KD KD KD KD 3,351 KD 3,512 Monthly 2,574 2,774 2,862 2,926 2,943 Income (Kuwaiti) Average House KD KD KD KD KD KD KD KD Price 218,570 255,296 200,696 221,773 267,709 297,208 380,717 414,443 Ratio of House 7.08 7.67 5.95 6.46 7.62 8.42 9.47 9.83 Price To Annual Income

Source: Household income data from CSB surveys and estimates using the consumer price inflation data

Chart 8 below shows the comparison of house prices to annual income ratios for some of the prominent countries and cities for the year 2014.

• The ratio is 5.07 for UK and 3.20 for the US. In UK, the Central Bank and various other institutions have raised concerns about high house prices in the UK.

• It is important to note that for the US, the long term average of this ratio is below 3.0 and the Noble price winner economist Robert Schiller who correctly predicted the housing bubble in the US used this ratio to track and make his financial crisis projections way back in 2007.

• In Western Europe, Switzerland has a ratio of 3.27 where the monetary authorities are comfortable with its level. In Germany, the ratio is 5.35 and there are concerns raised by most financial institutions about the possibility of a bubble in house prices.

• Australia has a ratio of 4.69 and after concerted effort by the Central Bank to reduce activities in the housing segment, house prices have started showing signs of easing in recent months.

• Against these ratios in the world, Kuwait’s ratio of 9.82 appears very high. Is there a threat of a bubble in housing in Kuwait?

16 Chart 8: National Ratios of Average House Prices to Annual Household Incomes (2014)

9.82

5.07 5.35 4.69

3.20 3.27

UK US Switzerland Germany Australia Kuwait

Source: Government Statistical Agencies, Economist Intelligence Unit and OECD websites

Chart 9 shows the same ratio of house prices to annual incomes of prominent cities and urban clusters in Europe and the US. • We see the values of the ratios at city levels in the US, UK and Europe are in the range of 9 to 20. For example, the ratio for the City of London is 18.94 and Paris is 15.15 for the year 2014. • New York houses are trading at 9.04 times income and Zurich houses are trading at 7.94 ratio. • Kuwait with its urban area of around 1,000 sq km population of 4 million and GDP size of around USD 200 billion is comparable to a large city in Europe or the US. Thus, it is advisable to compare the ratio of house prices to income in Kuwait to the ratios of these cities. • When seen against the city ratios, the value of the ratio in Kuwait doesn’t appear to be closer to a crisis level. • While not many will disagree that Kuwait houses are expensive, we note that small and dense urban clusters with big economic output and high average household incomes tend to have high ratios of house prices to incomes. • Empirical evidences elsewhere in the world suggests that such urban clusters can maintain the high values of the ratio over long terms.

Chart 9: Ratios of House Prices to Annual Incomes of Prominent Cities (2014)

18.94

15.15

9.82 9.04 7.94

City of London New York Paris Zurich Kuwait

We note that the average size of houses in Kuwait is more than 1,200 sq.m. (along with basement area). In comparison, the house sizes in these other cities may not be that big. This is another factor for the high prices of houses in Kuwait.

17 In conclusion, while there is no doubt that the house prices are expensive in Kuwait; these are comparable to some of the prominent metropolis cities in the world. The future supply of houses remain very tight in Kuwait and thus, there may not be any imminent threat of house price bubble in Kuwait. However, the high value of the ratio can limit the appreciation potential of houses from here.

Why House Prices in Kuwait may not be Overvalued?

We also note that the many private houses develop a couple of apartments for rent in Kuwait. The CSB methodology of Kuwait family income assessment appears to underestimate this rental income. If this income is estimated properly, the ratio of house prices to income may drop in Kuwait. We have covered the rental activities in the private housing areas in a later section of this report. Has there been Sizeable Speculative Trading in Private Housing Areas?

Whenever prices witness sizeable move in any asset market, there is a tendency to blame speculators for it. Such allegations are often easy make but extremely difficult to prove. We have analyzed thousands of transactions in private housing areas to see if there are any signs of speculative trading. For such analysis, it is imperative to first define speculative trading. We believe that if the market has a sizeable proportion of repeat trading in same houses or land parcels, it may providing a strong proof of speculative activities. Table 6 shows our analysis on the subject:

1. We have covered total 19,567 properties and recorded 25,500 transactions. Many of the properties were transacted several times during the period of 2007 and 2014. 2. Of the 19,567 properties, 14,864 properties were transacted only once during the period of 8 years. Thus, these transactions cannot be termed as speculative. These are the transactions for either self use or for long term investment. 3. A total of 4,703 properties witnessed multiple transactions in the period. However, 507 transactions were such where land parcels were developed into houses and then sold. Such transactions are likely to be done by real estate developers and these are not speculative. 4. The remaining 4,196 transactions are repeat transactions without the development change. This is around 21.4% of all transactions. We believe these are the possible speculative transactions because these units were bought and sold within a period of 8 years without any development change. 5. Chart 10 shows the classification of the repeat transactions (without development change) into land and properties.

Table 6: Analysis of Speculative Transactions in Kuwait Private Housing Market Units Covered for Transactions 19,567 Units with Single Transaction 14,864 Units with Multiple Transaction 4,703 Transactions after Development of a House on Land 507 Transactions without Development 4,196 Proportion of Possible Speculative Transactions 21.4%

18 Chart 10: Classiﬁcation of Repeat Transactions in Land and Property

44%

56%

Transactions in Land Transactions in Built Up Property

Chart 11 shows the top five areas with highest percentage of such speculative transactions. Khairan and Abu Ftaira tops the list with more than 50% of the transactions as repeat transactions and without any development change. Fnaitees has 29.7% of transactions as repeat and without development change; Mesilla has 29.2% such transactions and Mangaf has 26.0% of such transactions.

Chart 11: Top Five Areas with Highest Proportion of Possible Speculative Transactions in Private Housing

55.5% 52.9%

29.7% 29.2% 26.0%

Khairan Abu Ftaira Fnaitees Messila Mangaf

There are no global comparisons available to benchmark that if a ratio of 21.4% tractions being possibly speculative is a good enough proof of speculation in the market. From a purely logical point, the data indeed provides some indication of speculation in private housing sector in Kuwait. At the very least, the areas with more than half the transactions being repeat and without any change in the development status are speculative in nature.

19 Rental Activities in Private Housing Areas in Kuwait

Given the acute shortage of private housing in Kuwait, several families are living in rented places in private housing areas. Two types of rental stock exists in private housing areas of Kuwait:

1. Several houses have a few apartments constructed on different floors. The property owner remains the primary occupant of the property and these apartments are leased to family and friends. In many cases, these are also leased to unrelated Kuwaiti families.

2. There are thousands of houses that are made as apartment blocks with apartments on all floors. In most of such cases, the owner does not live in the property and the apartments are leased to Kuwaiti and non-Kuwaiti families.

While the majority of rental stock in the private housing areas is due to the first type of apartments, we have not covered these in this report. The data collection for this part is very difficult as families don’t want to disclose information about these apartments unless there is a vacancy.

The second type of properties are covered in details in this report. We have comprehensive coverage of 895 properties across various areas in Kuwait and further 3,476 properties were counted across all areas in Kuwait. Table 7 shows the snapshot of this segment in the private housing areas in Kuwait.

• We have information on 4,371 properties that are made as apartment blocks. There are 51,058 apartments in these properties. We believe that we have covered nearly 90% of this segment for all areas of Kuwait.

• We believe that the market has another 50,000 apartments that of first type as described above. Therefore, the total inventory of apartments in private housing areas is around 100,000. This is around 30% of the inventory of apartments in the investment areas in Kuwait.

• During our field surveys, we found 1,347 vacant apartments. The occupancy of this segment is 97.4%, which is higher than the occupancy ratio of around 95% for the investment areas in Kuwait. Such a high occupancy ratio clearly points to high demand relative to the supply in the market.

• The average monthly of an apartment is KD 371, which is substantially higher than the average rent of KD 313 for the investment section. The higher rental is due to the presence of large apartments in the mix.

Table 7: Rental Apartment Inventory in Private Housing Areas in Kuwait (2014) Total No. of Properties 4,371 Estimated No. of Apartments 51,058 Estimated Vacant Apartments 1,347 Occupancy Ratio 97.4% Average Monthly Rent KD 372

Chart 12 shows the unit type distribution of apartments in these 4,371 properties. The largest share of 45.5% is accounted for by 2 Bed type apartments and another 38.6% are 3 Bed type apartments. These two unit types have a combined share of 84% in the market. This is quite different from the investment properties segment where the largest shares are for 1 Bed and 2 Bed type units.

20 Chart 13 shows the occupancy ratios and average monthly rents of these unit types:

1. The occupancy ratios for all the unit types are high, which indicates that the demand remains high for apartments in the private housing areas.

2. The monthly rentals of 1 Bed and 2 Bed in this segment are comparable to the monthly rentals of same type of apartments in the investment areas.

3. However, the monthly rentals are sharply higher for the bigger units from 3 Bed onwards. We note that the sizes of 3 Bed units and bigger units in the private housing areas are larger than the sizes of similar units in the investment areas. Thus, the higher rentals reflect the difference in unit sizes.

4. The rentals for 6 Bed type units are quite high at KD 2,433 because such units are constructed over multiple floors and there are normally only 2 such units in a property.

Chart 12: Unit Type Distribution of Apartments in Private Housing Areas

0% 2% 0% 1 Bed 14% 2 Bed

3 Bed 39% 4 Bed

5 Bed

6 Bed 45%

Chart 13: Occupancy Ratios and Monthly Rentals of Various Unit Types

120.0% 86.7% KD 3,000 98.8% 100.0% 96.7% 97.9% 94.2% 100.0% KD 2,433 KD 2,500

80.0% KD 2,000

60.0% KD 1,500 KD 1,025 40.0% KD 1,000 KD 723 KD 509 20.0% KD 198 KD 289 KD 500

0.0% KD 0 1 Bed 2 Bed 3 Bed 4 Bed 5 Bed 6 Bed

Average Monthly Rent Occupancy Ratio

The rental market statistics of various areas are given in Table 8. We have only shown the number of properties that are completely made with apartments.

21 Table 8: Rental Market Dynamics of Various Private Housing Areas # of Properties # of Units Occupancy Ratio Average Monthly Rent Abu Halifa 44 1,096 99.3% KD 241 Adiliya 2 26 100.0% KD 588 Andalus 394 2,947 99.1% KD 374 Bayan 28 213 94.7% KD 645 Doha 72 465 98.7% KD 341 Egaila 210 2,061 95.4% KD 498 Fahaheel 39 819 99.3% KD 257 Farwania 21 599 99.1% KD 239 Fintas 131 2,689 98.6% KD 292 Hitteen 36 263 96.8% KD 633 Jabriya 229 2,201 98.9% KD 408 Jahra 128 3,383 77.3% KD 256 Khaitan 35 985 99.5% KD 231 Mahboula 35 928 99.2% KD 228 Mangaf 277 3,669 97.3% KD 334 Mubarak Al 9 54 95.8% KD 550 Abdulla Qasr 178 2,390 93.6% KD 177 Qurtuba 6 30 96.0% KD 484 Riggai 29 725 99.1% KD 254 Rumaithiya 219 1,466 99.6% KD 554 Salmiya 7 166 99.4% KD 315 Salwa 1,705 12,639 97.0% KD 588 Shaab 26 286 96.1% KD 438 Shuhada 31 205 98.1% KD 612 Surra 99 529 98.9% KD 651 Yarmouk 1 8 100.0% KD 650 Zahra 36 235 88.2% KD 736 Cap Rates of Transactions of Apartment Blocks in Private Housing Areas

Out of the several thousand transactions in the private housing areas for the year 2014, we filtered the transactions for only those properties that we identified as apartment blocks. There were 28 such transactions in different areas. Table 9 shows the results: 1. The average value per transaction is KD 589,417. We estimate that the average monthly rent for a property from all apartments is KD 3,648. 2. If we annualized the monthly rentals and then divide it by the average sale price of the property, it gives a cap rate of 7.4%. 3. Real Estate Association published a report a few months ago along with Wafra Real Estate that analyzed the prevailing cap rates in different investment properties locations in Kuwait. The average cap rate for whole of Kuwait for the investment properties was 6.4%. The time period for that study was the first six months of 2014.

22 4. Compared to it, the average cap rate for transactions in private housing areas is 100 basis points higher.

Table 9: Sale Transactions and Cap Rates for Properties with Apartments in Private Housing Areas No. of Transactions (2014) 28 Average Value per Transactions KD 589,417 Average Monthly Rental from the Property KD 3,648 Estimated Cap Rate 7.4%

23 Effect of Land Parcel Features on Prices

We all know that the neighborhood or the location of the house is the single most important factor that determines the price. Neighborhoods such as Abdulla Al Salem, Shuwaikh, Nuzha, etc. are very high social status symbol in Kuwait and therefore, the houses in these locations are the most expensive.

However, several factors determine the price of a house within a location. These factors are attached to the land parcels as therefore, we have labelled them as land parcel features. We have identified these factors as:

1. Access Streets – A land parcel that falls on two streets is more valued than a land parcel that falls on a single street. Further, the land parcel that falls on three streets is valued even higher. We have tested this relationship.

2. Frontage Length – If a keep the size of a land parcel the same, a land parcel with longer frontage is valued more than the land parcel with smaller frontage. Here the frontage is the side that is open towards to the road. We have tested the relationship of house prices with the length of the frontage.

3. Orientation – It is popular amongst real estate brokers that a house or land facing northward is more desirable than a house facing southward. Similarly, east facing houses are desirable over west facing houses. We have tested these from the available data.

There are several other factors that can affect the value of a house and land parcel. A setback area near the plot is preferred because the setback provides additional parking area. Houses near certain mosques are preferred and so are the houses that are closer to the highways. However, the data with us is insufficient to test these relationships statistically. Effect of Access Streets on Land Prices and House Prices

Table 10 shows the effect of one street access, two street access and three street access on land prices (in per sq.m.). We note that all the land parcels in all areas are mixed together in this calculation to arrive at an average premium value for Kuwait.

• The premium of two street over one street access on the land parcel prices varied from 4.2% in 2010 to 16.4% in 2014. The average premium for all the years in 9.8%.

• This premium has been in double digit in the last 4 years, which goes to show that there is higher importance being attached to this factor as the land prices are becoming more expensive.

• The premium of three street access over two street access is not as pronounced. The lowest premium was 2.9% in 2011 and the highest was 8.3% in 2013. The average value for the eight years period is 5.7%.

• We note that very few vacant land parcels are left that have three street access. This is particularly true for the neighborhoods that are more in demand and therefore, the premium is not adequately reflected.

24 Table 10: Effect of Number of Access Streets on Land Parcel Prices (per sq.m. of land area) 2007 2008 2009 2010 2011 2012 2013 2014 Average One Street Access KD 321 KD 389 KD 319 KD 377 KD 376 KD 447 KD 532 KD 642 - Two Street Access KD 343 KD 432 KD 335 KD 392 KD 423 KD 502 KD 589 KD 747 - Three Street Access KD 365 KD 465 KD 360 KD 405 KD 436 KD 521 KD 637 KD 788 - Premium of Two Street 6.7% 10.9% 5.1% 4.2% 12.5% 12.2% 10.6% 16.4% 9.8% Over One Street Premium of Three Street 6.5% 7.7% 7.4% 3.2% 2.9% 3.8% 8.3% 5.5% 5.7% Over Two Street

Table 11 shows the effect of one street access, two street access and three street access on houses prices, which are shown as their absolute value. The premium of two street over one street access on the house prices is substantially higher compared to the premium on land prices. The lowest value of the premium was in the year 2008 @ 18.1% and the highest value was in the year 2007 @ 26.0%. The average for the entire eight year period is 22.0%, which is more than double the premium seen on the land prices. This goes to show that the full potential of a land parcel with better access can be realized after development. The higher value may also reflect the fact most of the good land parcels are already developed as houses in Kuwait and therefore, the trading in houses reflect the value of the premiums more accurately compared to land parcels. The premium of three street access over two street access ranges from 3.8% in 2011 to 16.9% in 2014. The average value is 9.9% for the eight year period.

Table 11: Effect of Number of Access Streets on House Prices 2007 2008 2009 2010 2011 2012 2013 2014 Average KD KD KD KD KD KD KD KD One Street Access - 198k 237k 184k 205k 246k 272k 353k 372k KD KD KD KD KD KD KD KD Two Street Access - 249k 280k 224k 250k 299k 341k 424k 451k KD KD KD KD KD KD KD KD Three Street Access - 274k 318k 250k 269k 311k 368k 457k 528k Premium of Two Street 26.0% 18.1% 21.6% 22.0% 21.6% 25.3% 20.1% 21.4% 22.0% Over One Street Premium of Three Street 9.9% 13.5% 11.6% 7.4% 3.8% 8.1% 7.8% 16.9% 9.9% Over Two Street

Ideally, these calculations should be done for each neighborhood and shown to show results for like to like locations. However, for such calculations several thousand more observations are required, which are not available currently.

The calculations in Table 9 and Table 10 show conclusively that the number of access streets remain a critical factor in the determination of the value of a land parcel and a house. Effect of Frontage Length on House Prices

We examined relationship of frontage length with house prices and it is shown in Table 12. For this relationship, we selected only those houses that have single street access as multiple street access land parcels would have premium of multiple streets built into them, which would have skewed the results. The analysis was done with only 2014 transactions.

25 The observations available with us are not sufficient to carry out the analysis with vacant land parcels and thus, the analysis is done with houses. 1. Table 11 shows that the average price of a house (shown as per sq.m. of land area) increases as the land parcel frontage goes bigger. We note that the average frontage length in all these cases is around 19 meters. 2. Till the length of 22 meters, the percentage premium increases gradually. However, for houses with frontage 22 – 25 meters, the premium jumps by 4.3% over the previous category of 19 – 22 meters. The premium further jumps by 9.9% for houses with 25 – 28 meters frontage. 3. After increasing gradually for few more categories, the premium for the category 34 – 37 meters frontage jumps by 6.6% over the previous category of 28 – 31 meters. It further increases by 6.8% for the category 37 – 40 meters frontage. 4. For the houses with more than 40 meters frontage, the premium is 15.4% over category 37 – 40 meters frontage. Houses with more than 40 meters frontage are very rare in Kuwait and these command very high premium.

Table 12: Effect of Frontage Length on House Prices (2014) Average House Price % Premium Over Frontage Length (per sq.m. land area) Previous Category Less than 10 mts KD 648 10-13 mts KD 692 6.8% 13-16 mts KD 721 4.2% 16-19 mts KD 732 1.5% 19-22 mts KD 743 1.5% 22-25 mts KD 775 4.3% 25-28 mts KD 851 9.9% 28-31 mts KD 880 3.4% 31-34 mts KD 913 3.8% 34-37 mts KD 973 6.6% 37-40 mts KD 1,040 6.8% More than 40 mts KD 1,200 15.4%

Effect of Orientation on House Prices

Due to a variety of factors, consumers when buying a house prefer some orientations to others. To analyze this behavior, we again took only the houses with single street access and used Geographical Information System (GIS) methods to determine the direction the house is facing. In total eight values were obtained – North, South, East, West, North East, North West, South East and South West. We have kept the other factors constant for this analysis. For example, all the houses considered for this analysis have single street access. In addition, the effect of land parcel length is neutralized by dividing the house prices (in per sq.m. of land area) by the frontage length to obtain the price that a buyer is paying for every meter of length. The results of the analysis are shown in Table 13: • The North Facing houses are most preferred with average 1.6% premium over rank 2 category that is North East. • North East and East facing houses are equally preferred with an almost non-existent premium of 0.2%. • East facing commands around 3% premium over West facing houses that are ranked 4th in preference. • South facing houses are ranked 5th and these have 1.6% premium over North West facing houses which are ranked 6th.

26 • North West facing houses are ranked 6th and they have 4.9% premium over the South East Facing houses. • South West facing houses are least preferred. • While the incremental premiums may appear small, the total premium of North Facing house over South Facing houses is 13.8%.

Table 13: Orientation Preference Ranking and Premiums Preference Rank Premium Over Next Rank North Facing 1 1.6% North East Facing 2 0.2% East Facing 3 3.0% West Facing 4 1.0% South Facing 5 1.6% North West Facing 6 4.9% South East Facing 7 0.9% South West Facing 8

With that, we conclude our analysis of private housing segment in Kuwait. Snapshots of each private housing area with price trends and rental dynamics are given in the next section.

27 Private Housing Trends and Statistics of Different Locations in Kuwait

In this section, we have presented the analysis of several private housing areas in Kuwait. In total 67 areas are covered and several key statistics are shown for these areas. Table 14 shows the year wise ranks of these areas based on average house prices with the most expensive area given as rank 1. We have covered in total 67 areas for our analysis. Other areas could not be covered in this section due to lack of adequate data. • The ranking displayed that there are several areas that have gained ranking over the last 8 years. Prominent among those are Mubarak Al Abdulla, Sabah Al Salem, Kaerawan, Surra and Bayan. • Similarly, several other areas have lost their ranking in the last 8 years. Prominent among these are Qasr, Doha, Rumaithiya, Khaitan and Fahaheel. • There are a number of factors that play a part in houses of an area to appreciate at a rate higher or lower than other areas. • These include accessibility, demographic profile, density of social infrastructure such as convenience market, access to health care & education, quality of physical infrastructure such as roads, under the ground infrastructure, etc. • We have shown each of these areas over the coming pages on this report.

Table 14: Yearly Ranking of Areas on Average House Prices Soerted as 2014 Prices (Most Expensive as Rank 1) 2007 2008 2009 2010 2011 2012 2013 2014 Shuwaikh 1 1 NA 1 1 2 1 1 Abdulla Al-Salem 2 2 1 2 2 1 2 2 Nuzha 3 3 5 5 4 3 3 3 Khaldiya 4 4 2 4 7 5 7 4 Mansouriya 6 6 3 3 6 6 4 5 Daiya 10 22 7 10 9 9 6 6 Rawda 12 12 10 11 14 10 8 7 Adiliya 8 5 4 6 5 4 5 8 Yarmouk 7 8 6 7 8 7 9 9 Shaab 5 7 12 16 11 12 10 10 Mishref 21 16 14 14 16 15 11 11 Qurtuba 15 10 15 13 18 17 20 12 Kifan 19 15 17 21 22 19 17 13 Jabriya 11 17 18 17 24 18 12 14 Rumaithiya 26 24 26 23 23 20 15 15 Surra 14 9 11 12 19 13 22 16 Shamiya 9 20 9 8 10 8 13 17 Qadsiya 17 13 21 15 15 16 16 18 Faiha 13 11 8 9 12 11 14 19 Salwa 20 18 13 18 25 23 18 20 Salam 22 23 23 27 21 22 26 21

28 Shuhada 16 19 27 28 30 27 19 22 Hitteen 24 26 20 24 29 26 24 23 Dasma 27 30 28 29 26 28 25 24 Zahra 25 27 24 20 28 24 23 25 Mubarak Al Abdulla 18 14 25 26 17 14 28 26 Salmiya 23 25 16 25 27 25 27 27 Fintas 29 21 22 19 20 21 29 28 Egaila 33 31 34 33 32 41 32 29 Omariya 36 36 32 36 42 46 48 30 Andalus 37 34 33 35 38 33 36 31 Abu Halifa 32 28 19 22 31 47 30 32 Bayan 30 32 39 34 35 31 43 33 Ashbilia 28 29 29 32 33 29 35 34 Al Adan 34 41 38 37 40 37 41 35 Fahaheel 44 37 41 53 46 32 33 36 Sabah Al Nasser 39 35 31 38 47 38 42 37 Hadiya 31 38 30 31 37 34 37 38 Qasr 50 45 53 55 44 35 38 39 Mangaf 43 33 47 43 52 44 39 40 Ardiya 35 49 43 41 43 43 34 41 Khaitan 55 43 36 30 39 30 40 42 Rehab 46 46 42 44 48 40 46 43 Abdulla Al Mubarak 40 39 35 40 45 42 44 44 Kaerawan 41 40 37 42 41 39 53 45 Mubarak Al Kabeer 38 42 40 39 36 45 49 46 Doha 57 55 44 56 34 36 45 47 Fahad Al Ahmad 42 54 46 45 49 48 47 48 Al Qurain 49 47 49 47 54 49 50 49 Nahda NA NA NA 58 NA 55 51 50 Rabiya 52 56 56 46 50 51 54 51 Sabahiya 47 51 50 48 56 52 52 52 Al Qusour 53 44 45 50 51 53 57 53 Saad Al Abdulla City 51 50 48 52 57 50 55 54 Abu Ftaira NA NA NA NA NA NA NA 55 Riggai 56 57 55 57 59 58 59 56 Sabah Al Salem 45 48 52 51 55 56 56 57 Naeem 48 52 51 49 53 54 58 58 Naseem 54 53 54 54 58 57 60 59 Firdous 58 58 57 59 60 59 61 60 Ahmadi 61 59 60 61 64 62 64 61 Dhaher 60 61 58 62 61 61 63 62 Waha 59 60 59 60 62 60 62 63 Siddiq NA NA NA NA 13 NA 21 NA Sabah Al Ahmad Marine City NA NA NA NA NA NA NA NA Fnaitees NA NA NA NA 63 NA 31 NA

29 Abdulla Al-Salem Capital Governorate

· Table 15 shows that Abdulla Al Salem has nearly 1,182 private housing land parcels of which currently just 36 are vacant and remaining all have been developed into houses.

· The average land parcel size at 880 sq.m. is quite large given it is one of the premium areas in Kuwait.

· Table 16 shows that we covered total units for 151 transactions in this area for the period 2007 to 2014.

· Of these, following our methodology of estimating speculative transactions, we estimate that 12.6% of the transactions were likely speculative.

Table 15: Snapshot of Private Housing Units in Abdulla Al Salem Total Private Housing Land Parcels 1,182 Vacant Land Parcels 36 Total Houses 1,146 Total Area of All Land Parcels 1,040,500 sq.m. Average Land Parcel Size 880 sq.m.

Table 16: Analysis of Speculative Transactions in Abdulla Al Salem Units Covered for Transactions 151 Units with Single Transaction 132 Units with Multiple Transaction 19 Transactions with Development - Transactions without Development 19 Proportion of Possible Speculative Transactions 12.6%

· Chart 14 and 15 show the yearly trends in land prices and house prices. · Land prices have grown from KD 813 per sq.m. in 2007 to KD 1,280 per sq.m. in 2014. This is CAGR of 6.7% and it is substantially lower compared to average of Kuwait, which is more than 11%.

· Chart 14 shows that the real growth in land prices in Abdulla AL Salem came primarily in last 3 years.

The house prices have appreciate at a CAGR of 5.7% between 2007 and 2014, which is also substantially lower compared to the average CAGR of 9.6%. Chart 15 shows that the house price appreciation took place between 2010 and 2011. Since then there has been only modes

30 Chart 14: Trend of Land Prices (per sq.m.) in Abdulla Al-Salem

KD 1280 KD 1200 KD 1132

KD 850 KD 813 KD 801 KD 809 KD 820

2007 2008 2009 2010 2011 2012 2013 2014

Chart 15: Trend of House Prices in Abdulla Al-Salem

KD 1,204k KD 1,091k KD 1,120k KD 1,102k KD 977k KD 819k KD 850k KD 679k

2007 2008 2009 2010 2011 2012 2013 2014

31 Adiliya Capital Governorate

· Table 17 shows that there are around 862 private housing land parcels in this area and just 3 are vacant. Rest all have been developed into houses.

· The average land size in Adiliya is also big with 854 sq.m. · Of the total 121 transactions covered by us in this area, just 3 transactions have been without the development change. Thus, there are not many speculative activities in this area.

Table 17: Snapshot of Private Housing Units in Adiliya Total Private Housing Land Parcels 862 Vacant Land Parcels 3 Total Houses 859 Total Area of All Land Parcels 735,937 sq.m. Average Land Parcel Size 854 sq.m.

Table 18: Analysis of Speculative Transactions in Adiliya Units Covered for Transactions 121 Units with Single Transaction 91 Units with Multiple Transaction 30 Transactions with Development 27 Transactions without Development 3 Proportion of Possible Speculative Transactions 2.5%

· Chart 16 shows the land price movement in Adiliya. The data for the year 2010 appears invalid as it shows quite low value. This may be due to several possible reasons such as related party transactions where the price paid is not necessarily a true market price.

· However, the area has registered very impressive growth in land prices since 2007. The CAGR is 13.1% for the land prices, which is higher than the CAGR for Kuwait.

· Chart 17 shows the house price trend, which shows the correct trend except for the value in 2014. There are some isolated cases that sometimes skew data and show false trends.

· We believe that in 2014 also, the house prices have appreciate in Adiliya.

32 33 Daiya Capital Governorate

· Daiya is a small area in Capital Governorate with 662 private housing land parcels of which currently 17 are vacant.

· The average land parcel size is 854 sq.m., which is in line with other areas in Capital Governorate. · Since 2007, we have just 6 transactions where land parcels were traded multiple times without development. Clearly, the area is not high on speculation index.

Table 19: Snapshot of Private Housing Units in Daiya Total Private Housing Land Parcels 662 Vacant Land Parcels 17 Total Houses 645 Total Area of All Land Parcels 565,303 sq.m. Average Land Parcel Size 854 sq.m.

Table 20: Analysis of Speculative Transactions in Daiya Units Covered for Transactions 70 Units with Single Transaction 52 Units with Multiple Transaction 18 Transactions with Development 12 Transactions without Development 6 Proportion of Possible Speculative Transactions 8.6%

· With very few vacant land parcels, there are not many transactions in lands in this area. Thus, we do not have the land prices for all the years in Chart 18.

· However, enough data is available to analyze the house prices in Chart 19. The CAGR for the eight year period is 10.8%, which is slightly higher than the CAGR for Kuwait.

· Rapid appreciation of house prices have been witnessed in the years 2013 and 2014.

34 35 Dasma Capital Governorate · Dasma has more than 1,000 private housing parcels but just 12 are currently vacant.

· The average land parcel size at 485 sq.m. is substantially smaller compared to the other areas in Capital Governorate.

· We have recorded a total of 104 transactions in this area spread over 8 years. Of these, just seven transactions were the cases where land parcels were traded multiple times without development. This area is not high in speculative activities.

Table 21: Snapshot of Private Housing Units in Dasma Total Private Housing Land Parcels 1,012 Vacant Land Parcels 12 Total Houses 1,000 Total Area of All Land Parcels 490,460 sq.m. Average Land Parcel Size 485 sq.m.

Table 22: Analysis of Speculative Transactions in Dasma Units Covered for Transactions 104 Units with Single Transaction 87 Units with Multiple Transaction 17 Transactions with Development 10 Transactions without Development 7 Proportion of Possible Speculative Transactions 6.7%

· While Chart 20 shows that land values for all the 8 years is not available, the prices have gained substantially over this period.

· Being closer to Kuwait City and with smaller land parcels, the demand for land is quite high here. As a result, the land prices have appreciate by 13.8% CAGR over the land 8 years. This is the fastest rate of growth for any area in Capital Governorate.

· Chart 21 shows that house prices have also appreciated steadily over the 8 years period. Even in the year 2008, the decline was marginal.

· The CAGR of house prices is 11.2%, which is also higher than Kuwait average.

36 37 Doha Capital Governorate · Doha is a large area with 1,392 land parcels with private housing zoning. Of this, no land parcel is now vacant. · The average land parcel size is small at 364 sq.m. (relative to other areas in Capital Governorate). · We tracked 572 transactions in Doha of which 38 were the transactions in lands that were traded multiple times without development. This is just 6.6% of the transactions, showing the area is low on speculation.

Table 23: Snapshot of Private Housing Units in Doha Total Private Housing Land Parcels 1,392 Vacant Land Parcels 0 Total Houses 1,392 Total Area of All Land Parcels 507,256 sq.m. Average Land Parcel Size 364 sq.m.

Table 24: Analysis of Speculative Transactions in Doha Units Covered for Transactions 572 Units with Single Transaction 534 Units with Multiple Transaction 38 Transactions with Development - Transactions without Development 38 Proportion of Possible Speculative Transactions 6.6%

· The land prices show some sizeable movement in last two years, which we are not entirely sure about. It appears to be a case of a few stray transactions. · The house prices have appreciated at a CAGR of 18.0% in Doha since 2007. This is the highest rate of appreciation anywhere in Kuwait. · The proximity to Kuwait City and mid size land parcels may have contributed towards this rapid rise. · Given the price level around KD 300,000, there may still be more upside for prices here.

38 39 Faiha Capital Governorate · Faiha area has around 1,000 land parcels of which just 14 area vacant. · The average size of land is 548 sq.m., which is very close to the average size of Kuwait as a whole. · We covered 125 transactions in this area and just 4% of them are likely to be speculative.

Table 25: Snapshot of Private Housing Units in Faiha Total Private Housing Land Parcels 1,038 Vacant Land Parcels 14 Total Houses 1,024 Total Area of All Land Parcels 568,689 sq.m. Average Land Parcel Size 548 sq.m.

Table 26: Analysis of Speculative Transactions in Faiha Units Covered for Transactions 125 Units with Single Transaction 102 Units with Multiple Transaction 23 Transactions with Development 18 Transactions without Development 5 Proportion of Possible Speculative Transactions 4.0%

· Land prices have undergone steady increase in Faiha (Chart 24). The CAGR of land prices is 7.0%, lower than the CAGR for Kuwait.

· House prices have also shown moderate rate of growth with CAGR of 6.5%, which again is lower than Kuwait CAGR for house prices.

40 41 Kaerawan / Qairawan Capital Governorate · Kaerawan is a large private housing area in Capital Governorate with 1,696 parcels of which 141 are vacant.

· Average land parcel size is 421 sq.m. · We have tracked 117 transactions in this area with 10.3% of them possibly speculative.

Table 27: Snapshot of Private Housing Units in Kaerawan Total Private Housing Land Parcels 1,696 Vacant Land Parcels 141 Total Houses 1,555 Total Area of All Land Parcels 714,351 sq.m. Average Land Parcel Size 421 sq.m.

Table 28: Analysis of Speculative Transactions in Kaerawan Units Covered for Transactions 117 Units with Single Transaction 105 Units with Multiple Transaction 12 Transactions with Development - Transactions without Development 12 Proportion of Possible Speculative Transactions 10.3%

· House price trend for Kaerawan is shown in Chart 26. The CAGR of house prices is 9.6% over 8 years.

42 43 Khaldiya Capital Governorate · Khaldiya is another small area in the Capital Governorate with 788 private housing parcels. Of these currently, just 13 are vacant. · The average land parcel size is big at 815 sq.m. · We tracked 121 transactions in Khaldiya and found just eight of them to be likely speculative.

Table 29: Snapshot of Private Housing Units in Khaldiya Total Private Housing Land Parcels 788 Vacant Land Parcels 13 Total Houses 775 Total Area of All Land Parcels 642,442 sq.m. Average Land Parcel Size 815 sq.m.

Table 30: Analysis of Speculative Transactions in Khaldiya Units Covered for Transactions 121 Units with Single Transaction 96 Units with Multiple Transaction 25 Transactions with Development 13 Transactions without Development 8 Proportion of Possible Speculative Transactions 6.6%

· Chart 27 shows moderate growth in land prices between 2007 and 2014; a CAGR of 6.1%. · Chart 28 shows a similar trend in house prices where the CAGR is 7.8% between 2007 and 2014. · Both these growth rates are lower compared to the average corresponding growth rates for Kuwait.

44 Chart 27: Trend of Land Prices (per sq.m.) in Khaldiya KD 1135

KD 996

KD 790 KD 750 KD 750 KD 750 KD 630 KD 544

2007 2008 2009 2010 2011 2012 2013 2014

Chart 28: Trend of House Prices in Khaldiya KD 949k

KD 712k KD 702k KD 728k KD 648k KD 562k KD 547k KD 571k

2007 2008 2009 2010 2011 2012 2013 2014

45 Kifan Capital Governorate · Kifan has more than 1,500 private housing land parcels of which 31 are currently vacant. · The average land parcel size is 491 sq.m. · Of the 183 transactions that we tracked here. We found 33 transactions since 2007 where lands were sold multiple times without development. The proportion of such transactions is 18.0%. · While this proportion is still not very high, but it shows that there have been some speculation in this area.

Table 31: Snapshot of Private Housing Units in Kifan Total Private Housing Land Parcels 1,585 Vacant Land Parcels 31 Total Houses 1,554 Total Area of All Land Parcels 778,733 sq.m. Average Land Parcel Size 491 sq.m.

Table 32: Analysis of Speculative Transactions in Kifan Units Covered for Transactions 183 Units with Single Transaction 148 Units with Multiple Transaction 35 Transactions with Development 2 Transactions without Development 33 Proportion of Possible Speculative Transactions 18.0%

· Land prices shown in Chart 29 have undergone some sizeable swings, especially in the years of 2007 to 2009. · The land price CAGR between 2007 and 2014 is 10.6%. · The house prices have shown stable trends with a CAGR of 10.0% over the 8 years period.

46 9

47 Mansouriya Capital Governorate · With only 401 parcels with private housing zoning, Mansouriya is one of the smallest areas in Kuwait. · There are only four land parcels vacant in Mansouriya and the remaining 397 have houses. The average land parcel size is 833 sq.m. · We have tracked 44 transactions in Mansouriya over the last 8 years and found that only in three cases, land parcels were traded without development. Clearly, this is not a speculative area.

Table 33: Snapshot of Private Housing Units in Mansouriya Total Private Housing Land Parcels 401 Vacant Land Parcels 4 Total Houses 397 Total Area of All Land Parcels 333,857 sq.m. Average Land Parcel Size 833 sq.m.

Table 34: Analysis of Speculative Transactions in Mansouriya Units Covered for Transactions 44 Units with Single Transaction 41 Units with Multiple Transaction 3 Transactions with Development - Transactions without Development 3 Proportion of Possible Speculative Transactions 6.8%

· Chart 31 shows that land parcel price data is not available for most of the years but house price data is available for all years in Chart 32. · The house prices have gained at a CAGR of 10.4% over the last 8 years. This rate is around 80 basis points higher than the Kuwait average of 9.6% CAGR over the same period. · While a difference of 80 basis points may not appear large, we believe it is quite significant given the fact that houses have been always very expensive in Mansouriya. · What is remarkable is that the house prices have managed to grow consistently despite these being at very high level.

48 31

49 Nahda Capital Governorate · Nahda Area has only 415 private housing land parcels and just two of them are vacant. · Average land parcel area is 422 sq.m. · We have just nine transactions in this area over 8 years and thus, no meaningful conclusions should be drawn.

Table 35: Snapshot of Private Housing Units in Nahda Total Private Housing Land Parcels 415 Vacant Land Parcels 2 Total Houses 413 Total Area of All Land Parcels 175,297 sq.m. Average Land Parcel Size 422 sq.m.

Table 36: Analysis of Speculative Transactions in Nahda Units Covered for Transactions 9 Units with Single Transaction 9 Units with Multiple Transaction - Transactions with Development - Transactions without Development - Proportion of Possible Speculative Transactions 0.0%

· While Chart 33 shows house prices for a few years, we believe data is not sufficient to represent the market.

50 Chart 33: Trend of House Prices in Nahda (South Sulaibikhat) KD 280k KD 257k

KD 190k

KD 113k

- - - - 2007 2008 2009 2010 2011 2012 2013 2014

51 Nuzha Capital Governorate · Nuzha has 753 land parcels of which 16 are vacant and 737 have houses developed on them. · The average land parcel size is 818 sq.m. · We have tracked 91 transactions in Nuzha over the last 8 years and found that in 12 cases, land parcels were traded multiple times with development. · This is 13.2% of transactions and low measure of speculative activities.

Table 37: Snapshot of Private Housing Units in Nuzha Total Private Housing Land Parcels 753 Vacant Land Parcels 16 Total Houses 737 Total Area of All Land Parcels 616,218 sq.m. Average Land Parcel Size 818 sq.m.

Table 38: Analysis of Speculative Transactions in Nuzha Units Covered for Transactions 91 Units with Single Transaction 79 Units with Multiple Transaction 12 Transactions with Development - Transactions without Development 12 Proportion of Possible Speculative Transactions 13.2%

· Chart 34 shows the land price trend; between 2007 and 2014 the CAGR of land prices is 8.0%. · Chart 35 shows the house price trend for the same period; the CAGR of house prices is 6.7%. · Both these growth rates are substantially lower than the comparable figures for Kuwait.

52 34

53 Qadsiya Capital Governorate · Qadsiya has 1,081 land parcels with 36 vacant and 1,045 houses. · The average land parcel size is 570 sq.m. · We tracked 162 transactions in this area for 8 years period. Of this, we found that 24 transactions are possible speculative, proportion of less than 15%.

Table 39: Snapshot of Private Housing Units in Qadsiya Total Private Housing Land Parcels 1,081 Vacant Land Parcels 36 Total Houses 1,045 Total Area of All Land Parcels 615,845 sq.m. Average Land Parcel Size 570 sq.m.

Table 40: Analysis of Speculative Transactions in Qadsiya Units Covered for Transactions 162 Units with Single Transaction 137 Units with Multiple Transaction 25 Transactions with Development 1 Transactions without Development 24 Proportion of Possible Speculative Transactions 14.8%

· Chart 36 shows that the land prices have gained from KD 420 per sq.m. in 2007 to KD 800 per sq.m. in 2014; a CAGR of 9.6%. · Chart 37 shows the average house prices have appreciate from KD 312,000 to KD 536,000; a CAGR of 8.0%.

54 55 Qurtuba Capital Governorate · Qutuba is a large area with close to 2,100 land parcels of which 106 are vacant. · The average land parcel size here is 656 sq.m. · We tracked 223 transactions here over the last 8 years and found 30 transactions, which are possibly speculative. The proportion of such transactions is low at 13.5%.

Table 41: Snapshot of Private Housing Units in Qurtuba Total Private Housing Land Parcels 2,097 Vacant Land Parcels 106 Total Houses 1,991 Total Area of All Land Parcels 1,375,780 sq.m. Average Land Parcel Size 656 sq.m.

Table 42: Analysis of Speculative Transactions in Qurtuba Units Covered for Transactions 223 Units with Single Transaction 188 Units with Multiple Transaction 35 Transactions with Development 5 Transactions without Development 30 Proportion of Possible Speculative Transactions 13.5%

· Chart 38 shows that the land prices remained mostly stagnant for the period of 2007 till 2012. However, there are substantial gains in 2013 and 2014. Overall, the CAGR is 9.7%. · A somewhat similar behavior is seen in house prices also in Chart 39 where the breakout movement is seen over the last 2 years. The overall CAGR of house prices is 8.5%.

56 38

57 Rawda Capital Governorate · Rawda area has 1,585 land parcels with 28 vacant and 1,557 houses. · Average land parcel size is 704 sq.m. · Over the last 8 years, we have been able to record 197 transactions in this area. Of these, the possible speculative transactions are just 13.2%.

Table 43: Snapshot of Private Housing Units in Rawda Total Private Housing Land Parcels 1,585 Vacant Land Parcels 28 Total Houses 1,557 Total Area of All Land Parcels 1,116,603 sq.m. Average Land Parcel Size 704 sq.m.

Table 44: Analysis of Speculative Transactions in Rawda Units Covered for Transactions 197 Units with Single Transaction 165 Units with Multiple Transaction 32 Transactions with Development 6 Transactions without Development 26 Proportion of Possible Speculative Transactions 13.2%

· The land price appreciation trend for Rawda is shown in Chart 40. From KD 640 per sq.m. in 2007 to KD 974 per sq.m. in 2014, the CAGR is just 6.5%, which we note is quite low. · However, the house prices have appreciated at a CAGR on 11.2% over the same period, which is in line with the average in Kuwait. · This disconnect between the house prices and land prices may points either some undervaluation in land parcels or possibly the remaining vacant land parcels may not have good location.

58 59 Shamiya Capital Governorate With a total of 822 land parcels and only 6 vacant parcels, Shamiya has around 816 houses. The average land parcel size here is 633 sq.m. We recorded 89 transactions here and found that 11 transactions over the last 8 years were possibly speculative.

Table 45: Snapshot of Private Housing Units in Shamiya Total Private Housing Land Parcels 822 Vacant Land Parcels 6 Total Houses 816 Total Area of All Land Parcels 520,654 sq.m. Average Land Parcel Size 633 sq.m.

Table 46: Analysis of Speculative Transactions in Shamiya Units Covered for Transactions 89 Units with Single Transaction 78 Units with Multiple Transaction 11 Transactions with Development - Transactions without Development 11 Proportion of Possible Speculative Transactions 12.4%

· We do not have adequate number of transactions for lands in Shamiya thus, this chart could not be prepared. · Chart 42 shows the house prices. The average price of a house in 2007 was KD 410,000 that increased to KD 545,000 by 2014. This is a CAGR of just 4.1%. · We believe that this data for house prices is also somewhat doubtful as we notice some transactions that are not clean.

60 42

61 Shuwaikh Capital Governorate · Shuwaikh is one of the most premium residential areas in Kuwait. · It has 330 land parcels of which 17 are vacant and the remaining 313 have houses. · The average land parcel size is 1,123 sq.m., which is the largest land size in Capital Governorate. · We tracked 26 transactions in Shuwaikh area over the last 8 years and found three cases where land parcels were traded multiple times without development. · These may qualify as speculative transactions but the percentage is quite small.

Table 47: Snapshot of Private Housing Units in Shuwaikh Total Private Housing Land Parcels 330 Vacant Land Parcels 17 Total Houses 313 Total Area of All Land Parcels 370,546 sq.m. Average Land Parcel Size 1,123 sq.m.

Table 48: Analysis of Speculative Transactions in Shuwaikh Units Covered for Transactions 26 Units with Single Transaction 23 Units with Multiple Transaction 3 Transactions with Development - Transactions without Development 3 Proportion of Possible Speculative Transactions 11.5%

· Due to very few transactions in this area, Chart 43 shows data for only 3 years but the trend is clear. · On average, the land prices have gained at a CAGR of 7.1%. · For the house prices in Chart 44, the trend is not very clear because the number of transactions were very few. · Not much can be said about the average house prices here as the houses in this area have diverse quality and sizes here.

62 63 Surra Capital Governorate · Surra is a large area in Capital Governorate with 2,269 land parcels. Of these, currently 58 are vacant. · The average land parcel size is 686 sq.m. · We tracked 260 transactions in this area and found that in 17 cases, land parcels were traded multiple times. The percentage of this is just 6.5%.

Table 49: Snapshot of Private Housing Units in Surra Total Private Housing Land Parcels 2,269 Vacant Land Parcels 58 Total Houses 2,211 Total Area of All Land Parcels 1,557,380 sq.m. Average Land Parcel Size 686 sq.m.

Table 50: Analysis of Speculative Transactions in Surra Units Covered for Transactions 260 Units with Single Transaction 196 Units with Multiple Transaction 64 Transactions with Development 57 Transactions without Development 17 Proportion of Possible Speculative Transactions 6.5%

· Chart 45 shows that land prices increased from KD 481 per sq.m. in 2007 to KD 867 per sq.m. in 2014; a CAGR of 8.8%. · Over the same period, the house increased from an average value of KD 330,000 to KD 557,000; a CAGR of 7.7%. · We note that in both cases, the growth rate is lower than the corresponding growth rates for Kuwait.

64 46

65 Yarmouk Capital Governorate · The area of Yarmouk has 1,394 land parcels and 115 land parcels are empty. Among all areas of Capital Governorate, Yarmouk has the highest vacancy rate of 8.2%. · The average land parcel size is 740 sq.m. · We tracked 153 transactions here over the period of last 8 years and found around 21 cases of possible speculative transactions.

Table 51: Snapshot of Private Housing Units in Yarmouk Total Private Housing Land Parcels 1,394 Vacant Land Parcels 115 Total Houses 1,279 Total Area of All Land Parcels 1,030,886 sq.m. Average Land Parcel Size 740 sq.m.

Table 52: Analysis of Speculative Transactions in Yarmouk Units Covered for Transactions 153 Units with Single Transaction 130 Units with Multiple Transaction 23 Transactions with Development 2 Transactions without Development 21 Proportion of Possible Speculative Transactions 13.7%

· Chart 47 shows that the land prices here increased from KD 717 per sq.m. in 2007 to KD 1,128 per sq.m. in 2014. This is a CAGR of just 6.7%. · Over the same period, average house prices increased from KD 464,000 to KD 722,000; a CAGR of 6.5%. · The growth rates of land prices and house prices have been moderate in Yarmouk over the last 8 years.

66 67 Bayan Hawalli Governorate · Bayan is the second largest private housing area in Hawalli Governorate with close to 4,000 land parcels. · Of these, 504 land parcels are vacant and there are 3,444 houses. · The average land parcel size is 512 sq.m. · We have tracked 293 transactions here with a possible speculative proportion of 15.0%, which is a moderate number.

Table 53: Snapshot of Private Housing Units in Bayan Total Private Housing Land Parcels 3,948 Vacant Land Parcels 504 Total Houses 3,444 Total Area of All Land Parcels 2,019,854 sq.m. Average Land Parcel Size 512 sq.m.

Table 54: Analysis of Speculative Transactions in Bayan Units Covered for Transactions 293 Units with Single Transaction 249 Units with Multiple Transaction 44 Transactions with Development - Transactions without Development 44 Proportion of Possible Speculative Transactions 15.0%

· Chart 49 shows that Bayan land prices increased from KD 400 per sq.m. in 2007 to around KD 900 by 2014; a CAGR of 12.2%. This is higher than the growth rate of Kuwait. · In Chart 50, we show that the average house price has increased from KD 200,000 to KD 355,000 over the same period. This is a CAGR of 8.6%, which is lower than the Kuwait growth rate. · We believe that the land prices might have gone bit ahead of the market in this location and this will restrict further upside in the coming years.

68 49

69 Hitteen Hawalli Governorate · In Hitteen, there are 1,928 land parcels with 115 vacant and 1,813 houses. · The average land parcel size is 475 sq.m. · Of the 250 transactions that we tracked here, the proportion of possible speculative transactions is 12.0%.

Table 55: Snapshot of Private Housing Units in Hitteen Total Private Housing Land Parcels 1,928 Vacant Land Parcels 115 Total Houses 1,813 Total Area of All Land Parcels 916,029 sq.m. Average Land Parcel Size 475 sq.m.

Table 56: Analysis of Speculative Transactions in Hitteen Units Covered for Transactions 250 Units with Single Transaction 203 Units with Multiple Transaction 47 Transactions with Development 17 Transactions without Development 30 Proportion of Possible Speculative Transactions 12.0%

· Chart 51 shows that the land prices trend in Hitteen is somewhat moderate but steady. The CAGR of land prices here is 8.6%. · Chart 52 shows the trend in average house prices. After growing moderately for first 6 years, the house prices climbed rapidly in 2013 and 2014. · The CAGR of house prices for the full 8 years period is 9.8%.

70 71 Jabriya Hawalli Governorate · Jabriya is another large private housing area in Hawalli Governorate. · It has more than 3,000 land parcels with just 118 of them empty. · The average land parcel size is 666 sq.m. · We tracked 457 transactions in Jabriya and found 99 cases where the same land parcel was traded multiple times without development. · The proportion of such transactions in the overall transactions is 21.7%, which points to moderate speculative activities.

Table 57: Snapshot of Private Housing Units in Jabriya Total Private Housing Land Parcels 3,063 Vacant Land Parcels 118 Total Houses 2,945 Total Area of All Land Parcels 2,039,937 sq.m. Average Land Parcel Size 666 sq.m.

Table 58: Analysis of Speculative Transactions in Jabriya Units Covered for Transactions 457 Units with Single Transaction 339 Units with Multiple Transaction 118 Transactions with Development 19 Transactions without Development 99 Proportion of Possible Speculative Transactions 21.7%

• Chart 53 shows a bit of up and down trend in land prices. This might not reflect the market conditions but maybe due to wide variety of land parcels in this area that command different prices. • Overall, the land prices registered a CAGR of 5.9% over the period of 8 years. • House prices show a more defined trend in Chart 54. After dropping from 2007 till 2009 due to the financial crisis, house prices are steadily increasing. However, to the initial drop the CAGR of house prices is 6.1% over the entire period. It is one of the lowest growth rate in house prices in major areas of Kuwait.

72 73 Mishref Hawalli Governorate · Mishref has 2,429 land parcels and has 261 of them vacant currently. · The average land parcel size here is 836 sq.m., which is the largest among all the major private housing areas in Hawalli Governorate. · We tracked 206 transactions here over the last 8 years found 15.0% of them to be possibly speculative.

Table 59: Snapshot of Private Housing Units in Mishref Total Private Housing Land Parcels 2,429 Vacant Land Parcels 261 Total Houses 2,168 Total Area of All Land Parcels 2,030,930 sq.m. Average Land Parcel Size 836 sq.m.

Table 60: Analysis of Speculative Transactions in Mishref Units Covered for Transactions 206 Units with Single Transaction 172 Units with Multiple Transaction 34 Transactions with Development 3 Transactions without Development 31 Proportion of Possible Speculative Transactions 15.0%

· Chart 55 shows the land price trends and strangely the prices have moved mostly sideways. This reading might not be correct and the land price data for the year 2008 and 2009 looks skewed. · Overall, the land prices how a CAGR of 5.6%, which is quite low for a major residential area in Hawalli. · Chart 56 shows clear trend of house price appreciation. From KD 281,000 in 2007, the average house price has increased to KD 616,000; a CAGR of 11.8%. This is quite rapid growth rate compared to most other major areas.

74 75 Mubarak Al Abdulla Hawalli Governorate · While Mubarak AL Abdulla is not as big an area as Mishref is, the average land parcel size is comparable at 801 sq.m. to 836 sq.m. of Mishref. · There are 121 vacant land parcels in this area. · We tracked 124 transactions here and the proportion of speculative transactions is 15.3%.

Table 61: Snapshot of Private Housing Units in Mubarak Al Abdulla Total Private Housing Land Parcels 1,006 Vacant Land Parcels 121 Total Houses 885 Total Area of All Land Parcels 805,663 sq.m. Average Land Parcel Size 801 sq.m.

Table 62: Analysis of Speculative Transactions in Mubarak Al Abdulla Units Covered for Transactions 124 Units with Single Transaction 97 Units with Multiple Transaction 27 Transactions with Development 8 Transactions without Development 19 Proportion of Possible Speculative Transactions 15.3%

· In terms of land prices, this area is quite expensive with a rate of KD 1,108 per sq.m. in 2014. · The land prices have increased at a CAGR of 5.2% over the last 8 years. · The average house price is KD 433,000 in 2014 and the 8 years CAGR is 5.1% for house prices. · The relationship between the house prices and land prices is not very solid here and the land prices appear to be ahead of the house prices. This may limit the upside of land prices going forward.

76 77 Rumaithiya Hawalli Governorate · Rumaithiya is another large area with 2,734 land parcels for private housing. · The vacant land parcels are just 17 and the average size of a land parcel is 699 sq.m. · We tracked 380 transactions here and just 2.4% are possible speculative transactions.

Table 63: Snapshot of Private Housing Units in Rumaithiya Total Private Housing Land Parcels 2,734 Vacant Land Parcels 17 Total Houses 2,717 Total Area of All Land Parcels 1,909,997 sq.m. Average Land Parcel Size 699 sq.m.

Table 64: Analysis of Speculative Transactions in Rumaithiya Units Covered for Transactions 380 Units with Single Transaction 340 Units with Multiple Transaction 40 Transactions with Development 31 Transactions without Development 9 Proportion of Possible Speculative Transactions 2.4%

· Chart 59 shows the land prices have increased from KD 322 per sq.m. in 2007 to KD 663 per sq.m. in 2014; a CAGR of 10.9%. · Chart 60 shows the house price trend, in 2007 the average house price was KD 245,000 and it increased to KD 565,000 in 2014; a CAGR of 12.7%. This is a very good rate of appreciation for any major areas in Kuwait. · The relationship between land prices and house prices is favorable in Rumaithiya pointing to some potential upside in land prices.

78 79 Salam Hawalli Governorate · Salam is also a large private housing area with 2,842 land parcels and a sizeable number of 620 vacant. · The average parcel size is 505 sq.m. · We tracked 602 transactions and in 79 cases, land parcels were traded multiple times without any development. The proportion of such transactions is 13.1%.

Table 65: Snapshot of Private Housing Units in Salam Total Private Housing Land Parcels 2,842 Vacant Land Parcels 620 Total Houses 2,222 Total Area of All Land Parcels 1,435,617 sq.m. Average Land Parcel Size 505 sq.m.

Table 66: Analysis of Speculative Transactions in Salam Units Covered for Transactions 602 Units with Single Transaction 478 Units with Multiple Transaction 124 Transactions with Development 45 Transactions without Development 79 Proportion of Possible Speculative Transactions 13.1%

· Chart 61 shows the land price trend; from KD 479 per sq.m. in 2007, the land prices have now reached KD 1,061 per sq.m. in 2014. This is high growth rate of 12.0% per annum. · The house prices have increased from KD 277,000 in 2007 to KD 505,000 in 2014, annual growth rate of 9.0%. · Clearly, there is disconnect between the land price growth and the house price growth. We feel that the land prices are bit ahead of houses prices in this location and there might be some correction.

80 81 Salmiya Hawalli Governorate · While Salmiya is predominately an Investment Area in Kuwait, there are around 500 land parcels zoned as private housing. · Just nine of such land parcels are currently vacant. · The average size of these land parcels is 665 sq.m. after adjusting for some very large land parcels from the calculations. · We have tracked just 26 transactions of private housing in this area and only in two cases, land parcels were traded multiple times without development.

Table 67: Snapshot of Private Housing Units in Salmiya Total Private Housing Land Parcels 526 Vacant Land Parcels 9 Total Houses 517 Total Area of All Land Parcels 547,457 sq.m. Average Land Parcel Size 1,041 sq.m.

Table 68: Analysis of Speculative Transactions in Salmiya Units Covered for Transactions 26 Units with Single Transaction 24 Units with Multiple Transaction 2 Transactions with Development - Transactions without Development 2 Proportion of Possible Speculative Transactions 7.7%

· We do not have adequate data of land prices for this location as most of the land parcels were developed long time ago. · Chart 63 shows the house price trend for Salmiya. From KD 253,000 in 2007, the house prices have now reached KD 427,000; a CAGR of 7.8%.

82 83 Salwa Hawalli Governorate · Salwa is the largest private housing area in Hawalli Governorate with nearly 4,000 land parcels. · Of these, 191 are currently vacant and we have 3,808 houses here. · The average land parcel size is 701 sq.m. · We tracked 715 transactions in this location and of these 20.1% transactions were possibly speculative.

Table 69: Snapshot of Private Housing Units in Salwa Total Private Housing Land Parcels 3,999 Vacant Land Parcels 191 Total Houses 3,808 Total Area of All Land Parcels 2,804,787 sq.m. Average Land Parcel Size 701 sq.m.

Table 70: Analysis of Speculative Transactions in Salwa Units Covered for Transactions 715 Units with Single Transaction 558 Units with Multiple Transaction 157 Transactions with Development 13 Transactions without Development 144 Proportion of Possible Speculative Transactions 20.1%

· Chart 64 shows the trend in land prices. The prices show stable growth till 2013 but the average price jumped in 2014. Due to this, the CAGR of land prices for the full period of 8 years is 14.2%. However, it remains doubtful that how valid the land price data of 2014 is.

· The house price data shown in Chart 65 is more credible. The trend is moderately rising and the 8 year CAGR is 9.2%.

84 85 Shaab Hawalli Governorate · Shaab is another area like Salmiya, which is a mixture of private housing and investment area. · There are just 323 private housing parcels of which just 12 are vacant. · Average land parcel size is 700 sq.m. · We tracked 53 transactions in this area and the percentage of speculative transactions is around 15.1%.

Table 71: Snapshot of Private Housing Units in Shaab Total Private Housing Land Parcels 323 Vacant Land Parcels 12 Total Houses 311 Total Area of All Land Parcels 226,019 sq.m. Average Land Parcel Size 700 sq.m.

Table 72: Analysis of Speculative Transactions in Shaab Units Covered for Transactions 53 Units with Single Transaction 44 Units with Multiple Transaction 9 Transactions with Development 1 Transactions without Development 8 Proportion of Possible Speculative Transactions 15.1% · Chart 66 shows that the land price data is not available for all the years. Recent land transactions have taken place at a value of KD 1,400 per sq.m., which is quite high. · Chart 67 shows the house price trend. The CAGR for the whole 8 year period is 3.8%.

86 87 Shuhada Hawalli Governorate · Shuhada area has 1,567 land parcels with private housing zoning. Of these 127 are vacant and 1,440 are houses. · Average land size is 547 sq.m. · We tracked 302 transactions in this area and 12.6% are possible speculative transactions.

Table 73: Snapshot of Private Housing Units in Shuhada Total Private Housing Land Parcels 1,567 Vacant Land Parcels 127 Total Houses 1,440 Total Area of All Land Parcels 857,154 sq.m. Average Land Parcel Size 547 sq.m.

Table 74: Analysis of Speculative Transactions in Shuhada Units Covered for Transactions 302 Units with Single Transaction 239 Units with Multiple Transaction 63 Transactions with Development 26 Transactions without Development 37 Proportion of Possible Speculative Transactions 12.6% · Chart 68 shows a stable trend of land price appreciation. Between 2007 and 2014, the land prices have appreciated by 8.2% compounded growth per annum. · Houses price trends are shown in Chart 69, the CAGR of house prices is 6.8% per annum for the 8 year period.

88 89 Siddiq Hawalli Governorate · Siddiq is a large private housing area in Hawalli, which is being developed now. · Of 2,608 land parcels, nearly 2,395 are vacant and there are just 213 houses. · The average land parcel size is 542 sq.m. · Despite being an area with mostly land parcels, the percentage of possible speculative transactions where the same land parcel is sold multiple times is just 14.1%.

Table 75: Snapshot of Private Housing Units in Siddiq Total Private Housing Land Parcels 2,608 Vacant Land Parcels 2,395 Total Houses 213 Total Area of All Land Parcels 1,414,340 sq.m. Average Land Parcel Size 542 sq.m.

Table 76: Analysis of Speculative Transactions in Siddiq Units Covered for Transactions 312 Units with Single Transaction 264 Units with Multiple Transaction 48 Transactions with Development 4 Transactions without Development 44 Proportion of Possible Speculative Transactions 14.1%

· Chart 70 shows the land price trend in this area and Chart 71 shows house price trends. Since there are very few houses, the data is not sufficient for house prices. · For the land prices, the 8-year CAGR is solid 14.0%. This is substantially higher than the average for Kuwait at 11.1%. · The average land price in 2014 is KD 1,079 per sq.m. We feel that the prices have gone too high given that it is still a new area.

90 Chart 70: Trend of Land Prices (per sq.m.) in Siddiq

KD 1079

KD 927

KD 667 KD 543 KD 431 KD 456 KD 375 KD 360

2007 2008 2009 2010 2011 2012 2013 2014

Chart 71: Trend of House Prices in Siddiq

KD 465k KD 440k

------

2007 2008 2009 2010 2011 2012 2013 2014

91 Zahra Hawalli Governorate · Zahra area has 2,875 land parcels with 766 of them vacant. · The average land parcel size is 490 sq.m., which is one of the smallest in Hawalli Governorate. · We tracked 755 transactions in this area over 8 years. Of these 12.6% were possibly speculative.

Table 77: Snapshot of Private Housing Units in Zahra Total Private Housing Land Parcels 2,875 Vacant Land Parcels 766 Total Houses 2,109 Total Area of All Land Parcels 1,409,553 sq.m. Average Land Parcel Size 490 sq.m.

Table 78: Analysis of Speculative Transactions in Zahra Units Covered for Transactions 755 Units with Single Transaction 549 Units with Multiple Transaction 206 Transactions with Development 71 Transactions without Development 135 Proportion of Possible Speculative Transactions 12.6%

· Land prices in Zahra increased from KD 444 per sq.m. in 2007 to KD 836 in 2014; a CAGR of 9.5%. · House prices over the same time increased from KD 248,000 to KD 455,000; a CAGR of 9.0%. · Both the price series have moved in accord over the period of 8 years.

92 93 Abdulla Al Mubarak Farwania Governorate · Abdulla Al Mubarak is one of the largest private housing areas in Kuwait. · The area has 4,923 land parcels and just 27 of them are vacant. It has one of the lowest vacancy rates in Kuwait. · The average land parcel size is 416 sq.m. · We tracked 418 transactions here and just 3 of the are possibly speculative.

Table 79: Snapshot of Private Housing Units in Abdulla Al Mubarak Total Private Housing Land Parcels 4,923 Vacant Land Parcels 27 Total Houses 4,896 Total Area of All Land Parcels 2,048,813 sq.m. Average Land Parcel Size 416 sq.m.

Table 80: Analysis of Speculative Transactions in Abdulla Al Mubarak Units Covered for Transactions 418 Units with Single Transaction 399 Units with Multiple Transaction 19 Transactions with Development 16 Transactions without Development 3 Proportion of Possible Speculative Transactions 0.8%

· We do not have data on land prices in Abdulla Al Mubarak, as there are very few vacant land parcels in this area.

· Chart 74 shows the house price trend in this area. Average prices increased from KD 161,000 in 2007 to KD 309,000 in 2014; a CAGR of 9.7%.

94 95 Andalus Farwania Governorate · Andalus area has 2,622 land parcels with private housing zoning and of these 141 are vacant. · The average land parcel size is 516 sq.m. · We tracked 394 transactions here and found 77 cases where the same land was traded multiple times with development. The proportion of such transactions is 19.5%, which points to moderate speculation.

Table 81: Snapshot of Private Housing Units in Andalus Total Private Housing Land Parcels 2,622 Vacant Land Parcels 141 Total Houses 2,481 Total Area of All Land Parcels 1,353,616 sq.m. Average Land Parcel Size 516 sq.m.

Table 82: Analysis of Speculative Transactions in Andalus Units Covered for Transactions 394 Units with Single Transaction 310 Units with Multiple Transaction 84 Transactions with Development 7 Transactions without Development 77 Proportion of Possible Speculative Transactions 19.5%

· Andalus has the highest growth rate of land prices among all areas in Kuwait. Chart 75 shows that from a low of KD 220 per sq.m. in 2007, land prices increased to KD 801 per sq.m. in 2014. · This is a CAGR of 20.2%, which is nearly double the rate of Kuwait. This is spectacular rate of land price increase. · Chart 76 shows the trend in house prices that increased at a CAGR of 11.3% over the 8-year period. This is somewhat faster rate than the house prices growth rate in Kuwait. · The house prices are always more credible than the land prices because land is an input factor for the houses and if the house prices do not justify the land price, there might be a correction in land prices. · Given the difference between the growth of house prices and land prices, we fear that land prices have gone too far ahead of the house prices.

96 97 Ardiya Farwania Governorate · Ardiya area has 1,999 land parcels with 30 of them currently vacant. · The average land parcel size is 498 sq.m. · Over the period of 8 years, we recorded 186 transactions in this area and 12.4% of these may be speculative. Most of these transactions took place in 2007 and 2008.

Table 83: Snapshot of Private Housing Units in Ardiya Total Private Housing Land Parcels 1,999 Vacant Land Parcels 30 Total Houses 1,969 Total Area of All Land Parcels 996,489 sq.m. Average Land Parcel Size 498 sq.m.

Table 84: Analysis of Speculative Transactions in Ardiya Units Covered for Transactions 186 Units with Single Transaction 161 Units with Multiple Transaction 25 Transactions with Development 2 Transactions without Development 23 Proportion of Possible Speculative Transactions 12.4%

· Chart 77 shows that land price data is not available for recent years the vacant land parcels are very few now. · House prices have shown average growth trend with a CAGR of 9.4% over 8 years.

98 99 Ashbilia Farwania Governorate · The area of Ashbilia has 1,724 land parcels of which 260 are vacant. · Average land parcel size is 485 sq.m. · We have substantially number of transactions (889) recorded in this area over 8 years. · Of these 21.3% are possibly speculative, which points to speculative activities.

Table 85: Snapshot of Private Housing Units in Ashbilia Total Private Housing Land Parcels 1,724 Vacant Land Parcels 260 Total Houses 1,464 Total Area of All Land Parcels 836,013 sq.m. Average Land Parcel Size 485 sq.m.

Table 86: Analysis of Speculative Transactions in Ashbilia Units Covered for Transactions 889 Units with Single Transaction 632 Units with Multiple Transaction 257 Transactions with Development 68 Transactions without Development 189 Proportion of Possible Speculative Transactions 21.3%

· Chart 79 shows the trend in land prices and chart 80 shows trend in house prices. A quick visual inspection of the two charts suggest that land prices have increased at a rate faster than house prices. · The CAGR of land prices is 14.7% over 8 years and the CAGR of house prices is just 8.4%. · The differential in the growth rate of land prices and house prices again point to speculative activities in land parcels.

100 Chart 79: Trend of Land Prices (per sq.m.) in Ashbilia

KD 864 KD 791

KD 564 KD 493 KD 387 KD 405 KD 331 KD 353

2007 2008 2009 2010 2011 2012 2013 2014

Chart 80: Trend of House Prices in Ashbilia

KD 354k KD 313k KD 297k KD 256k KD 215k KD 221k KD 222k KD 202k

2007 2008 2009 2010 2011 2012 2013 2014

101 Firdous Farwania Governorate · Firdous is one of those few areas that do not have any land parcel vacant now. It has total 3,532 land parcels and all of them are now developed into houses. · The average land parcel size is quite small at 312 sq.m, the smallest in Farwania Governorate. · We tracked 367 transactions here and there were 68 transactions where the same property was traded multiple times. However, in 66 such cases land parcels were developed into houses and sold. · In just two cases, land parcels were traded multiple times with development.

Table 87: Snapshot of Private Housing Units in Firdous Total Private Housing Land Parcels 3,532 Vacant Land Parcels 0 Total Houses 3,532 Total Area of All Land Parcels 1,103,610 sq.m. Average Land Parcel Size 312 sq.m.

Table 88: Analysis of Speculative Transactions in Firdous Units Covered for Transactions 367 Units with Single Transaction 299 Units with Multiple Transaction 68 Transactions with Development 66 Transactions without Development 2 Proportion of Possible Speculative Transactions 0.5%

· With no land parcels vacant, we do not have data for land prices in this area. · Chart 81 shows the house price trend for this area. From a low of KD 87,000 for a house in 2007, the average prices have reached KD 202,000; a CAGR of 12.8%. · Despite a better than average growth in houses prices, the houses in this area are quite affordable.

102 103 Khaitan Farwania Governorate · Khaitan is mixture of private housing and investment land parcels. · The area has 908 land parcels of which 21 are vacant. The average land parcel size is 520 sq.m. · We could not obtain much data on land prices or house prices for this area. · Only 10 transactions were recorded over the period of 8 years, which is not sufficient to draw any conclusion.

Table 89: Snapshot of Private Housing Units in Khaitan Total Private Housing Land Parcels 908 Vacant Land Parcels 21 Total Houses 887 Total Area of All Land Parcels 471,917 sq.m. Average Land Parcel Size 520 sq.m. * Does not include the large land parcels taken over by the government

Table 90: Analysis of Speculative Transactions in Khaitan Units Covered for Transactions 10 Units with Single Transaction 9 Units with Multiple Transaction 1 Transactions with Development - Transactions without Development 1 Proportion of Possible Speculative Transactions 10.0%

· We do not have data on land prices for Khaitan. For houses prices data shown in Chart 82 is based on very few transactions and therefore, it may not reflect the real market conditions. · The house price CAGR based on the limited data is 15.2% for the period of 8 years.

104 105 Omariya Farwania Governorate · Omariya has 1,144 land parcels with an average size of 595 sq.m. · Of these 25 land parcels are vacant. · We registered 143 transactions in this area with a very small percentage of them being speculative.

Table 91: Snapshot of Private Housing Units in Omariya Total Private Housing Land Parcels 1,144 Vacant Land Parcels 25 Total Houses 1,119 Total Area of All Land Parcels 681,032 sq.m. Average Land Parcel Size 595 sq.m.

Table 92: Analysis of Speculative Transactions in Omariya Units Covered for Transactions 143 Units with Single Transaction 132 Units with Multiple Transaction 11 Transactions with Development - Transactions without Development 11 Proportion of Possible Speculative Transactions 9.4%

· Data on land prices is not available for the recent years. · Average house price has increased from KD 173,000 in 2007 to KD 379,000 in 2014. This is annual growth rate of 11.9%.

106 107 Rabiya Farwania Governorate · Rabiya is another area where all 1,047 land parcels are developed into houses and there are no vacant land parcels. · The average size of a land parcel is 477 sq.m. · We recorded 126 transactions in this area with no speculative transaction.

Table 93: Snapshot of Private Housing Units in Rabiya Total Private Housing Land Parcels 1,047 Vacant Land Parcels 0 Total Houses 1,047 Total Area of All Land Parcels 499,351 sq.m. Average Land Parcel Size 477 sq.m.

Table 94: Analysis of Speculative Transactions in Rabiya Units Covered for Transactions 126 Units with Single Transaction 102 Units with Multiple Transaction 24 Transactions with Development 24 Transactions without Development 0 Proportion of Possible Speculative Transactions 0.0%

· Like all areas with no vacant lands, the land price data is only available for 2009 and 2012. The last of the land parcel was sold in 2012 for KD 600 per sq.m. and later developed into a house. · Chart 86 shows house price trend. Over 8 years, the house prices have gained by 12.6% annual growth rate.

108 109 Rehab Farwania Governorate · Rehab also doesn’t have any vacant land parcel as all 1275 land parcels are developed into houses. · Average land parcel area is 409 sq.m. · We registered 83 transactions here with no speculative transaction.

Table 95: Snapshot of Private Housing Units in Rehab Total Private Housing Land Parcels 1,275 Vacant Land Parcels 0 Total Houses 1,275 Total Area of All Land Parcels 521,141 sq.m. Average Land Parcel Size 409 sq.m.

Table 96: Analysis of Speculative Transactions in Rehab Units Covered for Transactions 83 Units with Single Transaction 69 Units with Multiple Transaction 14 Transactions with Development 14 Transactions without Development 0 Proportion of Possible Speculative Transactions 0.0%

· With no vacant land parcels, data on land prices is not available. · Chart 87 shows house price trend. From a low of KD 138,000 in 2007, house prices have reached KD 320 in 2014. · The house price CAGR is 12.7%.

110 111 Sabah Al Nasser Farwania Governorate · With 50 vacant land parcels and 1,986 houses, Sabah Al Nasser has total 2,036 private housing land parcels. · The average size is 585 sq.m. which is the second largest size in Farwania Governorate. · We recorded 270 transactions here over the last 8 years. · Of these 38 transactions were the cases where same land parcels were traded several times. This is 14.1% of all transactions.

Table 97: Snapshot of Private Housing Units in Sabah Al Nasser Total Private Housing Land Parcels 2,036 Vacant Land Parcels 50 Total Houses 1,986 Total Area of All Land Parcels 1,190,563 sq.m. Average Land Parcel Size 585 sq.m.

Table 98: Analysis of Speculative Transactions in Sabah Al Nasser Units Covered for Transactions 270 Units with Single Transaction 227 Units with Multiple Transaction 43 Transactions with Development 5 Transactions without Development 38 Proportion of Possible Speculative Transactions 14.1%

· Chart 88 shows a bit of up and down trend in land prices. This is because very few vacant land parcels are available and therefore, the data not be representative of the market. · House prices have gained at an annual rate of 10.8% over the last 8 years.

112 89

113 Abu Halifa Ahmadi Governorate · Abu Halifa is mostly an investment zoned area but there are 226 private housing land parcels and of these nothing is vacant. · The average land parcel size is quite large at 754 sq.m. · Very few transactions were recorded for either land parcels or houses in Abu Halifa over the last 8 years.

Table 99: Snapshot of Private Housing Units in Abu Halifa Total Private Housing Land Parcels 226 Vacant Land Parcels 0 Total Houses 226 Total Area of All Land Parcels 170,511 sq.m. Average Land Parcel Size 754 sq.m.

Table 100: Analysis of Speculative Transactions in Abu Halifa Units Covered for Transactions 26 Units with Single Transaction 23 Units with Multiple Transaction 3 Transactions with Development - Transactions without Development 3 Proportion of Possible Speculative Transactions 11.5%

· Chart 90 shows the trend in house prices but this may not be representative of the market.

114 115 Dhaher Ahmadi Governorate · Dhaher is a large area for private housing with 2,477 parcels. Only five of these are currently vacant. · The average size of a land parcels is 280 sq.m., which is one of the smallest in Kuwait. · We recorded 216 transactions in this area with hardly any that can be classified as speculative.

Table 101: Snapshot of Private Housing Units in Dhaher Total Private Housing Land Parcels 2,477 Vacant Land Parcels 5 Total Houses 2,472 Total Area of All Land Parcels 693,413 sq.m. Average Land Parcel Size 280 sq.m.

Table 102: Analysis of Speculative Transactions in Dhaher Units Covered for Transactions 216 Units with Single Transaction 191 Units with Multiple Transaction 25 Transactions with Development 20 Transactions without Development 5 Proportion of Possible Speculative Transactions 4.8%

· With small land parcel size, houses in Dhaher are very affordable. The average house price was KD 76,000 in 2007 and it has increased to KD 169,000 in 2014. This is the second lowest value of houses in Kuwait. · The CAGR of house prices is 12.1%.

116 117 Ahmadi Ahmadi Governorate · Ahmadi has 3,425 private housing land parcels of which 792 are vacant. · The average parcel size is 428 sq.m. · Despite it being a big area, we have just 80 transactions recorded in Ahmadi over the last 8 years. The data may not represent the market conditions appropriately.

Table 103: Snapshot of Private Housing Units in East Ahmadi Total Private Housing Land Parcels 3,425 Vacant Land Parcels 792 Total Houses 2,633 Total Area of All Land Parcels 1,463,692 sq.m. Average Land Parcel Size 428 sq.m.

Table 104: Analysis of Speculative Transactions in Ahmadi Units Covered for Transactions 80 Units with Single Transaction 70 Units with Multiple Transaction 10 Transactions with Development - Transactions without Development 10 Proportion of Possible Speculative Transactions 12.5%

· Chart 92 shows the house prices increased from KD 69,000 in 2007 to KD 175,000 in 2014. This is a very impressive CAGR of 14.1%.

118 119 Egaila Ahmadi Governorate · Egaila is an area with 1,929 private housing land parcels with 581 of them empty. · The average size of a land parcel here is 480 sq.m. · We have 809 transactions in this area and out of the 187 cases are such where same land parcels were traded multiple time. · The proportion of such transactions is 23.1% that indicates speculative activities.

Table 105: Snapshot of Private Housing Units in Egaila Total Private Housing Land Parcels 1,929 Vacant Land Parcels 581 Total Houses 1,348 Total Area of All Land Parcels 926,270 sq.m. Average Land Parcel Size 480 sq.m.

Table 106: Analysis of Speculative Transactions in Egaila Units Covered for Transactions 809 Units with Single Transaction 517 Units with Multiple Transaction 292 Transactions with Development 105 Transactions without Development 187 Proportion of Possible Speculative Transactions 23.1%

· Chart 93 shows that the land prices have registered sudden spike in last 2 years. It appears that this is due to some speculative activities in these years. · The CAGR of land prices is 12.2% over the full period of 8 years. Overall, the land prices have increased by 225% over the period of 8 years and nearly three quarter of this gain has come in last two years. · The houses prices in Chart 94 do not show any such spike in growth over the last 2 years. The CAGR of house prices for the full period of 8 years is 11.1%.

120 93

121 Fahad Al Ahmad Ahmadi Governorate · Fahad AL Ahmad area has 1,973 land parcels with just five of them vacant. · The average parcel size is 407 sq.m. · We have only 64 transactions covered for this area and around 7.8% of these were possible speculative. This points to low speculation activities in this area.

Table 107: Snapshot of Private Housing Units in Fahad Al Ahmad Total Private Housing Land Parcels 1,973 Vacant Land Parcels 5 Total Houses 1,968 Total Area of All Land Parcels 803,611 sq.m. Average Land Parcel Size 407 sq.m.

Table 108: Analysis of Speculative Transactions in Fahad Al Ahmad Units Covered for Transactions 64 Units with Single Transaction 59 Units with Multiple Transaction 5 Transactions with Development - Transactions without Development 5 Proportion of Possible Speculative Transactions 7.8%

· Chart 95 shows that house prices have increased from KD 154,000 in 2007 to KD 297,000 in 2014. · This is a CAGR of 9.8%.

122 95

123 Fahaheel Ahmadi Governorate · Fahaheel is another area with mixture of private housing and investment zoned land parcels. · There are 1,119 private housing parcels with 61 of them vacant. The average land parcel size is 744 sq.m. · We have data on 116 units in this area we around 19.8% transactions were possible speculative. This indicates reasonably high level of speculation in this area.

Table 109: Snapshot of Private Housing Units in Fahaheel Total Private Housing Land Parcels 1,119 Vacant Land Parcels 61 Total Houses 1,058 Total Area of All Land Parcels 832,781 sq.m. Average Land Parcel Size 744 sq.m.

Table 110: Analysis of Speculative Transactions in Fahaheel Units Covered for Transactions 116 Units with Single Transaction 91 Units with Multiple Transaction 25 Transactions with Development 2 Transactions without Development 23 Proportion of Possible Speculative Transactions 19.8%

· Chart 96 shows land price data from 20till 2014. Over this five-year period, the land prices have increased at an annual rate of 20.1%. This once again suggests high activities of speculation in land. · Chart 97 shows house prices trends. The CAGR of house prices is 13.6% over the last 8 years.

124 96

125 Fintas / Fintas Agriculture Ahmadi Governorate · Fintas has only 541 private housing parcels, as it is primarily an investment area. · Of these 102 land parcels are vacant. · The average land parcel size of 1,217 sq.m. which is quite large for private housing land parcels. · We have 40 transactions in this area over the last 8 years and 32.5% of them are possibly speculative. This clearly points to high speculation in land parcels.

Table 111: Snapshot of Private Housing Units in Fintas Total Private Housing Land Parcels 541 Vacant Land Parcels 102 Total Houses 439 Total Area of All Land Parcels 658,398 sq.m. Average Land Parcel Size 1,217 sq.m.

Table 112: Analysis of Speculative Transactions in Fintas Units Covered for Transactions 40 Units with Single Transaction 27 Units with Multiple Transaction 13 Transactions with Development - Transactions without Development 13 Proportion of Possible Speculative Transactions 32.5%

· Chart 98 shows data on land prices is available only after 2010. Between 2010 and 2014, the average gain in land prices is 16.3% annually. · The houses have increased prices from KD 200,000 in 2007 to 419,000 in 2014; a CAGR of 11.1%.

126 98

127 Hadiya Ahmadi Governorate · Hadiya area has 1,495 land parcels with private housing zoning. Of these 334 are vacant and 1,161 have housed developed on them. · The average land parcel size is 617 sq.m. · We have 292 transactions in this area and of these 54 (18.5%) are possible speculative. This point to some speculative activities in this area.

Table 113: Snapshot of Private Housing Units in Hadiya Total Private Housing Land Parcels 1,495 Vacant Land Parcels 334 Total Houses 1,161 Total Area of All Land Parcels 922,836 sq.m. Average Land Parcel Size 617 sq.m.

Table 114: Analysis of Speculative Transactions in Hadiya Units Covered for Transactions 292 Units with Single Transaction 233 Units with Multiple Transaction 59 Transactions with Development 5 Transactions without Development 54 Proportion of Possible Speculative Transactions 18.5%

· Chart 100 shows land prices increasing from KD 258 per sq.m. in 2007 to KD 455 per sq.m. in 2014. This is a CAGR of 8.4%. · Chart 101 shows house price trends where the CAGR is 8.1%. · Both growth rates have moved in accord with each other.

128 100

101

129 Mangaf Ahmadi Governorate · Mangaf area has 2,154 private housing land parcels of which 121 are vacant. Substantial part of this area is zoned has investment also. · The average land parcel size is 398 sq.m. · We have 527 transactions in this area and 137 were the transactions possibly speculative. Most of these transactions took place in years between 2007 and 2010 when this area has several more vacant land parcels.

Table 115: Snapshot of Private Housing Units in Mangaf Total Private Housing Land Parcels 2,154 Vacant Land Parcels 121 Total Houses 2,033 Total Area of All Land Parcels 857,789 sq.m. Average Land Parcel Size 398 sq.m.

Table 116: Analysis of Speculative Transactions in Mangaf Units Covered for Transactions 527 Units with Single Transaction 335 Units with Multiple Transaction 192 Transactions with Development 55 Transactions without Development 137 Proportion of Possible Speculative Transactions 26.0%

· Chart 102 shows that the land prices have increased from KD 310 per sq.m. in 2007 to KD 617 per sq.m. in 2014; a CAGR of 10.3%. · The house prices have increased from KD 142,000 in 2007 to KD 329,000 in 2014; CAGR of 12.7%. · This area is one of those few cases where the house price growth rate has been higher than land price growth rate over the period of 8 years.

130 102

103

131 Riggai Ahmadi Governorate · Riggai has just one vacant land parcel out of 2,333 private housing zoned land parcels. · The average size is 426 sq.m. · We tracked 224 transactions and just one of them was a transaction where land parcel was traded multiple times with development.

Table 117: Snapshot of Private Housing Units in Riggai Total Private Housing Land Parcels 2,333 Vacant Land Parcels 1 Total Houses 2,332 Total Area of All Land Parcels 994,333 sq.m. Average Land Parcel Size 426 sq.m.

Table 118: Analysis of Speculative Transactions in Riggai Units Covered for Transactions 224 Units with Single Transaction 215 Units with Multiple Transaction 9 Transactions with Development 8 Transactions without Development 1 Proportion of Possible Speculative Transactions 0.1%

· Chart 104 shows the trend in house prices. The average price was KD 101,000 in 2007 that has now increased to KD 231,000 in 2014. · This is a CAGR of 12.5%.

132 133 Sabah Al Ahmad Marine City Ahmadi Governorate · Sabah Al Ahmad Marine City is another newly developed area with 9,008 land parcels. It has the third highest number of land parcels for any area in Kuwait. · Currently 8,429 land parcels are vacant and there are just 579 houses. · The average area of a land parcel is 899 sq.m. · We have 328 transactions recorded in this area and nearly 55.5% transactions involve trading in land parcels without any development. · Clearly, this area is quite high on speculative activities.

Table 119: Snapshot of Private Housing Units in Sabah Al Ahmad Marine City Total Private Housing Land Parcels 9,008 Vacant Land Parcels 8,429 Total Houses 579 Total Area of All Land Parcels 8,094,335 sq.m. Average Land Parcel Size 899 sq.m.

Table 120: Analysis of Speculative Transactions in Sabah Al Ahmad Marine City Units Covered for Transactions 328 Units with Single Transaction 146 Units with Multiple Transaction 182 Transactions with Development - Transactions without Development 182 Proportion of Possible Speculative Transactions 55.5%

· Chart 105 shows the trend in land prices and there is no data available on house prices. · The land prices have increased from KD 133 per sq.m. in 2007 to KD 316 per sq.m. in 2014. · The CAGR of land prices is 13.1% over 8 years.

134 Chart 105: Trend of Land Prices (per sq.m.) in Sabah Al Ahmad Marine City

KD 316

KD 252

KD 180 KD 133 KD 135 KD 137 KD 116 KD 117

2007 2008 2009 2010 2011 2012 2013 2014

135 Sabahiya Ahmadi Governorate · Sabahiya area has 3,165 land parcels with private housing zoning. Of these 95 are currently vacant. · The average land parcel size is 582 sq.m. · We have 305 transactions for this area of which 15.7% are possibly speculative.

Table 121: Snapshot of Private Housing Units in Sabahiya Total Private Housing Land Parcels 3,165 Vacant Land Parcels 95 Total Houses 3,070 Total Area of All Land Parcels 1,843,081 sq.m. Average Land Parcel Size 582 sq.m.

Table 122: Analysis of Speculative Transactions in Sabahiya Units Covered for Transactions 305 Units with Single Transaction 257 Units with Multiple Transaction 48 Transactions with Development - Transactions without Development 48 Proportion of Possible Speculative Transactions 15.7%

· Chart 106 shows land price data for the year 2008 and 2014. Between these two years, the land prices have increased at a rate of 15.5% annually. With limited data, this may not be representative of the market. · House price data is available for all years in Chart 107. The CAGR of house prices in Sabahiya is 10.4% over this period of 8 years.

136 106

107

137 Abu Ftaira Mubarak Al Kabeer Governorate · Abu Ftaira is another newly emerging area with 3,058 land parcels. · Of these 2,025 land parcels are vacant and the average land parcel size is 441 sq.m. · We have 1,810 transactions recorded in this area, which is the most for any area in Kuwait. · Nearly 52.9% of all the transactions are possibly speculative suggesting a highly speculative area.

Table 123: Snapshot of Private Housing Units in Abu Ftaira Total Private Housing Land Parcels 3,058 Vacant Land Parcels 2,025 Total Houses 1,033 Total Area of All Land Parcels 1,347,664 sq.m. Average Land Parcel Size 441 sq.m.

Table 124: Analysis of Speculative Transactions in Abu Ftaira Units Covered for Transactions 1,810 Units with Single Transaction 838 Units with Multiple Transaction 972 Transactions with Development 15 Transactions without Development 957 Proportion of Possible Speculative Transactions 52.9%

· Chart 108 shows the data on land prices in Abu Ftaira. Average land prices have increased from KD 292 per sq.m. in 2007 to KD 682 per sq.m. in 2014. This is a CAGR of 12.7%. · Houses have started emerging very recently in Abu Ftaira and transaction data is shown for houses in Chart 109 for the year 2014. The average house price is KD 251,000.

138 108

109

139 Al Adan Mubarak Al Kabeer Governorate · Al Adan area has 3,504 private housing land parcels and just four of them are vacant. · The average size of a land parcel here is 412 sq.m. · We have total 193 transactions in this area. Of these just four transactions were possibly speculative.

Table 125: Snapshot of Private Housing Units in Al Adan Total Private Housing Land Parcels 3,504 Vacant Land Parcels 4 Total Houses 3,500 Total Area of All Land Parcels 1,441,920 sq.m. Average Land Parcel Size 412 sq.m.

Table 126: Analysis of Speculative Transactions in Al Adan Units Covered for Transactions 193 Units with Single Transaction 185 Units with Multiple Transaction 8 Transactions with Development 4 Transactions without Development 4 Proportion of Possible Speculative Transactions 2.1%

· Land price data for AL Adan is not available. · Chart 110 shows the trend in House prices that increase with an annual rate of 10.6% between 2007 and 2014.

140 110

141 Al Qurain Mubarak Al Kabeer Governorate · Al Qurain is one of those rare areas that do not have any vacant land parcels. All 2,677 private housing zoned parcels have houses on them. · The average size of a land parcel is 411 sq.m. · We have recorded 218 transactions in this area with no speculation.

Table 127: Snapshot of Private Housing Units in Al Qurain Total Private Housing Land Parcels 2,677 Vacant Land Parcels 0 Total Houses 2,677 Total Area of All Land Parcels 1,099,402 sq.m. Average Land Parcel Size 411 sq.m.

Table 128: Analysis of Speculative Transactions in AL Qurain Units Covered for Transactions 218 Units with Single Transaction 193 Units with Multiple Transaction 25 Transactions with Development 25 Transactions without Development 0 Proportion of Possible Speculative Transactions 0.0%

· Chart 111 shows house price trend. · Average house values increased from KD 131,000 in 2007 to KD 288,000 in 2014; a CAGR of 11.9%.

142 143 Al Qusour Mubarak Al Kabeer Governorate · Al Qusour area has more than 3,000 land parcels with just seven of them vacant. · Average land parcel size is 408 sq.m. · We have 215 transactions here and none of them was speculative.

Table 129: Snapshot of Private Housing Units in Al Qusour Total Private Housing Land Parcels 3,067 Vacant Land Parcels 7 Total Houses 3,060 Total Area of All Land Parcels 1,250,806 sq.m. Average Land Parcel Size 408 sq.m.

Table 130: Analysis of Speculative Transactions in Al Qusour Units Covered for Transactions 215 Units with Single Transaction 215 Units with Multiple Transaction - Transactions with Development - Transactions without Development - Proportion of Possible Speculative Transactions 0.0%

· Chart 112 shows house prices increased from KD 122,000 in 2007 to KD 268,000 in 2014; a CAGR of 11.9%.

144 145 Fnaitees Mubarak Al Kabeer Governorate · Fnaitees area is a newly emerging area with 2,192 private housing parcels of which 2,175 are vacant. The area has just 17 houses. · The average land parcel size is 436 sq.m. · In this area, we have recorded 1,133 transactions and 337 of them qualify as possibly speculative. · The proportion of these transactions is nearly 30%, which show high level of speculation. · Despite the speculation, nearly 70% of the transactions in this area are the cases where families have bought the land parcels and they are holding on to them without either reselling or development. This shows there is long term interest in this area.

Table 131: Snapshot of Private Housing Units in Fnaitees Total Private Housing Land Parcels 2,192 Vacant Land Parcels 2,175 Total Houses 17 Total Area of All Land Parcels 955,820 sq.m. Average Land Parcel Size 436 sq.m.

Table 132: Analysis of Speculative Transactions in Fnaitees Units Covered for Transactions 1,133 Units with Single Transaction 796 Units with Multiple Transaction 337 Transactions with Development - Transactions without Development 337 Proportion of Possible Speculative Transactions 29.7%

· Chart 113 shows the land price trend for Fnaitees area. The prices moved from KD 315 per sq.m. in 2007 to KD 703 per sq.m. in 2014. · The CAGR of land prices is 12.1% over 8 years. · The house prices have started appearing recently as shown in Chart 114. In 2013 a transaction was recorded for KD 345,000, which sets a good benchmark for future transactions.

146 147 Messila / Massaiel Mubarak Al Kabeer Governorate · Messila / Massaiel has 1,835 land parcels and nearly 85% of the land parcels are currently vacant. It is one of the new areas that is being developed. · We tracked 435 transactions in this area of which 127 were the cases where the same land parcel was traded multiple times. This gives a high percentage of 29.2% for possible speculative transactions. · This is not surprising given this area has so many vacant land parcels and investors buy and sell them in expectation of some profit.

Table 133: Snapshot of Private Housing Units in Messila / Messila Total Private Housing Land Parcels 1,835 Vacant Land Parcels 1,552 Total Houses 283 Total Area of All Land Parcels 1,320,692 sq.m. Average Land Parcel Size 633 sq.m.

Table 134: Analysis of Speculative Transactions in Messila / Messila Units Covered for Transactions 435 Units with Single Transaction 302 Units with Multiple Transaction 133 Transactions with Development 6 Transactions without Development 127 Proportion of Possible Speculative Transactions 29.2%

· Chart 115 shows that after remaining below KD 500 per sq.m., the land prices have shot up above KD 800 per sq.m. in last 3 years. Thus, Messila / Messila has one of the highest land price growth rates of 12.0% per annum. · Since there are not many developed houses here, the data in Chart 116 is inadequate to read much into house prices. This should best be ignored as the houses are mostly on the sea side of Missila and that is very premium area.

148 149 Mubarak Al Kabeer Mubarak Al Kabeer Governorate · Mubarak AL Kabeer area has 3,551 land parcels with just 2 of them currently vacant. · The average land parcel size is 408 sq.m. · We have recorded 190 transactions in this area and none was speculative.

Table 135: Snapshot of Private Housing Units in Mubarak Al Kabeer Total Private Housing Land Parcels 3,551 Vacant Land Parcels 2 Total Houses 3,549 Total Area of All Land Parcels 1,447,646 sq.m. Average Land Parcel Size 408 sq.m.

Table 136: Analysis of Speculative Transactions in Mubarak Al Kabeer Units Covered for Transactions 190 Units with Single Transaction 174 Units with Multiple Transaction 16 Transactions with Development 16 Transactions without Development 0 Proportion of Possible Speculative Transactions 0.0%

· House price increased from KD 169,000 in 2007 in this area to KD 304,000 in 2014; a CAGR of 8.7%.

150 151 Sabah Al Salem Mubarak Al Kabeer Governorate · Sabah Al Salem area has the second highest number of private housing land parcels for any area in Kuwait. · With just 279 vacant land parcels, it has 5,866 houses. Therefore, this area has large Kuwaiti population. · The average land parcel size is 469 sq.m. · We have 863 transactions recorded for this area over the 8-year period. · Of these 12.7% transactions are possibly speculative. Most of these transactions took place in 2008 and 2014.

Table 137: Snapshot of Private Housing Units in Sabah Al Salem Total Private Housing Land Parcels 6,145 Vacant Land Parcels 279 Total Houses 5,866 Total Area of All Land Parcels 2,885,685 sq.m. Average Land Parcel Size 469 sq.m.

Table 138: Analysis of Speculative Transactions in Sabah Al Salem Units Covered for Transactions 863 Units with Single Transaction 753 Units with Multiple Transaction 110 Transactions with Development - Transactions without Development 110 Proportion of Possible Speculative Transactions 12.7%

· Chart 118 shows that the data for land prices is available for only 2 years of 2008 and 2014. Over this period of 7 years, the land prices show a growth of 3.6% annually. Nevertheless, due to the data on few transactions, this may not be representative of the market. · Chart 119 shows house price trend. From KD 139,000 in 2007, houses prices have increased to KD 230,000 in 2014. · This is a CAGR of 7.4%, which is quite moderate.

152 153 Naeem Jahra Governorate · Naeem has 912 private housing land parcels and none of these is vacant. · Average land parcel size is 415 sq.m. · We have tracked 62 transactions in this are with no speculation.

Table 139: Snapshot of Private Housing Units in Naeem Total Private Housing Land Parcels 912 Vacant Land Parcels 0 Total Houses 912 Total Area of All Land Parcels 378,349 sq.m. Average Land Parcel Size 415 sq.m.

Table 140: Analysis of Speculative Transactions in Naeem Units Covered for Transactions 62 Units with Single Transaction 54 Units with Multiple Transaction 8 Transactions with Development 8 Transactions without Development 0 Proportion of Possible Speculative Transactions 0.0%

· Chart 120 shows that the average house prices have increased from KD 132,000 in 2007 to KD 228,000 in 2014. · The CAGR of this is 8.2%, which is the slowest growth rate of houses prices anywhere in Jahra Governorate.

154 120

155 Naseem Jahra Governorate · Naseem area in Jahra Governorate has 1,814 private housing land parcels and 682 of them are vacant. · The average land parcel size is 467 sq.m. · We have collected data on 83 transactions in this area and 13.1% of these are possibly speculative.

Table 141: Snapshot of Private Housing Units in Naseem Total Private Housing Land Parcels 1,814 Vacant Land Parcels 682 Total Houses 1,132 Total Area of All Land Parcels 847,003 sq.m. Average Land Parcel Size 467 sq.m.

Table 142: Analysis of Speculative Transactions in Naseem Units Covered for Transactions 83 Units with Single Transaction 72 Units with Multiple Transaction 11 Transactions with Development - Transactions without Development 11 Proportion of Possible Speculative Transactions 13.3%

· House prices in Naseem increased from KD 120,000 in 2007 to KD 216,000 in 2014; a modest CAGR of 8.8%.

156 157 Qasr Jahra Governorate · Area of Qasr is one of the high demand areas. It has 1,698 land parcels and only 26 of these are vacant. · The average land parcel size of 670 sq.m. is the largest for any area in Jahra Governorate. · We have data on 101 transactions in this area and around 17.8% of these are possibly speculative.

Table 143: Snapshot of Private Housing Units in Qasr Total Private Housing Land Parcels 1,698 Vacant Land Parcels 26 Total Houses 1,672 Total Area of All Land Parcels 1,137,322 sq.m. Average Land Parcel Size 670 sq.m.

Table 144: Analysis of Speculative Transactions in Qasr Units Covered for Transactions 101 Units with Single Transaction 83 Units with Multiple Transaction 18 Transactions with Development - Transactions without Development 18 Proportion of Possible Speculative Transactions 17.8%

· Chart 122 shows that the house prices increased from KD 129,000 in 2007 to KD 330,000 in 2014. The CAGR of house prices is a very impressive 14.4%, which is one of the highest growth rates in Kuwait. · The average house price level of KD 330,000 is the highest level of house prices in Jahra Governorate.

158 159 Saad Al Abdulla City Jahra Governorate · Saad Al Abdulla is the largest private housing area in Jahra Governorate and also the largest area in Kuwait. · It has 7,563 private housing land parcels, of which 44 are currently vacant. · The average land parcel size is 409 sq.m. · We have recorded 800 transactions in this area with not a single speculative transaction.

Table 145: Snapshot of Private Housing Units in Saad Al Abdulla City Total Private Housing Land Parcels 7,563 Vacant Land Parcels 44 Total Houses 7,519 Total Area of All Land Parcels 3,095,868 sq.m. Average Land Parcel Size 409 sq.m.

Table 146: Analysis of Speculative Transactions in Saad Al Abdulla City Units Covered for Transactions 800 Units with Single Transaction 800 Units with Multiple Transaction - Transactions with Development - Transactions without Development - Proportion of Possible Speculative Transactions 0.0%

· House prices in Saad Al Abdulla increased from KD 125,000 in 2007 to KD 267,000 in 2014; a CAGR of 11.4%.

160 161 Waha Jahra Governorate · Waha area has 1,779 private housing parcels with just one of them vacant. · The average land parcel area is 312 sq.m., the smallest in Jahra Governorate. · We have 217 transactions for this are and no speculation.

Table 147: Snapshot of Private Housing Units in Waha Total Private Housing Land Parcels 1,779 Vacant Land Parcels 1 Total Houses 1,778 Total Area of All Land Parcels 555,390 sq.m. Average Land Parcel Size 312 sq.m.

Table 148: Analysis of Speculative Transactions in Waha Units Covered for Transactions 217 Units with Single Transaction 217 Units with Multiple Transaction - Transactions with Development - Transactions without Development - Proportion of Possible Speculative Transactions 0.0%

· House prices in Waha have been mostly the lowest for any area in Kuwait. · From KD 76,000 in 2007, average house prices have reached KD 162,000 in 2014, which is currently the lowest value for all areas in Kuwait. · The CAGR for house price growth is 11.5%.

162 163 Appendix 1 – Definitions of Terms

Average Monthly Rent – For any given location, it is the average of all monthly rents charged by the property owners to the lessees of all properties on a monthly basis. These properties may be 1 Bedroom apartments or 2 Bedroom apartments or any other type.

Generally it has been observed that all locations (also property grades) have a reasonable mix of various types of apartments and thus the mixture is not skewed in favour of either 1 Bedroom or 2 Bedroom apartments. Thus, the Average Monthly Rent can be compared across various locations (also property grades). However, wherever we have noticed that the Average Monthly Rent is skewed due to the higher share of any particular type of product type, we have adjusted it to make is comparable with others.

In some cases, the monthly rents include monthly electricity and Internet charges and in some other cases these charges are not included. Car has been exercised to arrive at comparable rents across all properties by doing suitable adjustments.

Cap Rate - Simply put a Cap Rate of a property is equal to its yearly income divided by its price. For example if a property is priced as KD 1 million and it generates KD 80,000 of yearly income, the Cap Rate is 8.00%.

Property Price = KD 1,000,000 Yearly Income = KD 80,000

Cap Rate = KD 80,000 / 1,000,000 = 8.00%

In practice, hundreds of income generating properties are traded in the market across several locations. For all these properties, the combination of income and price gives the Cap Rates. These Cap Rates become well known in the market and then these are used to value a property whose income is known. This method is called as income capitalization approach in property valuation.

Cap Rate = 8.00% Yearly Income = KD 80,000

Property Value = KD 80,000 / 8.00% = KD 1,000,000

The income that is used in the calculation can be gross income or net income (post any operations and maintenance expenses). Throughout this study, we have used only the gross income to calculate all Cap Rates, which is in line with the market practices.

Compounded Annual Growth Rate (CAGR) - The year-over-year growth rate of an investment over a specified period; calculated by taking the (N)th root of the total percentage growth rate, where (N) is the number of years in the period being considered. The compound annual growth rate (CAGR) isn›t a true return rate, but rather a representational figure. It is essentially an imaginary number that describes the rate at which an investment would have grown if it had grown at a steady rate.

Consumer Price Inflation - A consumer price index (CPI) measures changes in the price level of a market basket of consumer goods and services purchased by households. The CPI is a statistical estimate constructed using the prices of a sample of representative items whose pricesare collected periodically.

Disposable Income - The amount of money that households have available for spending and saving after income taxes (if applicable) have been accounted for. Disposable personal income is often monitored as one of the many key economic indicators used to gauge the overall state of the economy.

164 Occupancy Ratio – For residential properties, the Occupancy Ratio is calculated by dividing the number of vacant apartments by the total number of apartments in that property. For example if a building has 50 apartments and 5 of them are empty at the time of surveys, the Occupancy Ratio of the property is 5 / 50 = 90%. The Occupancy Ratio for a location is calculated by adding up all the vacant apartments at that location and dividing it by the total number of apartments in all properties at that location.

Private Housing – This is defined to include all those already constructed houses that are made on land zoned as “Residential” by the municipality. These are generally private houses owned largely by Kuwaiti population and these are traded in resale market. Currently in Kuwait, the new law does not facilitate the real estate companies to develop new large scale projects of such houses. Thus, individuals either buy an Existing House or buy a land parcel and construct their own house.

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