Real Estate Guidance 2017 1 Index
Brief on Real Estate Union 4 Executive Summary 6 Investment Properties Segment 8 Freehold Apartments Segment 62 Office Space Segment 67 Retail Space Segment 72 Industrial Segment 74 Appendix 1: Definition of Terms Used in the Report 76 Appendix 2: Methodology of Grading of Investment Properties 78
2 3 BRIEF ON REAL ESTATE UNION
Real Estate Association was established in 1990 by a distinguished group headed by late Sheikh Nasser Saud Al-Sabahwho exerted a lot of efforts to establish the Association. Bright visionary objectives were the motives to establishthe Association. The Association works to sustainably fulfil these objectives through institutional mechanisms, whichprovide the essential guidelines and controls. The Association seeks to act as an umbrella gathering the real estateowners and represent their common interests in the business community, overseeing the rights of the real estateprofessionals and further playing a prominent role in developing the real estate sector to be a major and influentialplayer 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 ofthe 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 membershipbase to include all owners segments of the commercial and investment real estate.
This publication is supported by kfas and Wafra real estate
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Executive Summary Investment Property Segment • For the analysis of the investment properties market, we have covered 162,576 apartments that are spread over 5,695 properties across 19 locations in Kuwait. We found 21,529 vacant apartments thereby, giving a market occupancy of 86.8%. The average monthly rent is now KD 278.9 and after adjusting for the occupancy ratio, the effective monthly rental is KD 242.0. • The sharp decline in occupancy ratio from the level of around 95% in last 5-6 years to 86.8% now is a result of several factors. • We also tracked 875 under construction properties with 26,466 apartments across all locations. Compared to the total stock of 13,353 investment properties, the under construction supply is 6.6% addition. • Given that this supply will be introduced in the market over the next two years, the market stock is expected to increase by 3.3% per year. This is a very significant pace of inventory addition and is one of the key reasons for the sharp decline in the occupancy ratio. • We have shown that during 2013-15 period, 50,066 new units were constructed in the market and 44,280 units were occupied. The market demand – supply was more or less balanced during this period. • During 2015-17 period, 67,636 units were constructed but only 35,798 units were occupied. This is the period when the market supply went far ahead of market demand. Thus, the occupancy declined sharply from around 95% till 2015 to 86.8% in 2017. • The average annual supply of new units between 2013 and 2017 has been around 29,426 while the annual absorption over the same period has been around 20,019. • We have also analyzed that the growth rate expat population, which is the primary driver of demand for investment apartments. The growth rate has been always around 3-4% with the 2016 growth reaching as high as 4.8%. Come 2017 and the growth rate has declined to just 2%. • While it is clear that there is no absolute reduction in expat population, the growth rate has come to a significant slowdown in 2017. We expect that the next 3-5 years, the expat population growth rate will remain just around 1.5-2.0%. • With the decline in expat population growth, we believe the annual rate of apartments absorption in the market may below 15,000. • We have currently 49,130 apartments vacant and further 26,466 apartments are under construction. This means the market is expected to have more than 75,000 apartments to absorb. With the reduced absorption pace of 15,000 per annum, this might take good 4-5 years before the market occupancy improves much. • Qebla has recorded the highest occupancy ratio in our current survey followed by Jahra and Murqab. On the other hand, the lowest occupancy ratios are observed at Sabah Al Salem and Mahboula areas.
Freehold Apartments Segment We have tracked several thousand transactions of freehold apartments in Kuwait over the last eight years. • The number of transactions were more than one thousand in the years 2007 and 2008.Post the financial crisis, the transactions dropped and the lowest point was reached in the year 2012. • The market recovered after that to register a high of 973 transactions in 2015. However, the transactions declined in 2017 as the full year recorded total 671 transactions. • Bneid al Qar prices moved from KD 603 per sq.m. in 2007 to KD 1,237 per sq.m. in 2015 and then declined to KD 1,071 in 2017 – a CAGR of 5.9% over this period. It is one of the lowest rate of appreciation anywhere in Kuwait. • Coastal Shaab area has given 6.4% CAGR to the investors and Shaab area have given 5.2% appreciation. • In Hawalli Governorate, Salmiya and Jabriya recorded low growth rates of 4.9% and 3.9% per annum respectively and Hawalli registered a higher growth at 6.5% per annum over 10 years. • Farwania recorded 6.9% growth rate but Sabah Al Salem registered the highest growth rate amongst all areas at 10.8% appreciation per annum despite considerable price correction in 2017. We believe the prices may decline further in Sabah AL Salem area due to weakness in the rental market. • In Ahmadi Governorate, most areas have given higher rate of appreciation compared to areas in other governorates. Abu Halifa has given 6.0% annual appreciation to the investors, Fintas at 6.8%, Mangaf at 7.2% and Mahboula is at 7.9%. • Overall, the rate of appreciation is 7.6% for all areas combined.
6 Office Space Segment The office space segment has done well in last few years and it is expected to continue this way for the next couple of years. • The occupancy ratios of office space is now 95.6% for the existing stock. This is the highest occupancy ratio attained in last 7-8 years (maybe first time since 2008). • In 2011, the occupancy ratio was quite low at 59.4%. From that level the segment has staged a very smart recovery with 95.6% occupancy in 2017. • The lease rates have shown consistent growth during this period. It currently stands at KD 7.8 per m2. We note that the lease rate doesn’t include any common area charges (CAM charges) because there are no market wide conventions for CAM charges. Some high quality properties charge KD 1-2 per m2 CAM charges and for some others, no charges are taken. • Based on the occupancy and the average lease rate, all these 415 properties generate KD 127.7 million of yearly rental income. If we assume a basic cap rate of 7%, the combined value of all these properties is KD 1.82 billion.
Retail Space Segment The occupancy ratio for all the retail mall space put together in Kuwait is 84.0%, including the occupancy of the under construction supply. This is a drop from the previous reading of 94.6% in 2015. • The occupancy ratio of the existing stock is not really an issue with a high reading of 98.7%. However, the real cause for worry is that the under construction supply has expanded very sharply to 346,046 m2 and the occupancy here is very low at just around 50%. • The prevailing lease rates have shown general decline. With a substantial chunk of retail supply hitting the market over the next few years, the lease rates are likely to remain under pressure.
Industrial Segment • For the industrial properties, we have surveyed warehousing stock across 8 locations in Kuwait. Warehousing supply is limited to very industrial few areas in Kuwait. • Since the lease rates are shown in ranges, the exact percentage change between Q2 2015 and Q4 2017 cannot be estimated but it has been observed that the lease rates have increased somewhat in select locations. • In Shuwaikh industrial area, which is the main industrial area, the Average Lease Rate (per sq.m.) range for 4 mts high warehouse has increased at the lower end. As we have maintained consistently this area is increasingly evolving as a commercial area with retail shops for car parts, workshops, furniture, etc. where the lease rates can go up to even KD 40 per sq.m. in select areas. • The Average Lease Rate in Al Dhajeej has increased from KD 2.5 – 5.5 in Q2 2015 to KD 2.5 – 5.8 in Q4 2017. The warehouses here are 9 to 11 mts height. In Al Rai, the Average Lease Rate reaches KD 9.5 for 7 mts high warehouses that have chillers for frozen food.
7 INVESTMENT PROPERTIES SEGMENT
8 INVESTMENT PROPERTIES SEGMENT
9 Investment Properties Segment The investment properties segment has grown rapidly over the last couple of years. Data from Public Authority of Civil Information (PACI) shows that there are now more than 13,353 properties in this segment across Kuwait. Table 1 shows our field survey coverage for all different areas of Kuwait. In total, we have covered 5,695 properties for our latest survey. This represents 42.6% coverage ratio, which is the highest coverage ratio achieved so far. We note that not all the properties in this segment have residential apartments. There are hundreds of properties where clinics, professional services and similar offices are operating. In addition, scores are hospitality properties developed on investment zoned land parcels. Our survey does not cover these properties however, the PACI data includes all such properties. Thus, we believe our actual coverage ratio is higher than what is shown here.
Table 1: Number of Investment Properties in Kuwait and Our Coverage Scope
No. of Investment Covered Sample % Area Properties Properties Coverage Capital Governorate 936 270 17.4% Sharaq* 313 96 20.8% Murqab* 100 14 14.4% Qebla* 327 13 4.0% Bnaid Al-Qar 196 147 36.1% Hawalli Governorate 5,498 1,861 37.3% Hawalli 1,914 606 28.3% Salmiyah 2,925 1,027 39.9% Shaab 125 57 50.8% Jabriya 534 171 52.0% Ahmadi Governorate 2,706 1,873 35.5% Fahaheel 578 242 26.8% Fintas 305 141 32.2% Mahboula 764 1,093 35.5% Abu Halifa 359 138 50.6% Mangaf 700 259 36.3% Jahra Governorate 439 117 26.7% Jahra 439 117 26.7% Farwaniyah Governorate 3,569 1,461 34.3% Farwaniyah 1,152 400 29.1% Khaitan 882 539 47.0% Jleeb Al-Shiyoukh 1,281 324 18.7% Riqey 254 198 91.4% Mubarak Governorate 205 113 28.0% Sabah Al-Salem 205 113 28.0% Total 13,353 5,695 42.6% Source: Public Authority of Civil Information * In the Capital Governorate, a number of properties have been developed as Hospitality Serviced Residences, which are still classified as Investment Property by PACI. These have not been covered in our survey and thus, the coverage ratio appears low.
10 Market Dynamics The dynamics of investment properties market at the end of fourth quarter 2017 is shown in Table 2. We have covered 162,576 apartments that are spread over 5,695 properties across 19 locations in Kuwait. We found 21,529 vacant apartments thereby, giving a market occupancy of 86.8%. The average monthly rent is now KD 278.9 and after adjusting for the occupancy ratio, the effective monthly rental is KD 242.0. The sharp decline in occupancy ratio from the level of around 95% in last 5-6 years to 86.8% now is a result of several factors as we have discussed later in this report. We also tracked 875 under construction properties with 26,466 apartments across all locations. Compared to the total stock of 13,353 investment properties, the under construction supply is 6.6% addition. Given that this supply will be introduced in the market over the next two years, the market stock is expected to increase by 3.3% per year. This is a very significant pace of inventory addition and is one of the key reasons for the sharp decline in the occupancy ratio. We believe the inventory addition pace is currently higher than the market absorption pace and this will continue to exert downward pressure on market occupancy in the coming years. We also note that in the previous issue of Q2 2015, we tracked 348 properties under construction and now we are tracking 875 properties. The pace of construction has fastened sharply over the last couple of years.
Table 2: Snapshot of Kuwait Investment Properties Market Segment (Q4 2017)
No of Functional Properties Covered 5,695 No of Functional Apartments Covered 162,576 Vacant Apartments 21,529 Observed Occupancy Ratio 86.8% Average Monthly Rent KD 278.9 Occupancy Adjusted Average Monthly Rent KD 242.0 No of Under Construction Properties Covered 875 No of Under Construction Apartments Covered 26,466 Against the backdrop of a sharp drop in the oil prices in international market and related slowdown in economic activities in the GCC region, there have been lingering doubts in the market about a drop in the occupancy ratio of the investment properties. Chart 1 shows that the ratio has indeed dropped from the previous survey. From a high of 94.3% in Q2 2015, the occupancy ratio is now 86.8%. To put the numbers in perspective, we estimate that there are 371,006 residential apartments in Kuwait in 13,353 investment properties. If we extend the current occupancy ratio of our sample to the whole market, we have 322,033 apartments occupied and 48,973 apartments vacant.
Chart1: Trend in Occupancy ratio and Average monthly Rent
The average monthly rental has decreased to KD 278.9 in Q4 2017 from KD 313.2 in Q2 2015. This is a decline of 10.9% over the last two years; annual decline rate of 5.5% in monthly rentals.
11 Table 3 below shows the area wise occupancy ratios and average monthly rentals. Qebla has recorded the highest occupancy ratio in our current survey followed by Jahra and Murqab. On the other hand, the lowest occupancy ratios are observed at Sabah Al Salem and Mahboula areas.
Table 3: Area Wise Occupancy Ratios and Average Monthly Rentals (Sorted with Declining Occupancy)
Occupancy Ratio Average Monthly Rent Qebla 96.3% KD 294.2 Jahra 96.2% KD 240.5 Murqab 94.1% KD 311.2 Sharaq 92.9% KD 419.3 Jabriya 92.1% KD 334.6 Bnaid Al-Qar 92.1% KD 431.6 Jleeb Al-Shiyoukh 91.1% KD 154.3 Shaab 91.1% KD 511.8 Fahaheel 90.5% KD 227.8 Farwaniyah 88.4% KD 256.7 Fintas 87.8% KD 261.6 Mangaf 87.6% KD 255.6 Khaitan 87.5% KD 243.7 Abu Halifa 87.3% KD 310.7 Hawalli 86.3% KD 253.6 Riqey 86.3% KD 261.8 Salmiyah 85.9% KD 346.8 Mahboula 83.9% KD 229.5 Sabah Al-Salem 67.2% KD 301.6 Total 86.8% KD 278.9
The Under Construction Supply of Investment Properties Will Continue to Keep the Occupancy Low This publication Al Murshid Al Aqari has been at the fore front of creation of investment properties market data since 2011. • In Table 4 we show that in 2013, there were 12,008 investment buildings with 253,303 apartments in Kuwait. The market occupancy was 95.5% indicating that 11,506 apartments were vacant. • By 2017, there are 13,353 investment buildings with 371,006 apartments. The market occupancy has now dropped to 86.8%.
Table 4: Macro Data on Investment Properties in Kuwait (2013-17)
2013 2015 2017 # of Investment Properties 12,008 13,137 13,353 # of Apartments 253,303 303,370 371,006 Occupancy 95.5% 94.3% 86.8% Vacant Apartments 11,506 17,292 49,130
• Chart 2 is very important to understand. It shows that during 2013-15 period, 50,066 new units were constructed in the market and 44,280 units were occupied. The market demand – supply was more or less balanced during this period. • During 2015-17 period, 67,636 units were constructed but only 35,798 units were occupied. This is the time period when the market supply went far ahead of market demand. Thus, the occupancy declined sharply from around 95% till 2015 to 86.8% in 2017. • The average annual supply of new units between 2013 and 2017 has been around 29,426 while the annual absorption over the same period has been around 20,019. • Over this period, the market constructed annually 9,406 apartments more than what was required.
12 Chart 2: Annual Supply and Absorption Trends for Apartments in Kuwait ( 2013-17 )
• In Chart 5 we have shown the growth rate expat population based on PACI data. The growth rate has been always around 3-4% with the 2016 growth reaching as high as 4.8%. • Come 2017 and the growth rate has declined to just 2%. We note that 2017 data from PACI is only till June 2017 and we have extrapolated this data to obtain the full year data.
Chart 3: Growth Rate of Expat Pobulation in Kuwait ( 2013-17 )
• While it is clear that there is no absolute reduction in expat population, the growth rate has come to a significant slowdown in 2017. We expect that the next 3-5 years, the expat population growth rate will remain just around 1.5-2.0%. • Chart 2 shows that the annual rate of apartments absorption in the market from 2013 to 2017 has been around 20,019. With the decline in expat population growth rate, we expect the annual absorption rate to decline to below 15,000. • We have currently 49,130 apartments vacant and further 26,466 apartments are under construction. This means the market is expected to have more than 75,000 apartments to absorb. With the reduced absorption pace of 15,000 per annum, this might take good 4-5 years before the market occupancy improves much.
13 Product Wise Market Analysis The product wise breakdown is shown in Chart 4. It is just somewhat different from the breakdown that we showed in the previous issue of this report. The Studio type apartments account for around 5.4% share in our current survey, 1 Bedroom apartments account for 21.3% and 2 Bedroom units account for 58.6% share. The share of 3 Bedroom units is 12.4% and 4 Bedroom units is 0.7%. There are some other types of units also in the market in small numbers, which include Duplex apartments and Penthouses.
Chart 4: Product wise breakdown of Investment Properties in Kuwait ( Q4 2017 )
Table 5 shows the trend of product wise occupancy ratios and average monthly rentals. We note the following: • The occupancy ratios for most product categories have declined. The notable decline is observed in 4 Bedroom categories where the occupancy ratio has dropped from 95.1% in Q2 2015 to 81.4% in Q4 2017. There has been a decline of 13.1% observed in 4 Bedroom units recorded over the last two years. • The occupancy ratio for 3 Bedroom apartments has decreased from 94.4% in Q2 2015 to 86.2% in Q4 2017. • On the monthly rental side, the Studio rentals have seen a negative change from KD 126.2 in Q2 2015 to KD 119.3 in Q4 2017. • The monthly rentals of 1 Bedroom and 2 Bedroom units have decreased by 10.8% and 11.8% respectively. The average rental of a 2 Bedroom unit is now more than KD 288.3 per month. • For 3 Bedroom units, the average rental decreased to KD 384.1 in Q4 2017 from KD 446.3 in Q2 2015; decrease of 13.9% over the last two years which is the highest of all categories.
Table 5: Occupancy Ratio and Average Monthly Rent Trends for Various Product Categories (Q4 2017)
Q2 2015 Q4 2017 % Change in Average Monthly Occupancy Average Monthly Occupancy Average Rent Ratio Rent Ratio Monthly Rent Studio Apt 96.0% KD 126.2 88.3% KD 119.3 -5.5% 1 Bed Apt 95.5% KD 235.2 88.9% KD 209.8 -10.8% 2 Bed Apt 93.6% KD 326.9 87.9% KD 288.3 -11.8% 3 Bed Apt 94.4% KD 446.3 86.2% KD 384.1 -13.9% 4 Bed Apt 95.1% KD 542.5 81.4% KD 471.6 -13.1%
14 Furnishing Status Wise Analysis Chart 5 shows the breakdown of units according to their furnishing status. It shows that the Unfurnished category now accounts for 94.2% share in the market and the Furnished and Semi Furnished categories have been reduced to just 2.3% and 3.5% share respectively.
Chart 5: Furnishing Status Wise Breakdown of Investment Properties in Kuwait ( Q4 2017 )
The trends of occupancy ratios and monthly rentals for these categories are shown in Table 6. Compared to Q2 2015, the occupancy ratios for Furnished and Semi Furnished categories have decreased significantly. However, the rentals in these segments have decreased to a lesser extent compared to the Unfurnished category over the last two years. In the Unfurnished category, the occupancy ratio has dropped to a lesser degree compared to the other two categories but the average monthly rent has decreased by a faster rate (compared to other two categories) of 11.3% over the last two years.
Table 6: Occupancy Ratio and Average Monthly Rent Trends for Various Furnishing Categories (Q4 2017)
Q2 2015 Q4 2017 % Change in Average Monthly Occupancy Average Monthly Occupancy Ratio Average Monthly Rent Ratio Rent Rent Furnished 95.4% KD 468.4 84.3% KD 432.7 -7.6% Semi Furnished 97.5% KD 380.0 83.7% KD 354.6 -6.7% Unfurnished 94.3% KD 302.4 88.9% KD 268.1 -11.3%
15 Property Age Wise Analysis Chart 4 shows that at the end of fourth quarter 2017, 73.4% of the properties have age more than 5 years. Around 21.3% of the properties have age of 2 to 5 years and 5.3% of the properties are new. With an increase in the inventory addition rate, Kuwait will witness a significant number of new properties in the market the coming years.
Chart 6: Property Age Wise breakdown of Investment Properties in Kuwait ( Q4 2017 )
Table 7 shows the occupancy ratios and average monthly rates of properties of different age categories. • The occupancy ratio for the properties below 2 years of age has dropped from 89.7% in Q2 2015 to 83.2% in Q4 2017. The rentals in this category has decreased by 16.8% in this category over the last two years; the fastest rate in any category. • The occupancy ratio also dropped for the category of property age 2 to 5 years and the rentals have decreased by 13.0% over the last two years. • The category of property age more than 5 years has also witnessed decline in prices as the average monthly rental decreased by 6.4% over the last two years.
Table 7: Occupancy Ratio and Average Monthly Rent Trends for Various Property Age Categories (Q4 2017)
Q2 2015 Q4 2017 % Change in Average Monthly Occupancy Average Monthly Occupancy Ratio Average Rent Ratio Rent Monthly Rent Property Age < 2 Yrs. 89.7% KD 374.9 83.2% KD 311.9 -16.8% Property Age 2 - 5 Yrs. 93.5% KD 338.6 85.9% KD 294.6 -13.0% Property Age > 5 Yrs. 94.8% KD 282.5 87.3% KD 264.5 -6.4%
Property Grade Wise Analysis No two properties are alike as they differ in terms of location, product mix, facilities, parking, property age, etc. to name a few characteristics. Therefore, a direct comparison of properties whether on monthly rentals or on occupancy is not entirely correct because we are not comparing apple-to-apple. A suitable method to facilitate a like-to-like comparison is to first segregate properties into different grades. Properties within a grade should have homogenous characteristics and therefore become comparable. To grade the properties, we have always employed a broad mathematical syntax to generate objective grades for the properties. A quick summary of the key points is as follows: 1. As they say that in real estate the location is the most important factor, we have generated a ranking of locations based on the Average Monthly Rents. Premium locations such as Shaab, Murqab, Bnaid Al-Qar and Sharaq are given higher weights than less premium locations such as Jleeb Al-Shiyoukh, Jahra, Khaitan and Farwania. 2. Many properties provide facilities such as swimming pool, gymnasium, guest lobby, steam, sauna, Jacuzzi, tennis, etc. All such facilities require initial investment and periodic maintenance expenditure. Therefore, properties with such facilities score points for each one of these. 3. Parking facilities is a major issue and 80% properties in our database have only open or shaded car parks. Only 20% properties have stilt or base / podium car parks. Such properties are given extra points.
16 Chart 7 shows the breakdown of properties according to their grades. The market composition has remained similar to our previous surveys. 1. Just around 1.3% properties of the total properties are Grade A+, which are luxurious properties with several facilities. 2. Another 7.8% of the properties are Grade A class and these have good location with some facilities for the residents. 3. Grade B accounts for 27.3% share and Grade C accounts for 30.4% share in the market. The largest share is for Lower Grade properties with 33.2% share. These properties are mostly old and do not have any facilities for the residents.
Chart 7: Property Grade Wise Breakdown of Investment Properties in Kuwait ( Q4 2017 )
The property grade wise occupancy and monthly rental trends are shown in Table 8. 1. For Grade A+ category, there has been a decline in the monthly rental. The average monthly rent is KD in 874.3 in Q4 2017; a decline from KD 993.5 in Q2 2015. 2. In all other categories, the average rentals have also decreased. Grade A category has witnessed decrease of 10.4%, Grade B around 12.2% decrease and Grade C around 11.8% decrease in the rentals. 3. The decline rate has been moderate in Lower Grade category, which is the most price sensitive category.
Table 8: Occupancy Ratio and Monthly Rent Trends for Property Grade Categories (Q4 2017)
Q2 2015 Q4 2017 % Change in Average Monthly Occupancy Average Occupancy Average Monthly Rent Rents Ratio Monthly Rent Ratio Grade A+ 93.9% KD 993.5 86.4% KD 874.3 -12.0% Grade A 93.9% KD 645.3 87.3% KD 578.4 -10.4% Grade B 92.6% KD 366.8 87.6% KD 321.9 -12.2% Grade C 93.9% KD 303.2 86.4% KD 267.3 -11.8% Lower Grade 95.8% KD 218.4 86.3% KD 197.6 -9.5% Properties in different grades also have sharp differences in furnishing status and Average Monthly Rents, which is shown in Table 9 and Table 10.
17 1. The shares of Furnished and Semi Furnished properties have decreased slightly over the last two years. We showed in Chart 5 that the less than 6% of all units belong to these two categories now. 2. Accordingly, the shares in Table 9 for these two categories have come down marginally compared to the last survey. 3. For the Unfurnished category, data is available across all grades and there are evidences in the market of price decline across all segments.
Table 9: % Share of Property Grades and Table 10: Average Monthly Rents of Property Grades and Furnishing Status (Q4 2017) Furnishing Status (Q4 2017)
Furnished Semi Unfurnished Furnished Semi Unfurnished Furnished Furnished Grade A+ 21.6% 14.7% 63.7% Grade A+ KD 986.2 KD 941.3 KD 822.6 Grade A 7.1% 8.6% 84.3% Grade A KD 714.9 KD 663.1 KD 528.7 Grade B 1.9% 8.3% 89.8% Grade B KD 344.5 KD 329.4 KD 297.4 Grade C 2.1% 0.3% 97.6% Grade C KD 291.6 KD 276.4 KD 261.3 Lower Grade 1.2% 0.6% 98.2% Lower Grade KD 280.3 KD 251.2 KD 190.6
Sharq (Including Maqwa Area) - Al Asimah Governorate Table 11 shows the snapshot of investment properties in Sharq area. We tracked 1,808 apartments in Sharq area and found 128 of them vacant. The occupancy ratio is 92.9% and the average rental has decreased from KD 436.4 in Q2 2015 to KD 419.3 in Q4 2017. We tracked 284 units under construction in this area.
Table 11: Snapshot of Investment Properties Segment in Sharq
Q2 2015 Q4 2017 Number of Functional Apartments 2,069 1,808 No of Vacant Apartments 155 128 Occupancy Ratio 92.5% 92.9% Average Monthly Rent KD 436.4 KD 419.3 No of Under Construction Apartments 460 284
Chart 8 shows the breakdown of units as per the furnishing status and Table 12 shows the occupancy and rental trends. 1. Nearly 32% of the units are Furnished and 13% are Semi Furnished. The remaining 55% of the units are Unfurnished. 2. The average rental of the Furnished unit is KD 743.6, which is for a typical 2 Bedroom unit. 3. The Unfurnished rental is now KD 318.2 in Q4 2017 compared to KD 336.4 in Q2 2015.
Chart 8: Sharq. Furnishing status wise breakdown ( Q4 2017 )
18 Table 12: Sharq – Trends in Furnishing Status Wise Occupancy and Monthly Rent
Q2 2015 Q4 2017 % Change Average Average in Average Occupancy Ratio Occupancy Ratio Monthly Rent Monthly Rent Monthly Rents Furnished 83.8% KD 825.0 85.4% KD 743.6 -9.9% Semi Furnished 91.0% KD 543.0 90.6% KD409.5 -24.6% Unfurnished 96.5% KD 336.4 91.3% KD 318.2 -5.4% • Chart 9 shows the property age wise breakdown of apartments in Sharq area. Around 15% of the units are new, another 10% have property age 2 to 5 yrs. and 75% have more than 5 years of age.
Chart 9: Sharq - Property Age wise breakdown ( Q4 2017 )
• Table 13 shows the trends in occupancy ratios and monthly rentals with property age categories. • The occupancy ratios are still healthy in a declining market. The occupancy ratio for the new properties have witnessed an increase from 80.5% in 2015 to 89.3% in 2017. • Significant declines have been registered in monthly rentals across all categories.
Table 13: Sharq – Trends in Property Age Wise Occupancy and Monthly Rent
Q2 2015 Q4 2017 % Change Occupancy Ratio Average Occupancy Ratio Average in Average Monthly Rent Monthly Rent Monthly Rents Property Age < 2 Yrs. 80.5% KD 702.0 89.3% KD 617.6 -12.0% Property Age 2 - 5Yrs. 88.4% KD 475.4 93.4% KD 405.2 -14.8% Property Age > 5 Yrs. 96.1% KD 371.4 93.1% KD 324.3 -12.7 %
19 • Chart 10 shows that sizeable number of properties are Grade A+ and Grade A. These properties are some of the premium furnished apartments and serviced residences. These properties have several facilities, good location and adequate parking facilities.
Chart 10 : Sharq- Property Grade wise breakdown Q4 2017
• Table 14 shows that the occupancy ratios and monthly rentals are available for all grades in Sharq area. • Grade A+ average rental is KD 578.3 and Grade A rental is KD 513.4. We note that many of these properties also have licenses to offer rooms on daily basis.
Table 14 : Sharq – Trends in Property Grade Wise Occupancy and Monthly Rent
Q2 2015 Q4 2017 % Change in Average Occupancy Ratio Average Occupancy Ratio Average Monthly Rents Monthly Rent Monthly Rent Grade A+ 83.5% KD 741.2 93.1% KD 578.3 -22.0% Grade A 93.5% KD 599.7 92.7% KD 513.4 -14.4% Grade B 94.6% KD 467.3 91.6% KD 363.8 -22.1% Grade C 94.0% KD 390.0 94.2% KD 312.9 -19.8% Lower Grade 93.5% KD 253.5 91.5% KD 231.7 -8.6%
For each location, we will be showing the prevailing Monthly Rentals for various products. For Sharq, these are shown in Table 15.
Table 15 : Prevailing Monthly Rentals in Sharq (Q4 2017)
Furnished Semi Furnished Unfurnished Studio KD 375 - 450 KD 225 - 350 KD 150 - 200 1Bed Apt KD 400 – 550 KD 325 – 500 KD 195 – 325 2Bed Apt KD 550 – 775 KD 500 – 750 KD 250 – 350 3Bed Apt KD 700 – 950 KD 650 - 800 KD 300 - 550 4Bed Apt - KD 750 - 900 - Penthouse KD 800 - 1,000 - -
20 Murqab - Al Asimah Governorate Murqab is a small area in Kuwait City and we have been consistently tracking 136 units here. Table 16 shows that the occupancy rate has marginally increased and but a marginal decrease in the average rental. There are 89 under construction properties in this area.
Table 16 : Snapshot of Investment Properties Segment in Murqab
Q2 2015 Q4 2017 Number of Functional Apartments 136 136 No of Vacant Apartments 11 8 Occupancy Ratio 91.9% 94.1% Average Monthly Rent KD 369.1 KD 311.2 No of Under Construction Apartments - 89
Chart 11 shows the breakdown of units as per the furnishing status and Table 17 shows the occupancy and rental trends. 1. All units are Furnished. This is one of the few areas where furnished properties have been prevailing for some time.
Chart 11: Murqab - Furnishing Status wise breakdown ( Q4 2017 )
21 • With the only category as Furnished apartments, the occupancy ratio and monthly rentals are mentioned below in Table 17.
Table 17 : Murqab – Trends in Furnishing Status Wise Occupancy and Monthly Rent
Q2 2015 Q4 2017 % Change Occupancy Ratio Average Occupancy Ratio Average in Average Monthly Rent Monthly Rent Monthly Rents Furnished 91.9% KD 349.4 94.1% KD 311.2 -15.7% Semi Furnished - - - - - Unfurnished - - - - -
• Chart 12 shows the property age wise breakdown of apartments in Murqab area. All properties in this area are more than 5 years of age.
Chart 12: Murqab - Property Age wise breakdown ( Q4 2017 )
• Table 18 shows the trends in occupancy ratios and monthly rentals with property age more than 5 years categories. The occupancy ratio has increased marginally and average rentals have also gone down in this area.
Table 18 : Murqab – Trends in Property Age Wise Occupancy and Monthly Rent
Q2 2015 Q4 2017 % Change Occupancy Ratio Average Occupancy Ratio Average in Average Monthly Rent Monthly Rent Monthly Rents Property Age < 2 Yrs. - - - - NA Property Age 2 - 5 Yrs. - - - - NA Property Age > 5 Yrs. 91.9% KD 369.1 94.1% KD 311.2 -15.7% • Chart 13 shows that all properties in this area are Grade B.
Chart 13: Murqab - Property Grade wise breakdown ( Q4 2017 )
22 • Table 19 shows that the occupancy ratios and monthly rentals are available for only Grade B category.
Table 19: Murqab – Trends in Property Grade Wise Occupancy and Monthly Rent
Q2 2015 Q4 2017 % Change in Average Occupancy Ratio Average Occupancy Ratio Average Monthly Rents Monthly Rent Monthly Rent Grade A+ 0 0 0.0% KD 0.0 NA Grade A 0 0 0.0% KD 0.0 NA Grade B 91.9% KD 369.1 94.1% KD 311.2 -15.7% Grade C 0 0 0.0% KD 0.0 NA Lower Grade 0 0 0.0% KD 0.0 NA For Murqab, we have shown the prevailing Monthly Rentals for various unit types in Table 20.
Table 20: Prevailing Monthly Rentals in Murqab (Q4 2017)
Furnished Semi Furnished Unfurnished Studio KD 275 - 350 - 1Bed Apt - - - 2Bed Apt - - - 3Bed Apt KD 225 – 350 - - 4Bed Apt KD 500 – 550 - - Penthouse - - -
Qebla - Al Asimah Governorate Qebla is another small area in Kuwait City and we have been consistently tracking 273 units here. Table 21 shows that the occupancy rate has increased at a marginal rate but the rentals have declined considerably. There are 65 under construction properties in this area.
Table 21: Snapshot of Investment Properties Segment in Qebla
Q2 2015 Q4 2017 Number of Functional Apartments 273 273 No of Vacant Apartments 12 10 Occupancy Ratio 95.6% 96.3% Average Monthly Rent KD 333.2 KD 294.2 No of Under Construction Apartments - 65 Chart 14 shows the breakdown of units as per the furnishing status and Table 22 shows the occupancy and rental trends. 1. Around 66% of the units here are Furnished. 2. Another 34% are Unfurnished. There are no Semi Furnished units in this area.
Chart 14: Qebla - Furnishing Status Wise Breakdown ( Q4 2017 )
23 • Table 22 shows that while the occupancy ratios in both furnished and unfurnished status categories are good, the average rental has declined by about 10.7% in furnished category and by 5.1% in unfurnished category.
Table 22: Qebla – Trends in Furnishing Status Wise Occupancy and Monthly Rent
Q2 2015 Q4 2017 % Change Occupancy Ratio Average Occupancy Ratio Average in Average Monthly Rent Monthly Rent Monthly Rents Furnished 95.1% KD 355.5 95.8% KD 307.4 -13.5% Semi Furnished - - - - - Unfurnished 98.2% KD 291.0 96.9% KD 276.1 - 5 . 1 % • Chart 15 shows the property age wise breakdown of apartments in Qebla area. • With no new properties constructed in this category of less than 2 years area, 29% of the properties are 2 to 5 years old and 71% are more than 5 years old.
Chart 15: Qebla - Property Age Wise Breakdown ( Q4 2017 )
• Table 23 shows the declining values in the rentals. Both the age categories registered considerable price decline.
Table 23: Qebla – Trends in Property Age Wise Occupancy and Monthly Rent
Q2 2015 Q4 2017 % Change Occupancy Ratio Average Occupancy Ratio Average in Average Monthly Rent Monthly Rent Monthly Rents Property Age < 2 Yrs. - - - - NA Property Age 2 - 5 Yrs. 96.2% KD 395.5 96.1% KD 361.6 -8.6% Property Age > 5 Yrs. 94.3% KD 320.0 96.5% KD 282.3 -11.8%
24 • Chart 16 shows that all properties in this area are Grade B.
Chart 16: Qebla - Property Grade Wise Breakdown ( Q4 2017 )
• Table 24 shows that the occupancy ratios and monthly rentals are available for only Grade B category.
Table 24: Qebla – Trends in Property Grade Wise Occupancy and Monthly Rent
Q2 2015 Q4 2017 % Change Occupancy Ratio Average Occupancy Ratio Average in Average Monthly Rent Monthly Rent Monthly Rents Grade A+ - - - - N/A Grade A - - - - N/A Grade B 95.6% 333.2 96.3% KD 294.2 -11.7% Grade C - - - - N/A Lower Grade - - - - N/A For Qebla, we have shown the prevailing Monthly Rentals for various unit types in Table 25.
Table 25: Prevailing Monthly Rentals in Qebla (Q4 2017)
Furnished Semi Furnished Unfurnished Studio - - - 1Bed Apt - - - 2Bed Apt KD 225 – 500 - KD 275 – 400 3Bed Apt KD 270 – 500 - - 4Bed Apt - - - Penthouse - - -
25 Bnaid Al Qar - Al Asimah Governorate We have increased our coverage scope by more than double in Bnaid Al Qar area. Table 26 shows that in Q4 2017 we tracked 3,221 units in this area, which is more than double the count for Q2 2015. The occupancy ratio for this area is 92.1%, which is a marginal increase from the previous survey. The average rental has decreased from KD 458.6 in Q2 2015 to KD 431.6 in Q4 2017. We also tracked 63 under construction apartments in this area compared to previous figure of 87.
Table 26: Snapshot of Investment Properties Segment in Bnaid Al Qar
Q2 2015 Q4 2017 Number of Functional Apartments 1,518 3,221 No of Vacant Apartments 131 255 Occupancy Ratio 91.4% 92.1% Average Monthly Rent KD 458.6 KD 431.6 No of Under Construction Apartments 87 63 Chart 17 shows the breakdown of units as per the furnishing status and Table 27 shows the occupancy and rental trends. 1. All units are Unfurnished in this area.
Chart 17: Bnaid Al Qar - Furnishing Status Wise Breakdown ( Q4 2017 )
• Table 27 shows that while the occupancy ratio of Unfurnished category increased marginally in line with the trend for the whole area. The average monthly rental has decreased by 5.9% over the last two years.
Table 27: Bnaid Al Qar – Trends in Furnishing Status Wise Occupancy and Monthly Rent
Q2 2015 Q4 2017 % Change in Average Occupancy Ratio Average Occupancy Ratio Average Monthly Rents Monthly Rent Monthly Rent Furnished - - - - - Semi Furnished - - - - - Unfurnished 91.3% KD 458.6 92.1% KD 431.6 -5.9%
26 • The property age breakdown as shown in the Chart 18 is well distributed across all three categories. Around 26% of the properties are less than 2 years age, another 38% are 2 to 5 years age and 36% are more than 5 years of age.
Chart 18: Bnaid Al Qar - Property Age Wise Breakdown ( Q4 2017 )
• In Q4 2017, the average rental of property of less than 2 years age is KD 488.5, for property 2 to 5 years age is KD 423.2 and for property more than 5 years age KD 402.9. • All three categories registered moderate decline in prices.
Table 28: Bnaid Al Qar – Trends in Property Age Wise Occupancy and Monthly Rent
Q2 2015 Q4 2017 % Change in Average Occupancy Ratio Average Occupancy Ratio Average Monthly Rents Monthly Rent Monthly Rent Property Age < 2 Yrs. 78.7% KD 510.8 26.3% KD 488.5 -4.4% Property Age 2 - 5 Yrs. 96.3% KD 439.3 37.8% KD 423.2 -3.7% Property Age > 5 Yrs. 94.0% KD 446.1 36.0% KD 402.9 -9.7% Chart 19 shows that the property grade wise breakdown: • Just a couple of properties are Grade A+ that account of 7% market share. The market share for Grade A is 17%, Grade B is 22% and Grade C is 46%. • This indicates that generally, the area has good quality properties with several facilities and adequate parking ratios.
Chart 19: Bnaid Al Qar - Property Grade Wise ( Q4 2017 )
27 • Table 29 shows that the occupancy ratios and monthly rentals are available for all the grade categories. • The occupancy ratios are generally good for all the categories. However, as compared to the previous years, the rentals are down for all categories.
Table 29: Bnaid Al Qar – Trends in Property Grade Wise Occupancy and Monthly Rent
Q2 2015 Q4 2017 % Change in Average Occupancy Ratio Average Occupancy Ratio Average Monthly Rents Monthly Rent Monthly Rent Grade A+ 100.0% KD 795.0 90.3% KD 736.1 -7.4% Grade A 68.3% KD 667.0 92.8% KD 612.3 -8.2% Grade B 95.2% KD 495.3 93.5% KD 456.8 -7.8% Grade C 95.0% KD 395.4 91.6% KD 361.9 -8.5% Lower Grade 97.6% KD 253.2 92.4% KD 241.3 -4.7% For Bnaid Al Qar, we have shown the prevailing Monthly Rentals for various unit types in Table 30.
Table 30: Prevailing Monthly Rentals in Bnaid Al Qar (Q4 2017)
Furnished Semi Furnished Unfurnished Studio - - KD 170 – 190 1Bed Apt - - KD 230 – 275 2Bed Apt - - KD 220 – 540 3Bed Apt - - KD 300 – 875 4Bed Apt - - KD 550 – 1,000 Penthouse - - -
28 Hawalli - Hawalli Governorate One of the largest areas for investment properties and mid income housing is Hawalli. Table 31 shows that we are tracking 15,924 apartments in this area, which is sizeable jump from the previous survey. The occupancy ratio has decreased to 86.3% in Q4 2017, it has with 95.5% in Q2 2015. The average monthly rent is now KD 253.6, which has decreased from KD 274.0 in Q2 2015. We are tracking 843 apartments under construction in this area, which is significant increase from the previous survey.
Table 31: Snapshot of Investment Properties Segment in Hawalli
Q2 2015 Q4 2017 Number of Functional Apartments 12,356 15,924 No of Vacant Apartments 559 2181 Occupancy Ratio 95.5% 86.3% Average Monthly Rent KD 274.0 KD 253.6 No of Under Construction Apartments 505 843 Chart 20 shows the breakdown of units as per the furnishing status. • There are 1% Furnished units in Hawalli anymore. Around 6% of the units are Semi Furnished and the remaining are Unfurnished.
Chart 20: Hawalli - Furnishing status wise breakdown ( Q4 2017 )
• Table 32 shows that the occupancy ratios have declined for the categories of Semi- Furnished and Unfurnished, the bigger decline in the rental has come from the semi - furnished category.
Table 32: Hawalli – Trends in Furnishing Status Wise Occupancy and Monthly Rent
Q2 2015 Q4 2017 % Change Occupancy Ratio Average Occupancy Ratio Average in Average Monthly Rent Monthly Rent Monthly Rents Furnished - - 84.2% KD 429.1 NA Semi Furnished 95.8% KD 298.2 86.2% KD 274.6 -7.9% Unfurnished 95.0% KD 264.0 85.1% KD 246.7 -6.6% • Chart 21 shows that just 6% of the properties are new, 8% are from age 2 to 5 years and 86% are more than 5 years old.
Chart 21: Hawalli - Property age wise breakdown ( Q4 2017 )
29 • Table 33 shows that the rental rate for new properties has declined by 7.1%. • Moderate declines are also registered in the two other categories.
Table 33: Hawalli – Trends in Property Age Wise Occupancy and Monthly Rent
Q2 2015 Q4 2017 % Change Occupancy Ratio Average Occupancy Ratio Average in Average Monthly Rent Monthly Rent Monthly Rents Property Age < 2 Yrs. 93.2% KD 311.4 88.2% KD 289.4 -7.1% Property Age 2 - 5 Yrs. 96.8% KD 284.6 85.3% KD 269.9 -5.2% Property Age > 5 Yrs. 95.4% KD 246.4 84.6% KD 234.6 -4.8% Chart 22 shows that the property grade wise breakdown: • Hawalli has 1% of properties as Grade A+ and 2% of the properties as Grade A. • Another 27% of the properties are Grade B and 37% of the properties are Grade C. • The relative proportion of higher grade properties is increasing in Hawalli with the new properties coming up with better grades.
Chart 22: Hawalli - Property grade wise breakdown ( Q4 2017 )
• Table 34 shows that the occupancy ratios and monthly rentals are available for all the grade categories. • We can see that there has been a decline in rentals across all categories. • Even the Lower Grade and Grade C properties have registered substantial decline in prices over the last two years. Lower Grade property segment is highly price sensitive and with the reduction in prices, the affordability is expected to improve. • Almost all categories of properties have witnessed a decline in the occupancy ratio be it marginally or substantially.
30 Table 34: Hawalli – Trends in Property Grade Wise Occupancy and Monthly Rent
Q2 2015 Q4 2017 % Change in Average Occupancy Ratio Average Occupancy Ratio Average Monthly Rents Monthly Rent Monthly Rent Grade A+ 94.1% 873.5 84.6% KD 754.1 -13.7% Grade A 96.4% 560.6 95.7% KD 497.8 -11.2% Grade B 93.8% 399.2 85.9% KD 321.6 -19.4% Grade C 95.1% 262.5 88.3% KD 238.1 -9.3% Lower Grade 97.2% 228.8 88.6% KD 207.6 -9.3% For Hawalli, we have shown the prevailing Monthly Rentals for various unit types in Table 35.
Table 35: Prevailing Monthly Rentals in Hawalli (Q4 2017)
Furnished Semi Furnished Unfurnished Studio - - KD 80 – 110 1Bed Apt - - KD 135 – 380 2Bed Apt - KD 220 – 475 KD 150 – 550 3Bed Apt - KD 400 – 700 KD 280 – 600 4Bed Apt - - KD 350 – 900 Penthouse - - KD 1,000 – KD 1,100
31 Salmiya - Hawalli Governorate The largest investment properties area in Kuwait is Salmiya. Table 36 shows that we are tracking 31,727 apartments in this area, which is about 9% higher than our previous survey. The occupancy ratio has dropped from 92.2% in Q2 2015 to 85.9% in Q4 2017. This drop is quite significant and is accompanied by a decline in rental from KD 363.6 in 2015 to KD 346.8 in 2017. We are tracking 2,178 apartments under construction in Salmiya. The pace of inventory addition has increased in Salmiya and it is one of the biggest construction zones in Kuwait.
Table 36: Snapshot of Investment Properties Segment in Salmiya
Q2 2015 Q4 2017 Number of Functional Apartments 29,013 31,727 No of Vacant Apartments 2,251 4474 Occupancy Ratio 92.2% 85.9% Average Monthly Rent KD 363.6 KD 346.8 No of Under Construction Apartments 1,883 2,178 Chart 23 shows the breakdown of units as per the furnishing status. • There are just 3% of Furnished units in Salmiya and another 3% as Semi Furnished. These shares have remained about the same as compared to last survey. • An overwhelming 94% of the units are now Unfurnished in Salmiya.
Chart 23: Salmiya - Furnishing status breakdown ( Q4 2017 )
• Table 37 shows that the occupancy ratios have declined for all categories. • For the Furnished category, the prices show moderate decline. However, the price decline is very significant in Semi Furnished and Unfurnished categories.
Table 37: Salmiya – Trends in Furnishing Status Wise Occupancy and Monthly Rent
Q2 2015 Q4 2017 % Change in Average Occupancy Ratio Average Occupancy Ratio Average Monthly Rents Monthly Rent Monthly Rent Furnished 95.0% KD 489.6 84.3% KD 476.2 -2.7% Semi Furnished 91.0% KD 362.0 84.6% KD 327.2 -9.6% Unfurnished 92.2% KD 361.6 85.2% KD 302.4 -16.4% • Chart 24 shows that 7% of the properties are new and another 29% are 2 to 5 years old. About 64% of the properties are more than 5 years old.
32 Chart 24: Salmiya - Property age wise breakdown ( Q4 2017 )
• Table 38 shows that the rentals for new properties have declined at the highest pace of 12.0%. • For the mid age properties and old properties , the rental growth has decreased at 5.5% and 8.4% respectively.
Table 38: Salmiya – Trends in Property Age Wise Occupancy and Monthly Rent
Q2 2015 Q4 2017 % Change in Average Occupancy Ratio Average Occupancy Ratio Average Monthly Rents Monthly Rent Monthly Rent Property Age < 2 Yrs. 87.8% KD 442.4 86.7% KD 389.5 -12.0% Property Age 2 - 5 Yrs. 91.1% KD 364.9 86.4% KD 344.9 -5.5% Property Age > 5 Yrs. 93.0% KD 358.7 84.3% KD 328.7 -8.4% Chart 25 shows that the property grade wise breakdown: • While only 2% of the properties are Grade A+, 10% of them are Grade A and 43% of the properties are Grade B, which is the biggest category in Salmiya. • The relative proportion of higher grade properties is increasing in Salmiya as new properties are made with better facilities.
Chart 25: Salmiya - Property grade wise breakdown ( Q4 2017 )
33 • Table 39 shows that the occupancy ratios and monthly rentals are available for all the grade categories. • All categories of grades have registered decline in prices. • The fastest rate of decline is noted in Grade B category where the rentals have decreased by 8.0%.
Table 39: Salmiya – Trends in Property Grade Wise Occupancy and Monthly Rent
Q2 2015 Q4 2017 % Change in Average Occupancy Ratio Average Occupancy Ratio Average Monthly Rents Monthly Rent Monthly Rent Grade A+ 90.8% KD 846 82.3% KD 812.6 -3.9% Grade A 95.3% KD 579.5 84.6% KD 561.2 -3.2% Grade B 90.4% KD 405 85.5% KD 372.6 -8.0% Grade C 92.6% KD 317 87.1% KD 299.5 -5.5% Lower Grade 94.1% KD 231.1 88.1% KD 217.6 -5.8% For Salmiya, we have shown the prevailing Monthly Rentals for various unit types in Table 40.
Table 40: Prevailing Monthly Rentals in Salmiya (Q4 2017)
Furnished Semi Furnished Unfurnished Studio KD 275 - 275 - KD 80 – 245 1Bed Apt KD 225 – 550 KD 350 – 500 KD 140 – 530 2Bed Apt KD 350 – 675 KD 275 – 675 KD 175 – 825 3Bed Apt KD 1,000 – 1,200 KD 650 – 950 KD 265 – 850 4Bed Apt - KD 750 - 850 KD 300 – 1,150 Penthouse - KD 800 - 900 KD 1,000 – KD 1,200
34 Shaab - Hawalli Governorate Shaab is one of the most premium investment properties area in Kuwait. Several units are occupied by Kuwaiti nationals in this area. Table 41 shows that we are tracking 1,330 apartments in this area. The occupancy ratio has dropped from 92.4% in Q2 2015 to 91.1% in Q4 2017. t. The rentals have changed marginally from KD 538.8 in Q2 2015 to KD 511.8 in Q4 2017. We are tracking 89 apartments under construction in Shaab.
Table 41: Snapshot of Investment Properties Segment in Shaab
Q2 2015 Q4 2017 Number of Functional Apartments 1,418 1,330 No of Vacant Apartments 108 119 Occupancy Ratio 92.4% 91.1% Average Monthly Rent KD 538.8 KD 511.8 No of Under Construction Apartments 111 89 Chart 26 shows the breakdown of units as per the furnishing status. • There are 14% of Furnished units in Shaab and another 10% as Semi Furnished. The share of Furnished category has increased by 3% and for Semi Furnished category’s share declined compared to our previous survey. • Majority units with 76% share are Unfurnished in Shaab.
Chart 26: Shaab - Furnishing status wise breakdown ( Q4 2017 )
35 • Table 42 shows that the occupancy ratios have declined for all categories. • For the Furnished category and Semi Furnished categories, the data shows marginal decline in rentals. • In the unfurnished category, the rentals have decreased by 14.3%, which is very substantial.
Table 42: Shaab – Trends in Furnishing Status Wise Occupancy and Monthly Rent
Q2 2015 Q4 2017 % Change Occupancy Ratio Average Occupancy Ratio Average in Average Monthly Rent Monthly Rent Monthly Rents Furnished 95.0% KD 1,350.0 89.4% KD 1,302.4 -3.5% Semi Furnished 94.8% KD 778.2 90.3% KD 748.7 -3.3% Unfurnished 93.1% KD 522.1 92.5% KD 447.3 -14.3% • Shaab has 23% of the properties with age less than 2 years and 13% with age 2 to 5 years. • About 64% of the properties are more than 5 years old.
Chart 27: Shaab - Property age wise breakdown ( Q4 2017 )
• Table 43 shows that the rental decline rate for old properties is the highest at 9.4%. • For the new age and mid age properties, the rentals have declined at 2.3% and 9.2% respectively.
Table 43: Shaab – Trends in Property Age Wise Occupancy and Monthly Rent
Q2 2015 Q4 2017 % Change Occupancy Ratio Average Occupancy Ratio Average in Average Monthly Rent Monthly Rent Monthly Rents Property Age < 2 Yrs. 92.5% KD 603.5 92.6% KD 589.7 -2.3% Property Age 2 - 5 Yrs. 93.8% KD 572.5 91.8% KD 519.6 -9.2% Property Age > 5 Yrs. 92.1% KD 515.9 90.3% KD 467.3 -9.4%
36 Chart 28 shows that the property grade wise breakdown: • Reflecting the premium nature of the area, 9% of the properties are Grade A+ and 53% are Grade A. For the two top grades, this area has the highest shares of all areas in Kuwait. • Another 34% of the properties are Grade B, 1% are Grade C and just 3% are Lower Grade.
Chart 28: Shaab - Property Grade wise breakdown ( Q4 2017 )
• Table 44 shows that the occupancy ratios and monthly rentals are available for all the grade categories. • For Grade A+ category, the rentals have gone down by 3.8% over the last two years. • For Grade B, the rental decline rate is 2.3%. • The highest decline in the growth rate is observed in Grade C properties.
Table 44: Shaab – Trends in Property Grade Wise Occupancy and Monthly Rent
Q2 2015 Q4 2017 % Change Occupancy Ratio Average Occupancy Ratio Average in Average Monthly Rent Monthly Rent Monthly Rents Grade A+ 91.0% KD 888.5 89.9% KD 854.6 -3.8% Grade A 92.6% KD 587.8 91.0% KD 571.5 -2.8% Grade B 92.1% KD 408.9 91.3% KD 399.3 -2.3% Grade C 91.7% KD 340.0 89.6% KD 311.8 -8.3% Lower Grade 95.8% KD 225.0 93.1% KD 218.6 -2.8% For Shaab, we have shown the prevailing Monthly Rentals for various unit types in Table 45.
Table 45: Prevailing Monthly Rentals in Shaab (Q4 2017)
Furnished Semi Furnished Unfurnished Studio - - - 1Bed Apt KD 350 – 550 KD 350 – 500 KD 200 – 275 2Bed Apt KD 400 – 750 KD 300 – 650 KD 225 – 540 3Bed Apt KD 900 – 1,100 KD 700 – 1,000 KD 350 – 850 4Bed Apt - KD 1,150 – 1,150 KD 400 – 1,250 Penthouse - - -
37 Jabriya - Hawalli Governorate Jabriya is small investment properties area in Kuwait as just a couple of blocks in this area are zoned as investment. Table 46 shows that we are tracking 3,881 apartments in this area. The occupancy ratio has not witnessed much change from 92.7% in Q2 2015 to 92.1% in Q4 2017. However, the rentals have dropped considerably from KD 362.8 in Q2 2015 to KD 334.6 in Q4 2017. We are tracking 431 apartments under construction in Jabriya.
Table 46: Snapshot of Investment Properties Segment in Jabriya
Q2 2015 Q4 2017 Number of Functional Apartments 5,913 3,881 No of Vacant Apartments 430 307 Occupancy Ratio 92.7% 92.1% Average Monthly Rent KD 362.8 KD 334.6 No of Under Construction Apartments 257 431 Chart 29 shows the breakdown of units as per the furnishing status. • There are just 2% of the units as Semi Furnished and 98% of the units are Unfurnished in Jabriya.
Chart 29: Jabriay - Furnishing status wise breakdown ( Q4 2017 )
• Table 47 shows that the rentals for the Unfurnished category has registered the highest decline rate of 14.6%.
Table 47: Jabriya – Trends in Furnishing Status Wise Occupancy and Monthly Rent
Q2 2015 Q4 2017 % Change Occupancy Ratio Average Occupancy Ratio Average in Average Monthly Rent Monthly Rent Monthly Rents Furnished - - - - NA Semi Furnished 93.0% KD 380.1 91.2% KD 364.8 -4.0% Unfurnished 92.6% KD 352.8 89.8% KD 301.4 -14.6% • Jabriya has 8% of the properties with age less than 2 years and 6% with age 2 to 5 years. • About 86% of the properties are more than 5 years old.
Chart 30: Jabriay -Property age wise breakdown ( Q4 2017 )
38 • Table 48 shows that the rental decline rate for new properties is high at 14.5%. • For the old properties, the rentals have decline by 8.6%.
Table 48: Jabriya – Trends in Property Age Wise Occupancy and Monthly Rent
Q2 2015 Q4 2017 % Change Occupancy Ratio Average Occupancy Ratio Average in Average Monthly Rent Monthly Rent Monthly Rents Property Age < 2 Yrs. 94.7% KD 442.9 93.4% KD 378.9 -14.5% Property Age 2 - 5 Yrs. 92.9% KD 356.8 92.3% KD 333.5 -6.5% Property Age > 5 Yrs. 92.5% KD 348.4 90.4% KD 318.4 -8.6% Chart 31 shows that the property grade wise breakdown: • Just 1% of the properties are Grade A+ and 10% are Grade A and 22% are Grade B. • The highest share is for Grade C properties that account for 47% share.
Chart 31: Jabriya - Property Grade Wise Breakdown Q4 2017
• Table 49 shows that the occupancy ratios and monthly rentals are available for all the grade categories. • For Grade A category, the rentals declined because of the addition of a few new properties. • For Grade B, the rental decline is 8.9% and for Grade C properties, the rental decreased by 5.5%. • The lowest price decline of 1.3% is registered for the Lower Grade properties..
Table 49: Jabriya – Trends in Property Grade Wise Occupancy and Monthly Rent
Q2 2015 Q4 2017 % Change Occupancy Ratio Average Occupancy Ratio Average in Average Monthly Rent Monthly Rent Monthly Rents Grade A+ 100.0% KD 900.0 88.4% KD 789.6 -12.3% Grade A 95.3% KD 698.0 87.6% KD 588.3 -15.7% Grade B 91.6% KD 425.3 93.4% KD 387.6 -8.9% Grade C 92.3% KD 346.1 93.6% KD 327.4 -5.5% Lower Grade 93.3% KD 214.3 92.6% KD 211.5 -1.3% For Jabriya, we have shown the prevailing Monthly Rentals for various unit types in Table 50.
Table 50: Prevailing Monthly Rentals in Jabriya (Q4 2017)
Furnished Semi Furnished Unfurnished Studio - - KD 165 – 210 1Bed Apt - KD 300 – 450 KD 160 – 300 2Bed Apt - KD 375 – 750 KD 220 – 625 3Bed Apt - - KD 300 – 630 4Bed Apt - KD 600 - 600 KD 300 – 800 Penthouse - - -
39 Fahaheel – Al Ahmadi Governorate Fahaheel is one of the key areas in the south of Kuwait for investment properties. Table 51 shows that we are tracking 6,345 apartments in this area, which is sizeable increase from the previous survey. The occupancy ratio has dropped from 94.7% in Q2 2015 to 90.5% in Q4 2017. The rentals have changed from KD 253.2 in Q2 2015 to KD 227.8 in Q4 2017. We are tracking 1,376 apartments under construction in Fahaheel, which is a sharp jump from the previous survey.
Table 51: Snapshot of Investment Properties Segment in Fahaheel
Q2 2015 Q4 2017 Number of Functional Apartments 3,421 6,345 No of Vacant Apartments 180 603 Occupancy Ratio 94.7% 90.5% Average Monthly Rent KD 253.2 KD 227.8 No of Under Construction Apartments 367 1,376 Chart 32 shows the breakdown of units as per the furnishing status. • There are just 1% of the units as Furnished, 6% as Semi Furnished and 93% of the units are Unfurnished in Fahaheel.
Chart 32: Fahaheel - Furnishing status wise breakdown ( Q4 2017 )
• Table 52 shows that the rentals for the Unfurnished category has registered decline of 10.8% in Fahaheel which is the highest decline in comparison to other categories..
Table 52: Fahaheel – Trends in Furnishing Status Wise Occupancy and Monthly Rent
Q2 2015 Q4 2017 % Change Occupancy Ratio Average Occupancy Ratio Average in Average Monthly Rent Monthly Rent Monthly Rents Furnished 96.3% KD 440.0 88.6% KD 421.7 -4.2% Semi Furnished 96.3% KD 440.0 91.2% KD 397.2 -9.7% Unfurnished 94.7% KD 302.1 89.9% KD 269.6 -10.8% • Fahaheel has 13% of the properties with age less than 2 years and 27% with age 2 to 5 years. • About 60% of the properties are more than 5 years old.
Chart 33: Fahaheel - Property age wise breakdown ( Q4 2017 )
40 • Table 53 shows that the rental growth rate for new properties is negative 7.1%. • For the properties with 2 to 5 years age, the rentals have declined 9.1% and for the old properties, the decline rate is quite high at 12.0%.
Table 53: Fahaheel – Trends in Property Age Wise Occupancy and Monthly Rent
Q2 2015 Q4 2017 % Change Occupancy Ratio Average Occupancy Ratio Average in Average Monthly Rent Monthly Rent Monthly Rents Property Age < 2 Yrs. 83.3% KD 323.9 87.6% KD 300.8 -7.1% Property Age 2 - 5 Yrs. 95.8% KD 324.4 90.4% KD 294.9 -9.1% Property Age > 5 Yrs. 96.0% KD 292.4 92.1% KD 257.4 -12.0% Chart 34 shows that the property grade wise breakdown: • Just 7% of the properties are Grade A and 27% are Grade B and another 34% are Grade C. • Lower Grade properties account for 31% share.
Chart 34: Fahaheel - Property Grade wise breakdown ( Q4 2017 )
• Table 54 shows that the occupancy ratios and monthly rentals are available for most of the grade categories. • Grade A has witnessed the highest decline in the growth rates followed by Grade B category. • In a nutshell, there has been a decline across all categories in occupancy ratios and average monthly rents.
Table 54: Fahaheel – Trends in Property Grade Wise Occupancy and Monthly Rent
Q2 2015 Q4 2017 % Change Occupancy Ratio Average Occupancy Ratio Average in Average Monthly Rent Monthly Rent Monthly Rents Grade A+ - - 88.4% KD 481.3 N/A Grade A 95.2% KD 498.4 87.6% KD 424.3 -14.9% Grade B 90.3% KD 348.0 90.3% KD 315.9 -9.2% Grade C 97.6% KD 301.3 92.1% KD 280.0 -7.1% Lower Grade 95.4% KD 224.9 94.6% KD 212.3 -5.6% For Fahaheel, we have shown the prevailing Monthly Rentals for various unit types in Table 55.
Table 55: Prevailing Monthly Rentals in Fahaheel (Q4 2017)
Furnished Semi Furnished Unfurnished Studio - - KD 130 – 165 1Bed Apt - KD 275 – 350 KD 170 – 300 2Bed Apt KD 400 – 500 KD 400 – 550 KD 190 – 580 3Bed Apt - KD 550 – 600 KD 300 – 400 4Bed Apt - - - Penthouse - - -
41 Fintas – Al Ahmadi Governorate Fintas is the smallest investment properties area in Al Ahmadi Governorate. Table 56 shows that we are tracking 5,194 apartments in this area, which is more than double the coverage as compared to the previous survey. The occupancy ratio has declined from 96.5% in 2015 to 87.8% in 2017. The rentals have changed from KD 287.8 in Q2 2015 to KD 261.6 in Q4 2017, which is a relatively moderate decline. We are tracking 59 apartments under construction in Fintas.
Table 56: Snapshot of Investment Properties Segment in Fintas
Q2 2015 Q4 2017 Number of Functional Apartments 2,234 5,194 No of Vacant Apartments 79 634 Occupancy Ratio 96.5% 87.8% Average Monthly Rent KD 287.8 KD 261.6 No of Under Construction Apartments 376 59 Chart 35 shows the breakdown of units as per the furnishing status. • Just 1% of the units are Furnished, 5% of the units as Semi Furnished and 94% of the units are Unfurnished in Fintas.
Chart 35: Fintas - Furnishing status wise breakdown ( Q4 2017 )
• Table 57 shows that the rentals for the Semi Furnished and Unfurnished category has registered negative rates of 18.5% and 3.5% respectively.
Table 57: Fintas – Trends in Furnishing Status Wise Occupancy and Monthly Rent
Q2 2015 Q4 2017 % Change Occupancy Ratio Average Occupancy Ratio Average in Average Monthly Rent Monthly Rent Monthly Rents Furnished - - 84.6% KD 427.6 NA Semi Furnished 95.2% KD 477.8 88.9% KD 389.4 -18.5% Unfurnished 97.5% KD 267.8 87.1% KD 258.3 -3.5% • Fintas has 20% of the properties with age less than 2 years and 26% with age 2 to 5 years. • About 54% of the properties are more than 5 years old.
Chart 36: Fintas - Property Age wise breakdown (Q4 2017)
42 • Table 58 shows that the rental growth rate for new properties is negative at 11.2% and negative 5.5% for the properties with 2 to 5 years age. • For the properties with more than 5 years age, the rentals have declined by 9.9% over the last two years.
Table 58: Fintas – Trends in Property Age Wise Occupancy and Monthly Rent
Q2 2015 Q4 2017 % Change Occupancy Ratio Average Occupancy Ratio Average in Average Monthly Rent Monthly Rent Monthly Rents Property Age < 2 Yrs. 95.5% KD 313.6 88.6% KD 278.5 -11.2% Property Age 2 - 5 Yrs. 98.1% KD 259.6 88.4% KD 245.4 -5.5% Property Age > 5 Yrs. 95.9% KD 249.4 86.3% KD 224.6 -9.9% Chart 37 shows that the property grade wise breakdown: • Just 8% of the properties are Grade A and 16% are Grade B and another 13% are Grade C. • Lower Grade properties account for 63% share.
Chart 37 Fintas - Property Grade wise breakdown ( Q4 2017 )
• Table 59 shows that the occupancy ratios and monthly rentals are available for most of the grade categories.
Table 59: Fintas – Trends in Property Grade Wise Occupancy and Monthly Rent
Q2 2015 Q4 2017 % Change Occupancy Ratio Average Occupancy Ratio Average in Average Monthly Rent Monthly Rent Monthly Rents Grade A+ - - NA NA N/A Grade A 95.2% KD 614.3 84.3% KD 518.2 -15.6% Grade B 95.8% KD 372.2 86.8% KD 351.4 -5.6% Grade C 96.1% KD 299.5 89.1% KD 256.4 -14.4% Lower Grade 96.9% KD 224.9 88.9% KD 218.6 -2.8% For Fintas, we have shown the prevailing Monthly Rentals for various unit types in Table 60.
Table 60: Prevailing Monthly Rentals in Fintas (Q4 2017)
Furnished Semi Furnished Unfurnished Studio - - KD 90 – 145 1Bed Apt - KD 300 – 350 KD 165 – 280 2Bed Apt - KD 325 – 475 KD 190 – 420 3Bed Apt - - KD 330 – 600 4Bed Apt - - - Penthouse - - -
43 Mahboula – Al Ahmadi Governorate Mahboula is the largest construction cluster for investment properties in Al Ahmadi Governorate. Table 61 shows that we are tracking 35,092 apartments in this area and another 5,650 under construction apartments. Knowing that this is one of the biggest construction pockets anywhere in Kuwait, we have increased our coverage of this area manifold this time. The occupancy ratio has dropped to 83.9% in Q4 2017 from 89.5% in Q2 2015. The rentals have changed from KD 273.8 in Q2 2015 to KD 229.5 in Q4 2017, which is very high pace of decline.
Table 61: Snapshot of Investment Properties Segment in Mahboula
Q2 2015 Q4 2017 Number of Functional Apartments 6,610 35,092 No of Vacant Apartments 695 5,650 Occupancy Ratio 89.5% 83.9% Average Monthly Rent KD 273.8 KD 229.5 No of Under Construction Apartments 2,853 5,259 Chart 38 shows the breakdown of units as per the furnishing status. • There are just 4% of the units as Furnished, 4% as Semi Furnished and 92% of the units are Unfurnished in Mahboula.
Chart 38: Mahaboula - Furnishing status wise breakdown ( Q4 2017 )
• Table 62 shows that the rentals for the Unfurnished category have declined at a rate of 19.3%m which is one of the fastest pace of decline anywhere in Kuwait in this category. • The rental declines is also substantial in the Furnished category.
Table 62: Mahboula – Trends in Furnishing Status Wise Occupancy and Monthly Rent
Q2 2015 Q4 2017 % Change in Average Occupancy Ratio Average Occupancy Ratio Average Monthly Rents Monthly Rent Monthly Rent Furnished 94.7% KD 385.0 84.1% KD 330.5 -14.2% Semi Furnished 91.2% KD 333.0 84.5% KD 304.8 -8.5% Unfurnished 89.4% KD 253.4 82.6% KD 204.6 -19.3% • Mahboula has 30% of the properties with age less than 2 years and 25% with age 2 to 5 years. • About 45% of the properties are more than 5 years old.
Chart 39: Mahaboula - Property age wise breakdown ( Q4 2017 )
44 • Table 63 shows that the rental decline rate for new properties is at 13% and for the properties with 2 to 5 years age it is more than 16%. • For the properties with more than 5 years age, the rentals have decreased by 18.3% over the last two years. This shows the extent of price decline in Mahboula area.
Table 63: Mahboula – Trends in Property Age Wise Occupancy and Monthly Rent
Q2 2015 Q4 2017 % Change Occupancy Ratio Average Occupancy Ratio Average in Average Monthly Rent Monthly Rent Monthly Rents Property Age < 2 Yrs. 87.1% KD 323.6 80.4% KD 281.1 -13.1% Property Age 2 - 5 Yrs. 90.6% KD 296.3 84.3% KD 248.5 -16.1% Property Age > 5 Yrs. 89.4% KD 295.8 83.4% KD 241.6 -18.3% Chart 40 shows that the property grade wise breakdown: • Just 6% of the properties are Grade A and 13% are Grade B and another 50% are Grade C. • Lower Grade properties account for 31% share.
Chart 40: Mahaboula - Property Grade wise breakdown ( Q4 2017 )
• Table 64 shows that the occupancy ratios have declined across all grade categories. • Monthly rentals have registered double digit decline rates across all the grade categories.
Table 64: Mahboula – Trends in Property Grade Wise Occupancy and Monthly Rent
Q2 2015 Q4 2017 % Change Occupancy Ratio Average Occupancy Ratio Average in Average Monthly Rent Monthly Rent Monthly Rents Grade A+ - - 81.0% KD 456.3 N/A Grade A 85.7% KD 499.8 80.3% KD 411.3 -17.7% Grade B 88.7% KD 366.0 82.6% KD 302.6 -17.3% Grade C 89.1% KD 297.9 84.2% KD 247.6 -16.9% Lower Grade 91.1% KD 241.7 84.6% KD 202.7 -16.1% For Mahboula, we have shown the prevailing Monthly Rentals for various unit types in Table 65.
Table 65: Prevailing Monthly Rentals in Mahboula (Q4 2017)
Furnished Semi Furnished Unfurnished Studio - - KD 90 – 225 1Bed Apt KD 265 – 400 KD 225 – 400 KD 155 – 300 2Bed Apt KD 300 – 550 KD 300 – 450 KD 180 – 500 3Bed Apt - - KD 300 – 600 4Bed Apt - - - Penthouse - - -
45 Abu Halifa – Al Ahmadi Governorate Abu Halifa is a mixture of prime and not-so-prime areas for investment properties in Al Ahmadi Governorate. The area falling on the Coastal Road is very prime where some of the high grade properties are developed. Inside areas are not comparable and have properties of all classes. Table 66 shows that we are tracking 4,016 apartments in this area and 308 under construction apartments. The occupancy ratio has dropped from 94.7%in Q2 2015 to 87.3% in Q4 2017. The rentals have changed from KD 337.0 in Q4 2015 to KD 310.7 in Q2 2015.
Table 66: Snapshot of Investment Properties Segment in Abu Halifa
Q2 2015 Q4 2017 Number of Functional Apartments 4,555 4,016 No of Vacant Apartments 241 511 Occupancy Ratio 94.7% 87.3% Average Monthly Rent KD 337.0 KD 310.7 No of Under Construction Apartments 100 308 Chart 41 shows the breakdown of units as per the furnishing status. • There are just 2% of the units as Furnished, 2% as Semi Furnished and 96% of the units are Unfurnished in Abu Halifa. • The proportion of properties with Furnished and Semi Furnished status has dropped marginally in Abu Halifa over the last few years.
Chart 41: Abu Halifa - Furnishing status wise breakdown Q4 2017
• Table 67 shows that the rentals for the Furnished and Semi Furnished categories show substantial decline. • However, the rental decline in the Unfurnished category is moderate.
Table 67: Abu Halifa – Trends in Furnishing Status Wise Occupancy and Monthly Rent
Q2 2015 Q4 2017 % Change Average Average in Average Occupancy Ratio Occupancy Ratio Monthly Rent Monthly Rent Monthly Rents Furnished 92.5% KD 490.0 82.6% KD 388.3 -20.8% Semi Furnished 90.1% KD 390.0 84.5% KD 351.2 -9.9% Unfurnished 94.7% KD 305.4 87.6% KD 299.7 -1.9% • Abu Halifa has 4% of the properties with age less than 2 years and 29% with age 2 to 5 years. • About 67% of the properties are more than 5 years old.
Chart 42 : Abu Halifa - Property age wise breakdown ( Q4 2017 )
46 • New properties have suffered the highest rate of price decline at 17.9%. The middle age properties and the old properties have witnessed relatively lesser price decline. • Given the overall market decline, the new properties are exposed to higher risk as these have to build up occupancy from zero. Thus, property owners are forced to drop prices quickly in order to attract tenants.
Table 68: Abu Halifa – Trends in Property Age Wise Occupancy and Monthly Rent
Q2 2015 Q4 2017 % Change Occupancy Ratio Average Occupancy Ratio Average in Average Monthly Rent Monthly Rent Monthly Rents Property Age < 2 Yrs. 96.0% KD 472.7 82.6% KD 388.3 -17.9% Property Age 2 - 5 Yrs. 92.6% KD 376.5 84.5% KD 351.2 -6.7% Property Age > 5 Yrs. 95.4% KD 279.9 87.6% KD 299.7 7.1% Chart 43 shows that the property grade wise breakdown: • Just 3% of the properties are Grade A+, 7% are Grade A, 10% are Grade B and another 48% are Grade C. • Lower Grade properties account for 32% share.
Chart 43 : Abu Halifa - Property Grade wise breakdown ( Q4 2017 )
• Table 69 shows that the occupancy ratios have maintained good level across all categories. • Rental declines are witnessed across all categories; the highest rate of price decline is in Grade A category at 11.3%.
Table 69: Abu Halifa – Trends in Property Grade Wise Occupancy and Monthly Rent
Q2 2015 Q4 2017 % Change Occupancy Ratio Average Occupancy Ratio Average in Average Monthly Rent Monthly Rent Monthly Rents Grade A+ - - 86.9% KD 611.3 N/A Grade A 92.9% KD 565.9 87.1% KD 502.0 -11.3% Grade B 97.6% KD 368.0 88.6% KD 347.9 -5.5% Grade C 93.6% KD 313.1 88.3% KD 286.5 -8.5% Lower Grade 95.7% KD 226.9 88.9% KD 219.8 -3.1% For Abu Halifa, we have shown the prevailing Monthly Rentals for various unit types in Table 70.
Table 70: Prevailing Monthly Rentals in Abu Halifa (Q4 2017)
Furnished Semi Furnished Unfurnished Studio - - KD 120 – 140 1Bed Apt KD 250 – 425 KD 250 – 350 KD 150 – 275 2Bed Apt KD 350 – 550 KD 300 – 500 KD 160 – 490 3Bed Apt - - KD 270 – 600 4Bed Apt - - - Penthouse - - -
47 Mangaf – Al Ahmadi Governorate Table 71 shows that we are tracking 7,063 apartments in this area, which is significant increase from our previous surveys. The occupancy ratio has dropped from 95.9% in Q2 2015 to 87.6% in Q4 2017. The rentals have changed from KD 271.6 in Q2 2015 to KD 255.6 in Q4 2017, which is moderate relative to other areas in Ahmadi Governorate. We are tracking 3,129 under construction apartments in this area that is a huge jump from the 428 units that we were tracking in 2015.
Table 71: Snapshot of Investment Properties Segment in Mangaf
Q2 2015 Q4 2017 Number of Functional Apartments 5,638 7,063 No of Vacant Apartments 231 876 Occupancy Ratio 95.9% 87.6% Average Monthly Rent KD 271.6 KD 255.6 No of Under Construction Apartments 428 3,129 Chart 44 shows the breakdown of units as per the furnishing status. • There are just 2% of the units as Furnished, 2% as Semi Furnished and 96% of the units are Unfurnished in Mangaf. • The proportion of properties with Furnished and Semi Furnished status has remained the same over the last few years.
Chart 44: Mangaf - Furnishing status wise breakdown ( Q4 2017 )
• Table 72 shows that the rentals for the Furnished and Semi Furnished categories have registered very sharp decline of 22% to 25%. However, these categories have just a handful of properties. • Unfurnished category with 96% share of properties has registered just 3.8% decline in rentals.
Table 72: Mangaf – Trends in Furnishing Status Wise Occupancy and Monthly Rent
Q2 2015 Q4 2017 % Change in Average Occupancy Ratio Average Occupancy Ratio Average Monthly Rents Monthly Rent Monthly Rent Furnished 96.8% KD 453.3 88.0% KD 338.6 -25.3% Semi Furnished 96.1% KD 411.3 88.3% KD 319.7 -22.3% Unfurnished 95.9% KD 268.5 87.4% KD 258.3 -3.8% • Mangaf has 14% of the properties with age less than 2 years and 14% with age 2 to 5 years. • About 72% of the properties are more than 5 years old.
Chart 45 : Mangaf - Property age wise breakdown ( Q4 2017 )
48 • With properties shifting from one age category to another, the rental growth rates for various categories are shown in Table 73. • While the occupancy ratio has declined across all categories, the rental decline has been moderate across all categories.
Table 73: Mangaf – Trends in Property Age Wise Occupancy and Monthly Rent
Q2 2015 Q4 2017 % Change Occupancy Ratio Average Occupancy Ratio Average in Average Monthly Rent Monthly Rent Monthly Rents Property Age < 2 Yrs. 95.8% KD 341.8 88.2% KD 317.5 -7.1% Property Age 2 - 5 Yrs. 96.6% KD 305.3 86.9% KD 281.6 -7.8% Property Age > 5 Yrs. 95.8% KD 276.0 85.1% KD 263.4 -4.6% Chart 46 shows that the property grade wise breakdown: • Just 3% of the properties are Grade A, 17% are Grade B and another 25% are Grade C. • Lower Grade properties account for 55% share.
Chart 46 : Mangaf - Property Grade wise breakdown ( Q4 2017 )
0%3% 17%
55% 25%
• Table 74 shows that the occupancy ratios have lessened substantially across all categories. • The rental rates for most grade categories has declined but it is almost flat for the Lower Grade category.
Table 74: Mangaf – Trends in Property Grade Wise Occupancy and Monthly Rent
Q2 2015 Q4 2017 % Change Occupancy Ratio Average Occupancy Ratio Average in Average Monthly Rent Monthly Rent Monthly Rents Grade A+ - - NA KD 0.0 N/A Grade A 96.0% KD 494.5 86.2% KD 412.3 -16.6% Grade B 92.5% KD 292.0 86.9% KD 268.3 -8.1% Grade C 95.8% KD 265.0 88.4% KD 245.7 -7.3% Lower Grade 97.0% KD 201.6 89.5% KD 199.8 -0.9% For Mangaf, we have shown the prevailing Monthly Rentals for various unit types in Table 75.
Table 75: Prevailing Monthly Rentals in Mangaf (Q4 2017)
Furnished Semi Furnished Unfurnished Studio - - KD 60 – 180 1Bed Apt KD 275 – 350 KD 250 – 350 KD 130 – 280 2Bed Apt KD 400 – 550 KD 300 – 450 KD 170 – 325 3Bed Apt - - KD 220 – 450 4Bed Apt - - KD 290 - 600 Penthouse - - -
49 Jahra – Jahra Governorate Table 76 shows that we are tracking 3,672 apartments in this area, which is small increase from our previous surveys. The occupancy ratio has not changed much from 96.4% in Q2 2015 to 96.2% in Q4 2017. Jahra is one of the very few areas in Kuwait that have maintained high occupancy in a declining market. The rentals have declined marginally from KD 266.7 in Q2 2015 to KD 240.5 in Q4 2017. We are tracking 239 under construction apartments in this area.
Table 76: Snapshot of Investment Properties Segment in Jahra
Q2 2015 Q4 2017 Number of Functional Apartments 3,217 3,672 No of Vacant Apartments 117 140 Occupancy Ratio 96.4% 96.2% Average Monthly Rent KD 266.7 KD 240.5 No of Under Construction Apartments 89 239 Chart 47 shows the breakdown of units as per the furnishing status. • All units in Jahra are Unfurnished.
Chart 47: Jahra – Furnishing Status Wise Breakdown (Q4 2017)
• Table 77 shows that the rentals for the Unfurnished properties has declined by 9.8% over the last two years.
Table 77: Jahra – Trends in Furnishing Status Wise Occupancy and Monthly Rent
Q2 2015 Q4 2017 % Change in Average Occupancy Ratio Average Occupancy Ratio Average Monthly Rents Monthly Rent Monthly Rent Furnished - - - - NA Semi Furnished - - - - NA Unfurnished 96.4% KD 266.7 96.2% KD 240.5 -9.8% • Jahra has 5% of the properties with age less than 2 years and 25% with age 2 to 5 years. • About 70% of the properties are more than 5 years old.
Chart 48 : Jahra - Property age wise breakdown ( Q4 2017 )
50 • Table 78 shows that despite maintaining the occupancy across all categories, the prices have registered around 9-10% decline across all categories.
Table 78: Jahra – Trends in Property Age Wise Occupancy and Monthly Rent
Q2 2015 Q4 2017 % Change Occupancy Ratio Average Occupancy Ratio Average in Average Monthly Rent Monthly Rent Monthly Rents Property Age < 2 Yrs. 92.5% KD 287.8 97.8% KD 256.4 -10.9% Property Age 2 - 5 Yrs. 96.2% KD 269.2 97.4% KD 244.9 -9.0% Property Age > 5 Yrs. 96.9% KD 246.1 95.1% KD 221.9 -9.8% Chart 49 shows that the property grade wise breakdown: • Jahra has witnessed the constant rates of grade properties over the last few years. We are now tracking 5% of the properties that are Grade A, 12% as Grade B and 24% as Grade C. • Majority of the properties remain Lower Grade with 59% share.
Chart 49 : Jahra - Property Grade wise breakdown ( Q4 2017 )
• Table 79 shows that the occupancy ratios has changed across all categories. • The rental rates for higher grade categories, except Grade A+ have been calculated. Grade A+ have not been calculated due to unavailability of data during the previous surveys. • Grade A and Grade B categories have registered declines of 8.7% and 11.0% respectively in the monthly rentals. • For the other two grades, the rental growth rate is moderately negative.
Table 79: Jahra – Trends in Property Grade Wise Occupancy and Monthly Rent
Q2 2015 Q4 2017 % Change in Average Occupancy Ratio Average Occupancy Ratio Average Monthly Rents Monthly Rent Monthly Rent Grade A+ - - NA - N/A Grade A 97.0% KD 439.2 95.4% KD 400.8 -8.7% Grade B 95.1% KD 334.4 96.1% KD 297.6 -11.0% Grade C 96.8% KD 289.3 96.2% KD 274.6 -5.1% Lower Grade 96.5% KD 226.7 96.8% KD 211.5 -6.7% For Jahra, we have shown the prevailing Monthly Rentals for various unit types in Table 80.
Table 80: Prevailing Monthly Rentals in Jahra (Q4 2017)
Furnished Semi Furnished Unfurnished Studio - - KD 60 – 130 1Bed Apt - - KD 135 – 260 2Bed Apt - - KD 190 – 500 3Bed Apt - - KD 225 – 550 4Bed Apt - - KD 280 - 600 Penthouse - - -
51 Farwania – Farwania Governorate Table 81 shows that we are tracking 14,486 apartments in this area, which is a significant high number from our previous surveys. The occupancy ratio has dropped from 96.8% in Q2 2015 to 88.4% in Q4 2017. The rentals have declined from KD 272.9 in Q2 2015 to KD 256.7 in Q4 2017. We are tracking 1,813 under construction apartments in this area.
Table 81: Snapshot of Investment Properties Segment in Farwania
Q2 2015 Q4 2017 Number of Functional Apartments 9,242 14,486 No of Vacant Apartments 295 1,681 Occupancy Ratio 96.8% 88.4% Average Monthly Rent KD 272.9 KD 256.7 No of Under Construction Apartments 447 1,813 Chart 50 shows the breakdown of units as per the furnishing status. • Just 1% of the properties are Furnished, 5% are Semi Furnished and 94% of the units in Farwania are Unfurnished.
Chart 50 : Farwania - Furnishing status wise breakdown ( Q4 2017 )
• Table 82 shows that the rentals for the Semi Furnished properties decreased by 13.6% and for Unfurnished properties decreased by 8.5% over the last two years.
Table 82: Farwania – Trends in Furnishing Status Wise Occupancy and Monthly Rent
Q2 2015 Q4 2017 % Change in Average Occupancy Ratio Average Occupancy Ratio Average Monthly Rents Monthly Rent Monthly Rent Furnished - - 88.6% KD 364.2 NA Semi Furnished 100.0% KD 320.0 89.6% KD 276.4 -13.6% Unfurnished 96.7% KD 272.8 88.1% KD 249.6 -8.5% • Farwania has 2% of the properties with age less than 2 years and 17% with age 2 to 5 years. • About 81% of the properties are more than 5 years old.
Chart 51 : Farwania - Property age wise breakdown ( Q4 2017 )
52 • Table 83 shows that the properties across all age categories have registered sizeable decrease in rentals.
Table 83: Farwania – Trends in Property Age Wise Occupancy and Monthly Rent
Q2 2013 Q2 2015 % Change in Average Occupancy Ratio Average Occupancy Ratio Average Monthly Rents Monthly Rent Monthly Rent Property Age < 2 Yrs. 96.1% KD 383.5 89.5% KD 329.6 -14.1% Property Age 2 - 5 Yrs. 97.4% KD 307.8 89.7% KD 273.9 -11.0% Property Age > 5 Yrs. 96.6% KD 260.3 86.4% KD 239.5 -8.0% Chart 52 shows that the property grade wise breakdown: • Farwania has witnessed development of better grade properties over the last few years. We are now tracking 4% of the properties that are Grade A, 25% as Grade B and 14% as Grade C.
Chart 52 : Farwania - Property Grade wise breakdown ( Q4 2017 )
• Majority of the properties remain Lower Grade with 57% share. • Table 84 shows that the occupancy ratios has declined across all categories. The rentals for all categories has also declined.
Table 84: Farwania – Trends in Property Grade Wise Occupancy and Monthly Rent
Q2 2015 Q4 2017 % Change in Average Occupancy Ratio Average Occupancy Ratio Average Monthly Rents Monthly Rent Monthly Rent Grade A+ - - 84.3% KD 458.6 N/A Grade A 97.2% KD 450.5 87.6% KD 417.6 -7.3% Grade B 96.9% KD 340.9 88.5% KD 299.6 -12.1% Grade C 96.4% KD 289.8 88.5% KD 263.1 -9.2% Lower Grade 96.8% KD 223.5 88.9% KD 201.6 -9.8% For Farwania, we have shown the prevailing Monthly Rentals for various unit types in Table 85.
Table 85: Prevailing Monthly Rentals in Farwania (Q4 2017)
Furnished Semi Furnished Unfurnished Studio - - KD 70 – 165 1Bed Apt - - KD 140 – 300 2Bed Apt - KD 300 – 500 KD 160 – 650 3Bed Apt - KD 375 – 650 KD 240 – 690 4Bed Apt - - KD 300 - 750 Penthouse - - -
53 Khaitan – Farwania Governorate Table 86 shows that we are tracking 13,971 apartments in this area, which is an increase from our previous surveys. The occupancy ratio has declined from 96.9% in Q2 2015 to 87.5% in Q4 2017. The rentals have decreased from KD 266.5 in Q2 2015 to KD 243.7 in Q4 2017. We are tracking 1,332 under construction apartments in this area.
Table 86: Snapshot of Investment Properties Segment in Khaitan
Q2 2015 Q4 2017 Number of Functional Apartments 10,329 13,971 No of Vacant Apartments 325 1747 Occupancy Ratio 96.9% 87.5% Average Monthly Rent KD 266.5 KD 243.7 No of Under Construction Apartments 127 1,332 Chart 53 shows the breakdown of units as per the furnishing status. • Just 1% of the units are Furnished, 1% of the units are Semi Furnished and 98% of the units in Khaitan are Unfurnished.
Chart 53 : Khaitan - Furnishing status wise breakdown ( Q4 2017 )
• Table 87 shows that the rentals for the Unfurnished properties that have about 98% share in the area have decreased by 9% % over the last two years. • Rentals also declined for the other two categories.
Table 87: Khaitan – Trends in Furnishing Status Wise Occupancy and Monthly Rent
Q2 2015 Q4 2017 % Change in Average Occupancy Ratio Average Occupancy Ratio Average Monthly Rents Monthly Rent Monthly Rent Furnished 97.5% KD 380.0 86.1% KD 367.4 -3.3% Semi Furnished 93.9% KD 365.0 87.9% KD 326.5 -10.5% Unfurnished 96.8% KD 265.6 87.6% KD 241.6 -9.0% • Khaitan has 7% of the properties with age less than 2 years and 15% with age 2 to 5 years. • About 78% of the properties are more than 5 years old.
Chart 54 : Khaitan - Property age wise breakdown ( Q4 2017 )
54 Table 88 shows that the properties across all age categories have registered declined rentals except for the new properties which has registered marginal increase.
Table 88: Khaitan – Trends in Property Age Wise Occupancy and Monthly Rent
Q2 2015 Q4 2017 % Change in Occupancy Ratio Average Monthly Occupancy Ratio Average Monthly Average Monthly Rent Rent Rents Property Age < 2 Yrs. 94.9% KD 287.0 88.2% KD 291.6 1.6% Property Age 2 - 5 Yrs. 97.9% KD 334.7 88.9% KD 271.6 -18.9% Property Age > 5 Yrs. 96.7% KD 250.0 85.7% KD 225.6 -9.8% Chart 55 shows that the property grade wise breakdown: • Khaitan has witnessed development of better grade properties over the last few years. We are now tracking 1% of properties that are Grade A+, 5% of the properties that are Grade A, 21% as Grade B and 21% as Grade C. • Majority of the properties remain Lower Grade with 52% share.
Chart 55 : Khaitan - Property Grade wise breakdown ( Q4 2017 )
• Table 89 shows that the occupancy ratios have declined across all categories. • The trend in the rentals is mixed across different grades – While there is substantial decline in Grade B and Grade C categories, there is moderate decline in Grade A+ and Grade A categories. • Further, Lower Grade properties have been able to maintain the rental rates in 2017 at the same level of 2015.
Table 89: Khaitan – Trends in Property Grade Wise Occupancy and Monthly Rent
Q2 2015 Q4 2017 % Change in Average Occupancy Ratio Average Occupancy Ratio Average Monthly Rents Monthly Rent Monthly Rent Grade A+ 92.1% KD 455.0 84.9% KD 431.8 -5.1% Grade A 97.5% KD 434.0 85.7% KD 412.5 -5.0% Grade B 96.6% KD 352.5 88.6% KD 307.6 -12.7% Grade C 97.3% KD 305.2 89.3% KD 274.6 -10.0% Lower Grade 96.7% KD 201.2 89.4% KD 202.8 0.8% For Khaitan, we have shown the prevailing Monthly Rentals for various unit types in Table 90.
Table 90: Prevailing Monthly Rentals in Khaitan (Q4 2017)
Furnished Semi Furnished Unfurnished Studio - - KD 80 – 145 1Bed Apt - - KD 125 – 260 2Bed Apt KD 300 – 495 KD 300 – 600 KD 160 – 520 3Bed Apt KD 430 – 700 KD 380 – 725 KD 230 – 410 4Bed Apt - - KD 275 - 700 Penthouse - - -
55 Jleeb Al Shiyoukh – Farwania Governorate Table 91 shows that we are tracking 6,864 apartments in this area. The occupancy ratio has gone down from 95.3% in Q2 2015 to 91.1% in Q4 2017. The rentals have decreased quite moderately from KD 160.5 in Q2 2015 to KD 154.3 in Q4 2017. We are tracking 874 under construction apartments in this area.
Table 91: Snapshot of Investment Properties Segment in Jleeb Al Shiyoukh
Q2 2015 Q4 2017 Number of Functional Apartments 7,253 6,864 No of Vacant Apartments 338 611 Occupancy Ratio 95.3% 91.1% Average Monthly Rent KD 160.5 KD 154.3 No of Under Construction Apartments 372 874 Chart 56 shows the breakdown of units as per the furnishing status. • All units in Jleeb area are Unfurnished.
Chart 56 : Jleeb Al Shiyoukh - Furnishing status wise breakdown ( Q4 2017 )
• Table 92 shows that the rentals for the Unfurnished properties decreased by 3.9% over the last two years.
Table 92: Jleeb Al Shiyoukh – Trends in Furnishing Status Wise Occupancy and Monthly Rent
Q2 2015 Q4 2017 % Change in Occupancy Ratio Average Monthly Occupancy Ratio Average Monthly Average Monthly Rent Rent Rents Furnished - - - - NA Semi Furnished - - - - NA Unfurnished 95.3% KD 160.5 91.1% KD 154.3 -3.9% • Jleeb Al Shiyoukh has 9% of the properties with age less than 2 years and 19% with age 2 to 5 years. • About 72% of the properties are more than 5 years old.
Chart 57 : Jleeb Al Shiyoukh - Property age wise breakdown ( Q4 2017 )
56 • Table 93 shows that the properties across all age categories have decreased rentals at very moderate pace.
Table 93: Jleeb Al Shiyoukh – Trends in Property Age Wise Occupancy and Monthly Rent
Q2 2015 Q4 2017 % Change in Average Occupancy Ratio Average Occupancy Ratio Average Monthly Rents Monthly Rent Monthly Rent Property Age < 2 Yrs. 80.7% KD 266.1 92.4% KD 256.1 -3.8% Property Age 2 - 5 Yrs. 92.1% KD 239.5 91.1% KD 232.6 -2.9% Property Age > 5 Yrs. 96.7% KD 135.9 90.3% KD 131.3 -4.1% Chart 58 shows that the property grade wise breakdown: • Jleeb Al Shiyoukh has witnessed development of better grade properties over the last few years. We are now tracking 1% of properties that are Grade A, 2% of the properties that are Grade B and 15% as Grade C. • Majority of the properties remain Lower Grade with 82% share.
Chart 58 : Jleeb Al Shiyoukh - Property Grade wise breakdown ( Q4 2017 )
• Table 94 shows that the occupancy ratios have decreased across all categories. • The decline of rentals is moderate across all grade categories.
Table 94: Jleeb Al Shiyoukh – Trends in Property Grade Wise Occupancy and Monthly Rent
Q2 2015 Q4 2017 % Change in Average Occupancy Ratio Average Occupancy Ratio Average Monthly Rents Monthly Rent Monthly Rent Grade A+ - - - - - Grade A 97.2% KD 485.0 89.6% KD 476.5 -1.8% Grade B 96.7% KD 357.4 90.2% KD 352.5 -1.4% Grade C 93.1% KD 307.5 91.3% KD 295.9 -3.8% Lower Grade 95.7% KD 124.8 91.9% KD 120.6 -3.4% For Jleeb Al Shiyoukh, we have shown the prevailing Monthly Rentals for various unit types in Table 95.
Table 95: Prevailing Monthly Rentals in Jleeb Al Shiyoukh (Q4 2017)
Furnished Semi Furnished Unfurnished Studio - - KD 35 – 140 1Bed Apt - - KD 140 – 235 2Bed Apt - - KD 150 – 325 3Bed Apt - - KD 250 – 450 4Bed Apt - - - Penthouse - - -
57 Riqey – Farwania Governorate Table 96 shows that we are tracking 4,529 apartments in this area. The occupancy ratio has declined to 86.3% in Q4 2017 from 97.1% in Q2 2015. The rentals have decreased to KD 261.8 in Q4 2017 from KD 297.0 in Q2 2015. We are tracking 611 under construction apartments in this area.
Table 96: Snapshot of Investment Properties Segment in Riqey
Q2 2015 Q4 2017 Number of Functional Apartments 4,857 4,529 No of Vacant Apartments 142 621 Occupancy Ratio 97.1% 86.3% Average Monthly Rent KD 297.0 KD 261.8 No of Under Construction Apartments 213 611 Chart 59 shows the breakdown of units as per the furnishing status. • All units in Riqey area are Unfurnished.
Chart 59 : Riqeh - Furnishing status wise breakdown ( Q4 2017 )
• Table 97 shows that the rentals for the Unfurnished properties decreased by 11.9% over the last two years.
Table 97: Riqey – Trends in Furnishing Status Wise Occupancy and Monthly Rent
Q2 2015 Q4 2017 % Change Occupancy Ratio Average Occupancy Ratio Average in Average Monthly Rent Monthly Rent Monthly Rents Furnished - - - - NA Semi Furnished - - - - NA Unfurnished 97.1% KD 297.0 86.3% KD 261.8 -11.9% • Riqey has 2% new properties, 11% properties with age 2 to 5 years and remaining 87% of the properties are more than 5 years old.
Chart 60 : Riqeh - Property age wise breakdown ( Q4 2017 )
58 • Table 98 that the rentals for properties with 2 to 5 years age decreased by 13.7% over the last two years. Rentals for properties with age more than 5 years also decreased by 10.3% over the same period.
Table 98: Riqey – Trends in Property Age Wise Occupancy and Monthly Rent
Q2 2015 Q4 2017 % Change Occupancy Ratio Average Occupancy Ratio Average in Average Monthly Rent Monthly Rent Monthly Rents Property Age < 2 Yrs. - - 87.5% KD 289.4 NA Property Age 2 - 5 Yrs. 96.8% KD 320.8 86.4% KD 276.9 -13.7% Property Age > 5 Yrs. 97.1% KD 285.3 85.9% KD 255.8 -10.3% Chart 61 shows that the property grade wise breakdown: • Riqey has witnessed better grade properties. We are now tracking 14% of properties that are Grade A, 34% of the properties that are Grade B and 33% as Grade C. • Just 19% of the properties are Lower Grade showing that the area has generally good grade properties.
Chart 61 : Riqeh - Property Grade wise breakdown ( Q4 2017 )
• The decline of rentals is homogenous across all grade categories – prices dropped around 9-11% in Riqey over the last two years.
Table 99: Riqey – Trends in Property Grade Wise Occupancy and Monthly Rent
Q2 2015 Q4 2017 % Change Occupancy Ratio Average Occupancy Ratio Average in Average Monthly Rent Monthly Rent Monthly Rents Grade A+ - - NA KD 0.0 N/A Grade A 93.3% KD 450.0 84.6% KD 401.6 -10.8% Grade B 91.8% KD 290.6 86.4% KD 255.9 -11.9% Grade C 100.0% KD 268.0 86.8% KD 241.7 -9.8% Lower Grade 94.7% KD 240.0 87.9% KD 211.3 -12.0% For Riqey, we have shown the prevailing Monthly Rentals for various unit types in Table 100.
Table 100: Prevailing Monthly Rentals in Riqey (Q4 2017)
Furnished Semi Furnished Unfurnished Studio - - KD 80 – 135 1Bed Apt - - KD 120 – 245 2Bed Apt - - KD 180 – 325 3Bed Apt - - KD 225 – 500 4Bed Apt - - KD 400 - 575 Penthouse - - -
59 Sabah Al Salam – Mubarak Al Kabeer Governorate Table 101 shows that we are tracking 3,044 apartments in this area, which is has increased substantially compared to our previous surveys. This is a new area under development with hundreds of under construction properties. By far, this is the largest construction pocket anywhere in Kuwait. The occupancy ratio has declined sharply from 94.2% in Q2 2015 to only 67.2%% in Q4 2017. The rentals has decreased from KD 337.3 in Q2 2015 to KD 301.6 in Q4 2017. Further, we are tracking 7,424 under construction apartments in this area that shows increased pace of construction in this area.
Table 101: Snapshot of Investment Properties Segment in Sabah Al Salam
Q2 2015 Q4 2017 Number of Functional Apartments 670 3,044 No of Vacant Apartments 39 999 Occupancy Ratio 94.2% 67.2% Average Monthly Rent KD 337.3 KD 301.6 No of Under Construction Apartments 558 7,424 Chart 62 shows the breakdown of units as per the furnishing status. • Around 8% of the units here are Furnished, 3% of units are Semi Furnished and remaining 89% are Unfurnished.
Chart 62 : Sabah Al Salem- Furnishing status wise breakdown ( Q4 2017 )
• Table 102 shows that the rentals for the Unfurnished properties (that have the largest share in this area) have declined by 14.8% over the last two years. • For the Semi Furnished category, the rentals have decreased by 16.4% over the last two years.
Table 102: Sabah Al Salam – Trends in Furnishing Status Wise Occupancy and Monthly Rent
Q2 2015 Q4 2017 % Change Occupancy Ratio Average Occupancy Ratio Average in Average Monthly Rent Monthly Rent Monthly Rents Furnished - - 65.8% KD 341.6 NA Semi Furnished 94.5% KD 361.0 64.2% KD 301.8 -16.4% Unfurnished 94.0% KD 327.0 68.3% KD 278.6 -14.8% • In our survey, 73% of the properties are more than 5 years age. Another 17% are 2-5 years age and remaining 10% are new properties. • This chart shall change in future with thousands of apartments under construction that will be delivered in the coming years.
Chart 63 : Sabah Al Salem- Property age wise breakdown ( Q4 2017 )
60 • Table 103 that the rentals for properties with more than 5 years age decreased by 14.4% over the last two years. • Comparative rentals are not available for the other two categories for the year 2015 and thus, percentage change cannot be calculated.
Table 103: Sabah Al Salam – Trends in Property Age Wise Occupancy and Monthly Rent
Q2 2015 Q4 2017 % Change Occupancy Ratio Average Occupancy Ratio Average in Average Monthly Rent Monthly Rent Monthly Rents Property Age < 2 Yrs. - - 59.4% KD 338.6 NA Property Age 2 - 5 Yrs. - - 68.4% KD 305.7 NA Property Age > 5 Yrs. 97.1% KD 337.3 71.3% KD 288.6 -14.4% Chart 64 shows that the property grade wise breakdown: • Around 24% of the apartments are Grade A, 21% are Grade B and 5% are Grade C. • Still 50% of the properties are Lower Grade.
Chart 64 : Sabah Al Salem - Property Grade wise breakdown ( Q4 2017 )
• The rentals have shown considerable decline across all grade categories. • For Grade A, which is a category with very small share, the rentals have declined by more than 32% over the last two years. • With a massive chunk of under construction supply getting completed over the next 12-15 months, the rentals will remain under pressure for the next few years.
Table 104: Sabah Al Salam – Trends in Property Grade Wise Occupancy and Monthly Rent
Q2 2015 Q4 2017 % Change Occupancy Ratio Average Occupancy Ratio Average in Average Monthly Rent Monthly Rent Monthly Rents Grade A+ - - - - - Grade A 23.5% KD 402.8 63.1% KD 402.8 -16.3% Grade B 21.4% KD 376.4 66.8% KD 376.4 -16.4% Grade C 5.3% KD 261.5 68.9% KD 261.5 -32.9% Lower Grade 49.9% KD 213.9 72.3% KD 213.9 -10.9% For Sabah Al Salam, we have shown the prevailing Monthly Rentals for various unit types in Table 105.
Table 105: Prevailing Monthly Rentals in Sabah Al Salam (Q4 2017)
Furnished Semi Furnished Unfurnished Studio - - - 1Bed Apt - - KD 165 – 300 2Bed Apt KD 450 – 600 KD 380 – 450 KD 210 – 390 3Bed Apt - KD 450 – 550 KD 320 – 510 4Bed Apt - - - Penthouse - - -
61 FREEHOLD APARTMENTS SEGMENT
62 Freehold Apartments Segment Table 106 shows the snapshot of freehold apartments segment. It’s a small segment with few properties. We tracked 43 properties in this segment with 1,590 apartments in Q4 2017. Of these nearly one thousand apartments were sold and 599 were unsold. Based on the number of months under sales, we have estimated that the sales pace is 3.2% every month. In simple terms, a project sells 3.2% of the units every month. This means that a project sells out in 31.3 months, which is slower than the typical construction period of 24 months. This is not a good measure of the health of this segment that a typical project is now not able to sell all units before it is fully constructed.
Table 106: Snapshot of Freehold Apartments Segment in Kuwait (Q4 2017)
No. of Properties Covered 43 Total No. of Units 1,590 Unsold Units 599 Sales Pace 3.2% Chart 65 shows the mix of units types in the freehold apartments projects market in Kuwait: • 1 Bedroom type units account for 12% share and 2 Bedroom types account for 50% share. • 3 Bedroom type units account for 30% share and there is 8% share for Studio type units. • These shares of unit types are different from the shares in the investment properties market segment where the 2 Bedroom types account for the highest shares. Several buyers of the freehold apartments are investors and they buy the units to earn stable rental income.
Chart 65: Breakdown of Units in Freehold Apartments (2017)
We have tracked several thousand transactions of freehold apartments in Kuwait over the last eight years and the number of transactions in each year are shown in Chart 66. • The number of transactions were more than one thousand in the years 2007 and 2008. • Post the financial crisis, the transactions dropped and the lowest point was reached in the year 2012. • The market recovered after that to register a high of 973 transactions in 2015. • Since then the market has again dropped and 2017 say total 671 transactions.
Chart 66 : No. of Freehold Apartments Sold in kuwait Average = 833 units per year
* Data from Ministry of Justice Transactions
63 We have tracked average price trend of apartments in various areas of Kuwait. The data in this Table 107 is based on nearly 8,500 transactions in these areas from 2007 until 2017. • Bneid al Qar prices moved from KD 603 per sq.m. in 2007 to KD 1,237 per sq.m. in 2015 and then declined to KD 1,071 in 2017 – a CAGR of 5.9% over this period. It is one of the lowest rate of appreciation anywhere in Kuwait. • Coastal Shaab area has given 6.4% CAGR to the investors and Shaab area have given 5.2% appreciation. • In Hawalli Governorate, Salmiya and Jabriya recorded low growth rates of 4.9% and 3.9% per annum respectively and Hawalli registered a higher growth at 6.5% per annum over 10 years. • Farwania recorded 6.9% growth rate but Sabah Al Salem registered the highest growth rate amongst all areas at 10.8% appreciation per annum despite considerable price correction in 2017. We believe the prices may decline further in Sabah AL Salem area due to weakness in the rental market. • In Ahmadi Governorate, most areas have given higher rate of appreciation compared to areas in other governorates. Abu Halifa has given 6.0% annual appreciation to the investors, Fintas at 6.8%, Mangaf at 7.2% and Mahboula is at 7.9%. • Overall, the rate of appreciation is 7.6% for all areas combined. • The data shows that the rate of appreciation was moderate in the first 5 years and jumped dramatically in 2012 to 2015 period. The growth rate decline in 2016 and was sharply negative for the year 2017. • We note that all the calculations are done without keeping in mind various transactions costs such as brokerage commission, registration fees, infrastructure contribution, etc. When these transactions costs are included, the net rate of appreciation could be around 6.5 to 7.0%.
64 5.9% 6.4% 5.2% 4.9% 3.9% 6.5% 6.9% 6.0% 6.8% 7.2% 7.9% 7.6% 10.8% Yrs.. CAGR of 10 KD 932 KD 840 KD 912 KD 743 KD 875 KD 711 KD 724 KD 746 KD 711 KD 878 2017 KD 1,071 KD 1,181 KD 1,016 KD 939 KD 882 KD 948 KD 766 KD 945 KD 764 KD 792 KD 814 KD 776 KD 938 2016 KD 1,169 KD 1,248 KD 1,039 KD 889 KD 801 KD 973 KD 712 KD 917 KD 941 2015 KD 1,237 KD 1,550 KD 1,290 KD 1,287 KD 1,041 KD 1,099 KD 1,031 KD 928 KD 871 KD 773 KD 956 KD 805 KD 672 KD 700 KD 821 2014 KD 1,037 KD 1,253 KD 1,157 KD 1,070 KD 1,003 KD 876 KD 934 KD 850 KD 723 KD 668 KD 631 KD 745 KD 718 KD 594 KD 605 KD 700 2013 KD 1,116 KD 1,020 KD 864 KD 953 KD 869 KD 674 KD 717 KD 667 KD 567 KD 471 KD 614 KD 612 KD 499 KD 497 KD 604 2012 KD 832 KD 745 KD 811 KD 656 KD 610 KD 574 KD 565 KD 479 KD 577 KD 522 KD 383 KD 431 KD 521 2011 KD 815 KD 676 KD 783 KD 587 KD 661 KD 522 KD 570 KD 391 KD 578 2010 KD 463 KD 359 KD 391 KD 516 KD 737 KD 618 KD 660 KD 544 KD 457 KD 526 KD 408 KD 345 KD 586 KD 425 KD 358 KD 381 KD 484 2009 Table 107: Average Price Trend (per sq.m. of unit area) for Freehold Apartments in Kuwait for last 11 Years for Freehold (per sq.m. of unit area) Price Trend 107: Average Table KD 580 KD 713 KD 796 KD 537 KD 544 KD 481 KD 411 KD 359 KD 489 KD 446 KD 314 KD 360 KD 439 2008 KD 603 KD 636 KD 610 KD 575 KD 574 KD 487 KD 381 KD 313 KD 396 KD 376 KD 371 KD 331 KD 421 2007 Areas Bnaid el Qar * Based on only primary market transactions (freehold apartments from developers). This year’s data is not used in the calculations of annual appreciation. data is not used in the calculations of annual appreciation. developers). This year’s apartments from * Based on only primary market transactions (freehold Coastal Shaab Shaab Salmiya Jabriya Hawalli Farwania Sabah Al Salem Abu Halifa Fintas Mangaf Mahboula Total 65 Chart 67 shows the year wise trend of rental yields of 1 Bed an 2 Bed units. The data for 3 Bed units for all the years was not available. • The yields have been calculated using the year wise prices of 1 Bed and 2 Bed apartments for different areas. For the same areas, average monthly rent of apartments were taken and the yields were calculated for each area. The yields were then averaged for all areas and shown in Chart 67. • The rental yields were mostly above 7% mark for the period between 2007 and 2012. The highest yields were recorded in the year 2010. Since then the yields have started compressing. The yields dropped below 7% in 2013 and now these are around 6%. • During the period of 10 years, the freehold prices have grown at a CAGR of 7.6% (refer to Table 107), the rentals have grown at around 6 – 6.5% per annum. • The combined return for the investors over the last 10 years has been 14.3% per annum, which is one of the best returns yielded by any real estate segment in Kuwait.
Chart 67 : No.Rental Yields in Kuwait
66 OFFICE SPACE SEGMENT
67 Office Space Segment The snapshot of the office space segment is shown in Table 108. As we have mentioned consistently that the office space segment has done well in last few years and it is expected to continue this way for the next couple of years. • Table 108 shows that the occupancy ratios of office space is now 95.6% for the existing stock.This is the highest occupancy ratio attained in last 7-8 years (maybe first time since 2008). • In Chart 68 we have shown the trend in the occupancy ratio of office inventory. In 2011, the occupancy ratio was quite low at 59.4%. From that level the segment has staged a very smart recovery with 95.6% occupancy in 2017. • The chart also shows the growth trend in the lease rate, which continues to climb up steadily. It currently stands at KD 7.8 per m2. We note that the lease rate doesn’t include any common area charges (CAM charges) because there are no market wide conventions for CAM charges. Some high quality properties charge KD 1-2 per m2 CAM charges and for some others, no charges are taken. • Based on the occupancy and the average lease rate, all these 415 properties generate KD 127.7 million of yearly rental income. If we assume a basic cap rate of 7%, the combined value of all these properties is KD 1.82 billion.
Table 108: Snapshot of Kuwait Office Space Segment
Q2 2013 Q2 2015 Q4 2017 Office Space Supply – A + B 1,183,838 sq.m. 1,188,838 sq.m. 1,461,578 sq.m. Existing Stock – A 1,122,390 sq.m. 1,171,538 sq.m. 1,433,437 sq.m. Under Construction Stock - B 61,448 sq.m. 17,300 sq.m. 28,141 sq.m. Occupancy Ratio – Office Space Supply 67.40% 86.77% 93.8% Occupancy Ratio – Only Existing Stock 71.10% 86.81% 95.6% Occupancy Ratio – Under Construction Stock 0.00% 83.8% 0.0% Average Lease Rate (per sq.m.) KD 6.8 KD 7.2 KD 7.8
Chart 68: Trend of Office Space Occupancy and Lease Rate
Chart 69 shows the percentage share of office space inventory for various governorates: • Asma Governorates, which all the business districts of Kuwait City, accounts for 70% of all office space inventory in Kuwait. We have covered 161 properties here with combined leasable area of 996,327 m2. • Ahmadi Governorate has 23 properties with a share of just 4%. The average size of a property is 2,567 m2. • Hawalli Governorate is the second largest cluster of office space properties with 166 properties that have 19% share in the total inventory. • Farwania Governorate has 48 properties and it accounts for 6% share in the total inventory.
68 Chart 69: Share of Different Governorates in Office Space Inventory ( Q4 2017 )
• Table 109 shows the governorate level occupancy ratios, lease rates and growth rates over the last two years. • The occupancy ratios are generally high for all governorates. In Capital Governorate, which has the largest stock of office space, the occupancy ratio is 97.1%, which is the best recording for any governorate. • The lease rates have shown different trends. In the Capital Governorate, the lease rates have held up at the same level as our previous survey. Elsewhere, the lease rates have shown very impressive growth rates. • In cases of Farwania and Jahra Governorates, our data appears somewhat skewed due to increased sample size and development of some better grade properties. • By and large, the lease rates have grown in almost all governorates and this has happened with very high occupancy ratios everywhere.
Table 109: Governorate Wise Trends in Occupancy Ratios and Average Lease Rates
Q2 2015 Q4 2017 % Change in Average Lease Lease Rate Occupancy Ratio Occupancy Ratio Occupancy Ratio Rate (per sq.m.) (per sq.m.) 1,171,538 sq.m. 1,433,437 sq.m. Capital 85.1% KD 7.98 97.1% KD 7.97 -0.12% Hawalli 94.1% KD 6.79 93.6% KD 7.39 8.82% Ahmadi 91.8% KD 6.21 83.2% KD 6.54 5.24% Farwaniyah 95.8% KD 5.12 93.0% KD 6.68 30.47% Jahra 95.8% KD 3.88 90.4% KD 6.39 64.90%
69 Dynamics of office space with different property grades are shown in Chart 70. The definitions of the grades are given in appendix. • The International Grade properties account for 16% share in the inventory. There are just 6 properties in this grade and their average leasable area is 38,291 m2. • The largest chunk of office space is Grade B where the total inventory is 478,607 m2. • Grade A has 28% share in the inventory and Grade C has 23% share in the inventory.
Chart 70: Distribution of office space inventory with property Grades ( Q4 2017 )
Table 110 shows the grade wise trends in occupancy and lease rates. • The occupancy ratios for all grades have improved considerably. • The lease rates for the International Grade A properties has jumped up by 6.5%. However, the biggest just has come in Lower Grade properties where the lease rates went up by 19.3%. • The demand for office space improved substantially over the last couple of years but the supply has not been able too keep up. This has lead to sharp jump in lease rates.
Table 110: Grade Wise Trends in Occupancy Ratios and Average Lease Rates
Q2 2015 Q4 2017 % Change in Average Lease Rate Average Lease Lease Rate Occupancy Ratio Occupancy Ratio (per sq.m.) Rate (per sq.m.) (per sq.m.) Intl. Grade A 83.6% KD 11.25 99.2% KD 11.98 6.5% Grade A 87.8% KD 8.66 94.1% KD 8.84 2.1% Grade B 87.7% KD 7.05 94.8% KD 7.32 3.9% Grade C 90.2% KD 5.65 95.9% KD 6.02 6.6% Lower Grade 91.6% KD 4.33 95.6% KD 5.17 19.3%
70 Outlook for the Office Space Segment Over the last 3-4 years, the office space segment has been one of the best performing segment in Kuwait when it comes to improvement in occupancy rates. However, there are several factors that warrant caution for the market outlook over the next 2-3 years:
Government Sector has increased its captive supply 1. Various government entities have been developing their captive towers and some of these properties are nearing completion. Prominent examples are KIA Building and Kuwait Central Bank building in Sharq area. These two properties combined have nearly 140,000 m2 of space. While KIA and the Central Bank will occupy most of this space, any extra space may be leased to other government entities that so far have been leasing at other properties. 2. KIA with PIFFs has holding across several companies and these companies may be asked to shift to the KIA building once they complete their lease terms. 3. Further, the KIA and Central Bank offices will move to the new properties thereby freeing up spaces from the existing government properties. These spaces can be acquired by several government departments, which will reduce the Government Sector’s incremental demand for the open market.
Large Captive Properties for Private Sector in Pipeline 1. National Bank of Kuwait (NBK) and Mabanee Company have been developing their headquarter towers in Asma Governorates. These two towers combined have more than 50,000 m2 of office space. Of the two groups, NBK occupies considerable office space in Kuwait City Properties that may get affected once NBK moves to their tower.
Sluggish Economic Environment Leads to Sluggish Demand 1. With the sharp decline in oil prices in early 2016, the economic activities in the GCC countries have come down. The government sector was a prime driver of economic activities in the GCC countries for the last 4-5 years before 2016. Now the government is forced to rationalize expenditure plans and the economic activities are expected to remain sluggish for the next 2-3 years.
71 RETAIL SPACE SEGMENT
72 Retail Space Segment Table 111 shows the dynamics of the retail space segment. It shows that the occupancy ratio for all the retail mall space put together in Kuwait is 84.0%, including the occupancy of the under construction supply. This is a drop from the previous reading of 94.6% in 2015. The occupancy ratio of the existing stock is not really an issue with a high reading of 98.7%. However, the real cause for worry is that the under construction supply has expanded very sharply to 346,046 m2 and the occupancy here is very low at just around 50%.
Table 111: Snapshot of Kuwait Retail Mall Space Segment
Q2 2013 Q2 2015 Q4 2017 Retail Mall Space Supply – A + B 784,141 sq.m. 799,141 sq.m. 1,145,187 sq.m. Existing Stock – A 634,257 sq.m. 770,196 sq.m. 799,141 sq.m. Under Construction Stock – B 149,884 sq.m. 28,945 sq.m. 346,046 sq.m. Occupancy Ratio - Retail Mall Space Supply 88.5% 94.6% 84.0% Occupancy Ratio - Only Existing Stock 94.8% 95.3% 98.7% Occupancy Ratio - Only Under Construction Stock 61.8% 74.8% 50.0%
• The prevailing lease rates are shown in Table 113. Generally, there has been some decline seen in the average rates even if the peak rates have gone up. • With a substantial chunk of retail supply hitting the market over the next few years, the lease rates are likely to remain under pressure.
Table 112: Prevailing Lease Rates in Kuwait Retail Mall Space Segment (per sq.m. per month)
Q2 2015 Q4 2017 Max Min Avg. Max Min Avg. Basement KD 50.0 KD 4.0 KD 18.0 KD 50.0 KD 4.0 KD 17.5 Ground Floor KD 90.0 KD 5.5 KD 25.7 KD 100.0 KD 5.5 KD 23.5 1st Floor KD 45.0 KD 5.0 KD 14.4 KD 55.0 KD 5.0 KD 14.1 2nd Floor KD 40.0 KD 5.0 KD 9.8 KD 45.0 KD 5.0 KD 9.1 The governorate wise supply breakdown is shown in Chart 71. • With only marginal increase in the functional retail space inventory, the governorate wise breakdown of retail space shares have remained largely the same as last survey. • Farwania and Hawalli governorates remain the largest areas with retail mall space supply. Combined, these two governorates account for nearly 70% of retail space in Kuwait. • However, the new under construction supply is largely concentrated in Ahmadi and Capital Governorates. Thus, the percentage shares will change in the coming years.
Chart 71: Governorate Wise Breakdown Of Retail Mall Space Supple ( Q4 2017 )
73 INDUSTRIAL SEGMENT
74 Industrial Segment For the industrial properties, we have surveyed warehousing stock across 8 locations in Kuwait. Warehousing supply is limited to very industrial few areas in Kuwait. Table 113 shows the locations, their respective governorates, average heights and prevailing Average Lease Rates range (per sq.m.) for warehouses (excluding the front showroom area) for Q2 2015 and Q4 2017. Since the lease rates are shown in ranges, the exact percentage change between Q2 2015 and Q4 2017 cannot be estimated but it has been observed that the lease rates have increased somewhat in select locations. In Shuwaikh industrial area, which is the main industrial area, the Average Lease Rate (per sq.m.) range for 4 mts high warehouse has increased at the lower end. As we have maintained consistently this area is increasingly evolving as a commercial area with retail shops for car parts, workshops, furniture, etc. where the lease rates can go up to even KD 40 per sq.m. in select areas. We have written a comprehensive guide on Shuwaikh, Al Rai, Fahaheel and East Ahmadi areas under a different publication in the year 2014. The Average Lease Rate in Al Dhajeej has increased from KD 2.5 – 5.5 in Q2 2015 to KD 2.5 – 5.8 in Q4 2017. The warehouses here are 9 to 11 mts height. In Al Rai, the Average Lease Rate reaches KD 9.5 for 7 mts high warehouses that have chillers for frozen food.
Table 113: Prevailing Lease Rates of Warehouses in Various Areas (Excluding the front showroom area)
Average Lease Average Lease Average Location Governorate Rate Range Rate Range Height (mts) (per sq.m.) Q2 2015 (per sq.m.) Q4 2017 Shuwaikh Capital 4.0 - 8.5 KD 2.75 - 7.5 KD 3.25 - 7.5 Al Dhaajeej Farwania 9.0 - 11.0 KD 2.5 - 5.5 KD 2.5 - 5.8 Al Rai Farwania 6.0 - 7.5 KD 2.5 - 9.0 (cold) KD 2.5 - 9.5 (cold) Ardiya Farwania 5.0 – 8.5 KD 2.5 - 5.5 KD 2.5 - 5.5 Sabhan Ahmadi 5.0 - 11.0 KD 2.5 - 5.5 KD 2.5 - 5.8 Abdulla Port Ahmadi 6.0 - 8.5 KD 2.0 - 4.5 KD 2.5 - 5.0 Amghara Jahra 7.0 - 8.5 KD 2.5 – 8.5 (cold) KD 2.5 – 9.0 (cold) Sulaibiya Jahra 7.0 - 11.0 KD 2.5 - 9.0 (cold) KD 2.5 - 9.0 (cold)
While the Occupancy Ratios in warehousing could not be estimated, evidences on the ground consistently show that in most areas the Occupancy Ratios remain above 95% for the last several years and the warehousing demand remains robust.
75 Appendix 1: Definition of Terms Used in the Report Investment Property Segment – The Investment Properties Segment in Kuwait is defined to include all such properties that are constructed on land parcels zoned as “Investment” by the municipality. Kuwaiti companies & individuals and GCC companies & individuals can own such land parcels and develop properties to earn rental income. Generally apartments buildings are developed on these land parcels with some retail shops on the ground floor. These properties are predominantly occupied by expatriates from India, Egypt, Lebanon, Jordan, Philippines, etc.
Occupancy Ratio For Investment 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.
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.
Furnishing Status The Furnishing Status of an Investment Property can broadly be classified into 3 categories: 1. Furnished – In these type of properties, all household furniture and appliances are provided by the house owner. This include bed with mattresses, sofa set, dining table, all kitchen appliances, TV & cable system, etc. The house owner is responsible for all the repair and maintenance of these furniture and appliances. The monthly rent of such properties is higher than the rent of comparable Semi Furnished or Unfurnished properties. 2. Semi Furnished – In these type of properties, the house owner provides only the Kitchen Appliances but does not provide the loose wooden furniture of living room and bed rooms. The house owner is responsible for the repair and maintenance of such appliances. The monthly rent of such properties is higher than the rent of comparable Unfurnished properties. 3. Unfurnished–In such properties, the house owner does not provide any appliance or furniture. The monthly rent of such properties is the lowest.
Office Space Segment This includes all commercial properties that are used as offices. These vary greatly in profile. Kuwait City has many properties that are high rise, have adequate parking facilities and have many facilities for the companies. But there are many properties in other locations that have bare minimum facilities and no parking spaces. These have been segregated into various grades.
Office Space Supply This is measured in sq.m. and it is the sum of the gross leasable areas (GLA) of all office properties that are covered by us. These properties include all those which are already constructed and are functioning as office properties and also those that are under construction.
Existing Stock This includes all those office properties that are already constructed and functional. Under Construction Stock This includes all those office properties that under construction. Occupancy Ratio The Occupancy Ratio for an office property is calculated by dividing the vacant area (measured in sq.m.) by the total leasable area (measured in sq.m.) of that property.
Average Lease Rate For office properties, the lease is generally charged on a per sq.m. basis and it can vary according to various floors and also according to the size of area occupied by the lessee. Thus, the Average Lease Rate is the average of all lease rates for that property. The Average Lease Rate of a location is calculated by taking a simple average of all Average Lease Rates of various properties at that location.
76 Residential Section The Residential Section in this report includes two segments: 1. Existing House (Private House) 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. This report doesn’t cover the buying and selling of land parcels for such purpose. 2. New Project New projects in Kuwait are of two types: a. Those projects available in Khairan where large scale projects of private houses are developed and sold by real estate companies. Development and sale of Investment apartments where an investor (Kuwaiti or GCC individuals) can buy an apartments in order to either resale or lease to earn rental income.
Industrial Segment The Industrial Segment in this report includes warehouse properties in various locations in Kuwait. These properties differ in height and are used either as pure warehouses or as warehouses and offices.
Average Lease Rate For Industrial properties, the lease is generally charged on a per sq.m. basis and it can vary according to the height of the warehouse and also according to the size of area occupied by the lessee. Thus, the Average Lease Rate is the average of all lease rates for that property (if occupied by multiple lessees). The Average Lease Rate of a location is calculated by taking a simple average of all Average Lease Rates of various properties at that location.
Retail Space Segment This includes all commercial properties that are used as retail centres. Most of such properties are well defined retail malls with anchor stores, food courts and parking facilities. Some others are large high street retail centres but are included here because of their size.
Retail Mall Space Supply This is measured in sq.m. and it is the sum of the gross leasable areas (GLA) of all covered retail properties. These properties include all those which are already constructed and are functioning as retail centres and also those that are under construction.
Existing Stock This includes all those retail properties that are already constructed and functional. Under Construction Stock This includes all those retail properties that are under construction.
77 Appendix 2: Methodology of Grading of Investment Properties The grading of Investment Properties is done in the most logical manner possible. The underlying idea the is that the grade must reflect the hierarchy of the location of the property in the packing order, it must give higher grading to properties that are new and lower grading to those that are old as we have seen through our analysis that newer properties are able to command significantly higher Average Monthly Rent and the grading must give weight to every single feature of the property (other than the basic house and common areas) that cost the developer some extra money and these are mode to offer better service to the residents. Therefore, we followed the following method: 1. Through our extensive database, we generated the hierarchy of all locations as per the ranking of Average Monthly Rents. Properties at various locations were given numerical points on the basis of this location hierarchy. 2. Our analysis show that properties with less than 2 yrs age command 18.5% premium monthly rentals compared to properties that are between 2 and 5 yrs old, which in turn command 10.2% premium over properties that are more than 5 yrs old. Thus, we gave suitably higher points to new properties and lower points to the old properties. 3. Investment properties have a wide range of facilities such as swimming pool, gymnasium, steam & sauna room, tennis court, security features, etc. Each of such facilities for every property covered is noted and appropriate points have been given to properties with such facilities. 4. Most Investment properties in Kuwait do not have any constructed parking space as areas on service roads (with or without shades) are used for parking. However, there are some properties where the developer has provided stilt or podium / basement car parks. Additional points have been given to such properties. 5. Through our extensive database, we generated the hierarchy of all locations as per the ranking of Average Monthly Rents. Properties at various locations were given numerical points on the basis of this location hierarchy. 6. Our analysis show that properties with less than 2 yrs age command 18.5% premium monthly rentals compared to properties that are between 2 and 5 yrs old, which in turn command 10.2% premium over properties that are more than 5 yrs old. Thus, we gave suitably higher points to new properties and lower points to the old properties. 7. Investment properties have a wide range of facilities such as swimming pool, gymnasium, steam & sauna room, tennis court, security features, etc. Each of such facilities for every property covered is noted and appropriate points have been given to properties with such facilities. Most Investment properties in Kuwait do not have any constructed parking space as areas on service roads (with or without shades) are used for parking. However, there are some properties where the developer has provided stilt or podium / basement car parks. Additional points have been given to such properties.
78 Disclaimer All agencies involved in this report state that all efforts have been made to check the reliability of the sources of information used in this report. While we do not doubt its accuracy, we have not verified the information and we make no guarantee, warranty or representation about the factual accuracy of the data. It is your responsibility to independently confirm its accuracy and pleteness. Any projections, opinions assumptions or estimates used in this report do not present the current or potential performance of the market. This information is designed exclusively for reference purpose. The content of the report are intellectual property of Kuwait Real Estate Association, Liases Foras Middle East Co. and United Gulf Real Estate Co. Any reproduction of any part or complete report with prior written permission of all three agencies is prohibited.
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