Business Monitor International


Kuwait Real Estate Report

Published 15 July 2014

  • 64 pages
 
$1,295.00
Kuwait Real Estate Report

BMI View: BMI retains a largely positive outlook for the real estate sector in Kuwait. A strengthening private sector means demand for commercial real estate will continue to grow over 2014-2015 with increases in rental costs as well as net yields projected across all sub-sectors, adding to a recent up-tick in transactional activity witnessed during H1 2014. However, high vacancy rates coupled with a poor business environment that causes significant delays with development projects tarnishes the potential of this sleeping giant in the Middle East.

While BMI remains optimistic about Kuwait, there are several factors hindering the economic potential of the nation with a constitutional monarchy. Soft market conditions could persist, particularly in the office segment, where dynamics are still dictated by a legacy of oversupply. Our outlook would also be considerably tempered should political uncertainty in the country or its neighbours escalate.

The country is blessed with a vast oil wealth that has nurtured a generous social welfare cushion for its citizens. However, with oil revenues generating more than half of the country's GDP and government income, their economy is vulnerable to the global oil market. In response, Kuwait announced a USD102bn economic plan to address their need to diversify their oil economy and invest in the expansion of the private sector in 2010. However, due to bureaucratic clashes between the cabinet and Parliament, progress on this development has stalled. This has also discouraged the entrance of foreign investors.

Changes in Kuwait's political situation, or that of its neighbours, such as Iraq, will also continue to present substantial risks to our growth forecasts. The Kuwaiti economy will remain on a moderate expansion path with growth supported by robust private consumption and a modest rise in oil production and exports.

We forecast real GDP growth of 2.9% in 2014, and remain cautious about Kuwait's fixed investment outlook,...

Table of Contents

BMI Industry View
7
SWOT
9
Political
11
Economic
12
Business Environment SWOT
13
Industry Forecast
15
Office
15
Table: Forecast Office Rents, 2014-2015(KWD/sq m/month)
15
Table: Forecast Office Net Yields, 2011-2018 (%)
16
Retail
16
Table: Forecast Retail Rents, 2014-2015 (KWD/sq m/month)
17
Table: Forecast Retail Net Yields, 2011-2018 (%)
17
Industrial
17
Table: Forecast Industrial Rents, 2014-2015 (KWD/sq m/month)
18
Table: Forecast Industrial Net Yields, 2011-2018 (%)
18
Construction And Infrastructure Forecast Scenario
18
Table: Construction And Infrastructure Industry Data (Kuwait 2012-2017)
18
Table: Construction And Infrastructure Industry Data (Kuwait 2018-2023)
19
Construction And Infrastructure Forecast Scenario
20
Macroeconomic Forecasts
24
Economic Analysis
24
Government Consumption Outlook: Pickup In Growth
26
Fixed Investment: Finally Looking More Positive
27
Net Exports Outlook: Limited Growth Opportunities Ahead
29
Table: Kuwait - Economic Activity
31
Industry Risk Reward Ratings
32
Middle East And Africa Risk/Reward Ratings
32
Table: Middle East And Africa Real Estate Risk/Reward Ratings
32
Kuwait - Risk/Reward Ratings
33
Rewards
33
Risks
33
Market Overview
35
Kuwait City
36
Salmiya
36
Al-Jahara
36
Office
37
Table: Terms Of Rental Contract/Leases, H213
38
Table: Historical Rental Costs, 2012-2014 (KWD per m2/month)
38
Table: Net Yields, 2012-2014 (%)
39
Retail
39
Table: Terms Of Rental Contract/Leases, H213
40
Table: Historical Rental Costs, 2012-2014 (KWD/sq m/month)
40
Table: Net Yields, 2012-2014 (%)
41
Retail Sales Indicators
41
Table: Retail Sales Indicators, 2010-2017
41
Industrial
41
Table: Terms Of Rental Contracts/Leases, H213
42
Table: Historical Rental Costs, 2012-2014 (KWD/sq m/month)
43
Table: Net Yields, 2012-2014 (%)
43
Competitive Landscape
44
Company Profile
45
National Real Estate Company (NREC)
45
Pearl Of Kuwait Real Estate Company
47
Salhia
49
Tamdeen Group
51
United Real Estate Company (URC)
53
Demographic Forecast
55
Table: Kuwait's Population By Age Group, 1990-2020 ('000)
56
Table: Kuwait's Population By Age Group, 1990-2020 (% of total)
57
Table: Kuwait's Key Population Ratios, 1990-2020
58
Table: Kuwait's Rural And Urban Population, 1990-2020
58
Methodology
59
Industry Forecast Methodology
59
Sources
60
Risk/Reward Ratings Methodology
60
Table: Real Estate Risk/Reward Ratings Indicators
62
Table: Weighting Of Indicators
63

The Kuwait Real Estate Report features Business Monitor International (BMI)'s market assessment and independent forecasts of major construction projects in the residential and commercial markets, plus rental prices and yields in major cities. The report critically analyses the prospects for real estate within the broader economic and financial context - both domestic and global - via our econometrically-modelled and clearly explained banking and economic forecasts and follows this through to evaluate the implications for REITs.

BMI's Kuwait Real Estate Report provides industry professionals and strategists, sector analysts, business investors, trade associations and regulatory bodies with independent forecasts and competitive intelligence on the real estate industry in Kuwait.

Key Benefits

  • Benchmark BMI's independent real estate industry forecasts for Kuwait to test other views - a key input for successful budgeting and strategic business planning in the Kuwaiti real estate market.
  • Target business opportunities and risks in Kuwait through our reviews of latest industry trends, regulatory changes and major deals, projects and investments.
  • Assess the activities, strategy and market position of your competitors, partners and clients via our Company Profiles (inc. SWOTs, KPIs and latest activity).

Coverage

Executive Summary

Summary of BMI's key industry forecasts, views and trend analysis covering real estate and construction, regulatory changes, major investments and projects and significant national and multinational company developments.

Industry SWOT Analysis

Analysis of the major Strengths, Weaknesses, Opportunities and Threats within the real estate sector and within the broader political, financial, economic and business environment.

Market Overview

Overview of the real estate sector, including analysis of existing/planned real estate developments and emerging industry trends in the office, industrial and commercial sectors.

Market Analysis

Features detailed city-level data and analysis on rental prices, yields, contract terms and real estate availability with separate chapters covering the office, retail and industrial sub-sectors.

Industry Forecast Scenario

Historical data series (2010-2012) and forecasts to end-2017 for the domestic real estate industry and for the local and global finance industry. Indicators include:

Real Estate: Office, retail and industrial real estate yields for all major cities (%); short-term forecasts on minimum and maximum real estate rental prices by sub-sector (US$ per square metre, and local currency per square metre)

Construction: Industry value (US$bn); contribution to GDP (%); employment (`000); real growth (%)

Economy: Economic growth (%); nominal GDP (US$bn); unemployment (%); interest rates (%); exchange rate (against US$)

Business Environment Ratings

BMI's Real Estate Business Environment Ratings provide a country-comparative Risk-Reward Ratings index aimed at investors (real estate vendors, construction companies and financial investors) in the regional real estate market.

The ratings methodology makes sophisticated use of over 40 industry, economic and demographic data points.

Company Profiles

Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI's industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape to generate Company SWOT analyses.

The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.

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