2012-09-26 01:29:33 - Kuwait Real Estate Report Q4 2012 - a new market research report on companiesandmarkets.com

The Kuwait Real Estate report examines the Commercial Office, Retail, Industrial and Construction segments throughout the Kingdom in the context of a recovering market which is backed by government spending and robust economic growth.

With a focus on the principal cities of Salmiya, Al-Jahara and Kuwait City, the report covers the rental market performance in terms of rates and yields over the past 18 months and examines how best to maximise returns in the commercial real estate market, while minimising investment risk and exploring the impact of the government fed construction boom on a market which is stabilising after a tough few years.

Nevertheless, Kuwait´s various real estate sectors are developing in different directions and at varying rates. The commercial market in

 

 

general remains positive and the market is recovering. The most recent data – covering H112 – corroborates expectations that the market is stabilising although it has still to settle down and is characterised by frequent, although ultimately minor, fluctuations in rental rates.

We retain a broadly sanguine outlook on the Kuwaiti economy´s prospects in 2012 and 2013. Elevated global hydrocarbon prices will allow the government to keep fiscal spending high, driving domestic consumption, while oil production looks set to remain near capacity in the months ahead. While our outlook on fixed investment is less positive, we nevertheless forecast real GDP growth of 4.5% and 3.7% in 2012 and 2013 respectively, down only modestly on estimated growth of 5.7% last year.

Key Points

- The KWD37bn Kuwait Development Plan is expected to stimulate growth in the residential sector, while the Kuwait Investment Authority will invest KWD1bn in the commercial and investment segments. Projects being developed include the construction of the business hub Silk City at an estimated cost of US$77bn. Large infrastructure projects in the pipeline, such as a new railway and metro system, will also be a springboard for further sector expansion.

- Long-term opportunities in the retail sector through tourism, the high number of expatriates, urbanisation and increased consumer spending power. New shopping centres continue to open across Kuwait, drawing in high-end retail brands such as US delicatessen Dean and DeLuca and UK department store Harvey Nichols.

- Lacklustre investment spending on the part of the government will weigh on Kuwait´s long-run economic prospects, and we see growth slowing gradually in the years ahead. That said, in the near term we expect loose fiscal and monetary policy to continue to spur activity and forecast real GDP growth of 4.5% and 3.7% in 2012 and 2013 respectively.

- Political instability is likely to persist throughout the remainder of the year, with no sign of a cooling of tensions between the government and opposition members of parliament. As a result, legislative gridlock will continue to hold up the implementation of the government´s four-year economic development plan, weighing on growth in the short and long term.

- Inflation in Kuwait is likely to remain relatively subdued in the near term, and easing global commodity prices have led us to revise down our average inflation forecast for 2012, from 5.0% to 4.0%. That said, given rising wages and robust economic growth, price stability is increasingly reliant on government subsidies, which raises significant fiscal risks for the years ahead.The price of this market report covers 4 quarterly reports on this sector. This quarterly report will be downloadable instantly as a PDF document, with the 3 remaining reports delivered at regular intervals throughout the year.

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