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Executive Summary
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
Executive Summary
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.
Executive Summary
SWOT Analysis
Kuwait Real Estate/Construction SWOT
Kuwait Political SWOT
Kuwait Economic SWOT
Kuwait Business Environment SWOT
Real Estate Market Overview
Market Analysis – Office
Rents And Yields
Table: Historic Rents – 2011-2012 (KWD per m2/month)
Table: Net Yield, 2011-2013 (%)
Table: Terms of Rental Contract/ Leases - H112
Supply and Demand
Industry Forecast Scenario
Table: Forecast Rents - (KWD per m2/month)
Table: Forecast Net Yield, 2008-2016 (%)
Market Analysis – Retail
Rents And Yields
Table: Historic Rents – 2011-2012 (KWD per m2/month)
Table: Net Yield, 2011-2013 (%)
Table: Terms of Rental Contract/ Leases - H112
Supply And Demand
Industry Forecast Scenario
Table: Forecast Rents - (KWD per m2/month)
Table: Forecast Net Yield, 2008-2016 (%)
Table: Kuwait Retail Sales Indicators, 2008 - 2016
Market Analysis – Industrial
Rents And Yields
Table: Historic Rents – 2011-2012 (KWD per m2/month)
Table: Net Yield, 2011-2013 (%)
Table:. Terms of Rental Contract/ Leases - H112
Industry Forecast Scenario
Table: Forecast Rents - (KWD per m2/month)
Table: Forecast Net Yield, 2008-2016 (%)
Forecast Scenarios
Infrastructure Report
Table: Kuwait Construction And Infrastructure Industry Data, 2007 - 2016
Table: Kuwait Construction And Infrastructure Long Term Forecasts, 2012 - 2021
Construction and Infrastructure Forecast Scenario
Macroeconomic Outlook
Table: Kuwait - Economic Activity, 2011 - 2016
Real Estate Risk/Reward Ratings
Real Estate/Construction Risk/Reward Ratings
Table: Middle East And North Africa Risk/Reward Ratings
Kuwait’s Risk/Reward Ratings
Table: BMI Business And Operation Risk Ratings
Institutions
Table: BMI Legal Framework Rating
Infrastructure
Table: Labour Force Quality
Market Orientation
Table: Mena - Annual FDI Inflows
Table: Trade And Investment Ratings
Table: Top Export Destinations
Operational Risk
Competitive Landscape
Company Monitor
National Real Estate Company (NREC)
Pearl Of Kuwait Real Estate Company
Salhia Real Estate Company
Tamdeen Group
United Real Estate Company (URC)
Demographic Data
Table: Kuwait's Population By Age Group, 1990-2020 ('000)
Table: Kuwait's Population By Age Group, 1990-2020 (% of total)
Table: Kuwait's Key Population Ratios, 1990-2020
Table: Kuwait's Rural And Urban Population, 1990-2020
BMI Methodology
How We Generate Our Industry Forecasts
Construction Industry
Bank Lending
Real Estate/Construction Business Environment Rating
Table: Weighting Of Indicators
Sources
SWOT Analysis
Kuwait Real Estate/Construction SWOT
Kuwait Political SWOT
Kuwait Economic SWOT
Kuwait Business Environment SWOT
Real Estate Market Overview
Market Analysis – Office
Rents And Yields
Table: Historic Rents – 2011-2012 (KWD per m2/month)
Table: Net Yield, 2011-2013 (%)
Table: Terms of Rental Contract/ Leases - H112
Supply and Demand
Industry Forecast Scenario
Table: Forecast Rents - (KWD per m2/month)
Table: Forecast Net Yield, 2008-2016 (%)
Market Analysis – Retail
Rents And Yields
Table: Historic Rents – 2011-2012 (KWD per m2/month)
Table: Net Yield, 2011-2013 (%)
Table: Terms of Rental Contract/ Leases - H112
Supply And Demand
Industry Forecast Scenario
Table: Forecast Rents - (KWD per m2/month)
Table: Forecast Net Yield, 2008-2016 (%)
Table: Kuwait Retail Sales Indicators, 2008 - 2016
Market Analysis – Industrial
Rents And Yields
Table: Historic Rents – 2011-2012 (KWD per m2/month)
Table: Net Yield, 2011-2013 (%)
Table:. Terms of Rental Contract/ Leases - H112
Industry Forecast Scenario
Table: Forecast Rents - (KWD per m2/month)
Table: Forecast Net Yield, 2008-2016 (%)
Forecast Scenarios
Infrastructure Report
Table: Kuwait Construction And Infrastructure Industry Data, 2007 - 2016
Table: Kuwait Construction And Infrastructure Long Term Forecasts, 2012 - 2021
Construction and Infrastructure Forecast Scenario
Macroeconomic Outlook
Table: Kuwait - Economic Activity, 2011 - 2016
Real Estate Risk/Reward Ratings
Real Estate/Construction Risk/Reward Ratings
Table: Middle East And North Africa Risk/Reward Ratings
Kuwait’s Risk/Reward Ratings
Table: BMI Business And Operation Risk Ratings
Institutions
Table: BMI Legal Framework Rating
Infrastructure
Table: Labour Force Quality
Market Orientation
Table: Mena - Annual FDI Inflows
Table: Trade And Investment Ratings
Table: Top Export Destinations
Operational Risk
Competitive Landscape
Company Monitor
National Real Estate Company (NREC)
Pearl Of Kuwait Real Estate Company
Salhia Real Estate Company
Tamdeen Group
United Real Estate Company (URC)
Demographic Data
Table: Kuwait's Population By Age Group, 1990-2020 ('000)
Table: Kuwait's Population By Age Group, 1990-2020 (% of total)
Table: Kuwait's Key Population Ratios, 1990-2020
Table: Kuwait's Rural And Urban Population, 1990-2020
BMI Methodology
How We Generate Our Industry Forecasts
Construction Industry
Bank Lending
Real Estate/Construction Business Environment Rating
Table: Weighting Of Indicators
Sources
