KUWAIT: The interconnectedness of global markets means that economic developments in major economies can have profound effects on Kuwait. Economic trends in major economies are likely to affect Kuwait’s real estate market, particularly in terms of transaction volumes and market values. To better understand the impact of the global economic trends and the regulatory measures needed to ensure stability and prevent fraudulent activities in Kuwait’s substantial real estate sector, Kuwait Times spoke to Ala’a Behbehani, a passionate real estate investor and the general manager of a renowned real estate company in Kuwait.
Global economic impact
Behbehani explained: "Kuwait is a part of the world and is greatly affected by it. Since the United States is the dominant economic force globally, any disruption or impact there will, in one way or another, affect the entire world, including Kuwait. As you can see, the American economy has been experiencing inflation and rising interest rates since the post-COVID period, and there are fears of entering a recession or depression in the worst-case scenario. This will reflect on the currencies of various countries and the amount of imported oil, and its effects will undoubtedly impact Kuwait due to its connection with these two important factors.
"According to economic indicators from America, Europe, and Asia, I can say that from now and for the next year, the Kuwaiti real estate market will experience either stagnation or a decline in the number of transactions and traded value. This is because we have reached a cap due to the gap between asking prices and the purchasing power available to citizens for buying residential properties today.”
Kuwait’s real estate market
Behbehani added: "We know that the annual trading volume of the residential real estate market in Kuwait ranges between KD 2-4 billion. It is a very large market, and many citizens prefer to trade in real estate or the stock market because these are the only two fields that do not require extensive experience and offer quick profits. Additionally, there is no need for a commercial license to engage in these activities. However, this large market needs greater and stricter oversight from the Ministry of Commerce, especially regarding real estate offices and brokers, as we find thousands of brokers operating without offices or official licenses, increasing instances of real estate fraud.”
Enhanced regulations
Behbehani concluded: "As a regulator and enforcer of legislative laws, represented by the Ministry of Commerce, the government must scrutinize and tighten the issuance of real estate and broker licenses and impose stricter penalties on intruders to prevent fraud and deceit. This will also help prevent money-laundering, which previously found an easy market. Additionally, we need a real estate authority that takes care of this large market, involving the Ministry of Commerce, the Municipality, and the Ministry of Justice. There is also a need to issue laws and tighten control over the market and establish modern mechanisms for buying and selling real estate,” he pointed out.