The real estate sales in Kuwait fell 14 per cent to KD218 million ($762 million) compared to last year mainly due to a drop in residential sales, with decreased sales in the investment segment also contributing to a lesser extent, according to a report by National Bank of Kuwait (NBK).

The residential sector sales too witnessed a slump hitting KD104 million in February, down 29 per cent y/y. The drop was a result of a sharp fall in the number of transactions; though the average transaction size was actually up 40 per cent y/y.

More precisely, the decline in sales was due to fewer transactions for plots of land, the report stated.

However, the commercial sector, registered a year-on-year improvement in sales, for the fourth month in a row, the Kuwaiti lender stated in its latest report on the country'st real estate activity.

February 2012 saw 517 plot sales bringing in KD 92 million, while this year, February saw 217 transactions with a total of KD 53 million. Comparatively, the sale of homes saw a much smaller decline, decreasing by 52 transactions and KD6 million only.

The investment sector – which is made up mostly of apartments and buildings intended for rental – recorded sales totaling KD93 million in February, a small 4 per cent y/y drop and a 24 per cent m/m increase.

The y/y slowdown does not necessarily reflect a broader cool off in the performance of the sector. In fact, both the sales of plots and buildings – where most of the sector’s value comes from – saw y/y increases.

However, the sale of a complex in Ahmadi governorate worth KD18 million in February of last year offset these y/y increases, the report stated.

According to NBK, the investment sector saw 138 transactions in February, 42 per cent of which were for single apartments.

Though this type of transaction has become more common over the years, the relatively small average transaction size means it does not contribute much to the value of total sales.

The Kuwaiti lender pointed out that the apartments had a three-month (Dec – Feb) average price of KD656 sq/m in February. Conversely, whole buildings made up 29 per cent of the transactions, recording a 3-month average price of KD1343 sq/m.

The NBK said the commercial sector sales totaled KD21 million, double the amount of February 2012. This is the fourth consecutive month of y/y increases.

But unlike previous months, the increase was not skewed by a single exceptionally large transaction, but rather all transactions were of a relatively large size.

Acxcording to NBK, the Savings and Credit Bank (SCB) had approved KD24.2 million worth of housing loans in February.

These came from 393 approved loan applications, about three quarters of which were for new constructions, while the purchase of existing homes and loans for additions and renovations took 14 per cent and 13 per cent respectively, the report added.-TradeArabia News Service