Summary
This paper provides insights on the real estate market in Kuwait. A number of market distortions and imbalances are identified and their likely implications for the economy are discussed. The dynamics of prices on land and various types of completed buildings are also discussed. It argues that the high prices typical for single-family houses and some non-residential properties are driven up by: (1) high effective demand from families for investment outlets; (2) high social value attached to living in detached houses, which is supported by the current governmental housing policy; and (3) limited access to non-residential land by the private sector. The conditions for private investment in non-residential development, including existing constraints for non-Kuwaitis and international developer/investors, are also reviewed.
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Extract
Overview of Real Estate Markets in Kuwait
Introduction
Kuwait is a small rich country with a population close to 2.2 million people, out of which about 0.9 million are Kuwaiti nationals and 1.3 million are non-nationals (2002 estimates); GDP per capita is $17,500 (July 2003 estimates) (World Fact Book, 2004). An examination of the real estate market in Kuwait provides a useful insight on how State control over land and private development and construction activity interact in a process of fast modernization and urbanization. Given the drive of cities in Gulf countries to define their place in global markets (Parsa, et al., 2004), opening a discussion of land-related issues in Kuwait for an international audience appears appropriate.This paper is based on the results of two of several independent studies sponsored by the Kuwait Government through the World Bank when the issue of land availability gained prominence on the Kuwait Government policy agenda in early 2000. There are at least two reasons why this issue attracted attention: (1) previous studies focused on energizing and accelerating private sector participation in the economy identified a lack of available land for the private sector as a seemingly serious issue and recommended an in-depth study of the land situation in the country; and (2) the State housing program became overwhelmed by a growing waitlist of qualified beneficiaries.After the country's liberation and the nat...See the full content of this document
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