KIB: Kuwait City Maintains Its Investment Appeal in the Office and Commercial Real Estate Market

Kuwait International Bank (KIB) confirmed that the administrative and commercial real estate market in Kuwait City continues to maintain its high investment appeal, supported by limited supply and sustained demand for prime locations with economic activity, particularly on main streets. This reinforces the stability of real estate asset values and underscores the robust fundamentals underpinning this sector.

In this context, Mishaari Al-Boulian, Head of the Real Estate Valuation Department at Kuwait International Bank (KIB), stated that prices for land designated for administrative and commercial use, with an area of 500 square meters, vary according to location and the permitted building ratio. The price of vacant land per square meter ranges between 7,000 and 13,750 dinars on the capital’s most prominent streets, including Ahmed Al-Jaber, Fahad Al-Salem, Jabir Al-Mubarak, Mubarak Al-Kabeer, and Abdullah Al-Mubarak, with higher prices recorded for properties featuring high building ratios and strategic locations.

He added that investment return rates in these areas currently range between 6% and 7.25%, varying based on achieved rental levels, building quality, availability of parking spaces, and the suitability of the property for various administrative and commercial activities.

Al-Boulian noted that Fahad Al-Salem Street continues to attract investors due to its strategic location and its hosting of numerous financial institutions and major companies, while Ahmed Al-Jaber, Jabir Al-Mubarak, and Mubarak Al-Kabeer streets maintain good demand levels as a result of ongoing administrative and commercial activity.

He clarified that the market value of administrative and commercial land depends not only on location and building ratio but is also influenced by several key factors, most notably the volume of supply and demand in the market, building occupancy levels, the nature of prevailing economic activities in the area, as well as the general state of the local economy and profit rates, which play a crucial role in guiding investors’ decisions.

Al-Boulian emphasized that the availability of parking spaces has become a fundamental factor in the success of administrative and commercial real estate and in enhancing its ability to attract tenants and investors, given its direct impact on occupancy rates, rental values, and ease of access to the property. He added that state initiatives implemented in partnership with the private sector to develop multi-story parking facilities in vital areas contribute to supporting economic activity, improving infrastructure, and enhancing Kuwait City’s competitiveness as a major financial and commercial hub.

He also pointed out that the market is currently witnessing a shift in tenant preferences, with growing demand for small and medium-sized administrative offices ranging between 30 and 50 square meters. This trend is driven by startups, entrepreneurs, and freelancers seeking to optimize operational costs and utilize more efficient spaces. This shift has positively reflected on the occupancy rates of administrative and commercial buildings, prompting some property owners to subdivide office spaces to align with market needs and achieve better investment returns.