Kuwait Finance House: Investment real estate offers competitive returns ranging between 6% and 7.1%

A report by Kuwait Finance House on the local real estate market during the second quarter of 2026 stated that annual inflation in Kuwait stood at 2.5% by the end of May 2026, according to the latest data from the Central Statistical Bureau. However, a slow acceleration has been observed since the beginning of the second half of 2025, after it had been on a downward trajectory, recording 2.2% in May 2025, amid varying price level increases. The price increase rate in the housing services component declined, registering annual inflation of around 0.5% by the end of May 2026, compared to 0.9% at the end of the fourth quarter of 2025.

The report noted that the accelerated completion of residential cities planned under government schemes had a positive impact on real estate transactions in the second quarter, alongside the completion of numerous government and infrastructure projects, as well as the planning of new government initiatives. This occurred despite economic indicators experiencing volatility amid geopolitical tensions. The general market index at the Kuwait Stock Exchange fell by 2.3% from the beginning of 2026 by the end of the second quarter, which influenced some investors to seek safe havens, including real estate.

During the second quarter of 2026, the price of gold rose to $4,007 per ounce, a significant increase, marking a 21.3% year-on-year rise. Although this represented its lowest level since the start of the year, down 14.2% from the end of the first quarter of 2026, it continued to reflect the volatility and uncertainty prevailing in the markets.

**Investment Property Returns**

On the other hand, the report stated that investment properties offer competitive returns compared to other investment opportunities, with yield rates ranging from 6% to 7.10% in the second quarter of 2026, depending on distinguishing factors across different governorates. It is worth noting that the yield from sales does not include fines imposed in accordance with the regulations and laws applied by the Kuwait Municipality, such as renting out basements or constructing residential units with areas smaller than the permitted limit.

The average return on investment properties in the Capital Governorate reached 6.48% by the end of the second quarter of 2026. In Hawalli Governorate, the average yield on investment property stood at 6.32%, while in Farwaniya Governorate, it reached 6.63%. In Ahmadi Governorate, the average yield was 6.82%, and in Mubarak Al-Kabeer Governorate, it reached 6.48%. In Jahra Governorate, the yield recorded 6.67% by the end of the second quarter of 2026.

The report also addressed commercial property returns, stating that yield rates ranged between 5.70% and 8.65% according to Q2 2026 data across Kuwait’s governorates. The average return on commercial property in the Capital Governorate reached 6.85% by the end of the second quarter of 2026, while in Hawalli Governorate, it recorded 7.38%. In some locations within Hawalli, the average yield reached 7.50%, and in Salmiya, it reached 7.33%.

The average return on commercial properties in Farwaniya Governorate stood at 7.70% by the end of the second quarter of 2026. In some of its commercial areas, such as sites overlooking main streets in the governorate, the average yield reached 7.60%. In some locations in Khaitan, the yield was approximately the same, while in some internal locations in Al-Dajeej, it reached 7.78%. Meanwhile, the average yield in Jleeb Al-Shuyoukh reached 8.08%.

The average return on commercial property in Ahmadi Governorate reached 7.82%. The average yield on commercial properties in internal locations in Fahaheel reached 7.83%, and in some key areas in Fintas, it reached 7.55%. In Manqaf, the average yield reached 8.10%. The average return on commercial properties in Jahra Governorate was 6.94%, with the average on Marzouq Al-Mutab Street reaching 6.9% by the end of the second quarter of 2026.