KIB: Investment sector leads real estate activity in the first half of 2026

A report by Kuwait International Bank (KIB) stated that the investment real estate sector continued to lead real estate activity in Kuwait during the first half of 2026, supported by regulatory reforms enacted by the state in recent periods. These reforms contributed to redirecting investments toward investment properties, considered the most stable and capable of generating sustainable operational returns.

The report clarified that the real estate market has witnessed fundamental changes recently due to government decisions aimed at regulating the residential and industrial sectors. This has prompted a broad segment of investors to focus on the investment sector, amid rising demand for income-generating real estate assets and continued improvement in rental levels in many investment areas.

It added that recent decisions issued by the Kuwait Municipality have contributed to enhancing the quality of the investment sector by implementing more efficient regulatory requirements, including providing parking spaces, improving services, and adhering to modern planning standards. These measures enhance the quality of real estate assets and increase their long-term value.

In this context, Eng. Fahad Al-Mansoor, Senior Real Estate Analyst at KIB, noted that the value of transactions in the investment real estate sector reached approximately 574.2 million Kuwaiti dinars through 655 deals during the first half of 2026, compared to 828.1 million dinars through 687 deals during the same period in 2025.

Al-Mansoor pointed out that these figures should be interpreted in light of the circumstances the region experienced during the first half of the year, where markets were affected by uncertainty resulting from geopolitical developments. This led several investors to postpone executing major deals, which reflected on the total transaction value.

He emphasized that this decline does not reflect weakness in the performance of the investment real estate sector, but rather primarily indicates a decrease in the value of executed deals, while real estate activity remained at good levels. This is confirmed by the data, as the decline in the number of deals did not exceed 4.7% compared to the same period last year, with the drop concentrated in high-value transactions.

He added that the continued execution of 655 deals over six months, despite regional conditions, reflects the sector’s resilience and investor confidence, and confirms sustained genuine demand for investment properties as one of the most stable sectors in the real estate market.

Shift in Investor Trends

Al-Mansoor noted that the market is witnessing a noticeable shift in investor behavior, with the prevailing trend now being the purchase of mid-aged investment properties for redevelopment and rehabilitation, rather than buying new properties. This model offers added value and higher returns.

He explained that redeveloping real estate assets contributes to improving building quality, enhancing operational efficiency, and increasing rental income, which positively impacts the market value of the property upon resale. This has made this approach increasingly attractive to investors in the current period.

Positive Outlook for the Second Half

Al-Mansoor concluded by affirming that the investment real estate sector is poised to continue leading the market in the coming period, supported by sustained demand for investment residential units, rising rental values, and regulatory reforms implemented by the state, alongside continuous improvement in the quality of new projects.

He indicated that stability in geopolitical conditions will gradually lead to the return of major deals, which will positively reflect on the total transaction value. He expects the second half of the year to witness greater activity, further strengthening the position of the investment real estate sector as one of the key pillars supporting the national economy.