"The Center": Kuwait's Real Estate Market... Stable

The Kuwait Finance House (KFH) released its latest report on real estate sector outlook for the second half of 2026, providing a comprehensive analysis of real estate market performance in Kuwait, the Kingdom of Saudi Arabia, and the United Arab Emirates. The report reviews market performance across the three countries during the first half of 2026 and evaluates key trends expected to influence activity in the remainder of the year. It notes that geopolitical tensions, rising construction costs, and tighter financing conditions have contributed to a slowdown in momentum across Gulf Cooperation Council (GCC) real estate markets, although their fundamental resilience remains intact. KFH expects GCC real estate markets to remain in a phase of stability during the second half of 2026, supported by strong macroeconomic indicators, despite a deceleration in momentum compared to the first half of the year. Government policies, infrastructure investments, population growth, and economic diversification efforts are expected to continue supporting long-term demand, with office, industrial, and logistics assets projected to be among the best-performing sectors in the region.

**Kuwait: Market Stability**

The Kuwaiti real estate market maintained its stability during the first half of 2026, despite a slowdown in investment activity. The total value of real estate sales declined by 5.9% year-on-year, while the number of transactions increased by 1.7%, reflecting the continued strength of underlying demand. Residential transactions rose by 7.5% year-on-year, partially supported by government housing initiatives and a growing pipeline of planned residential projects, which include more than 140,000 units. Meanwhile, investment real estate continued to serve as a hedge against inflation amid regional uncertainty. Looking ahead to the second half of 2026, KFH expects the Kuwaiti real estate market to maintain its stability, as reflected by the Center’s Real Estate Sector Index score of 3.0 out of 5.0. Housing reforms, regulations concerning vacant land, and investor establishment initiatives are expected to strengthen the market’s fundamentals in the long term, while the commercial and logistics sectors continue to benefit from strategic infrastructure projects. Commercial real estate sales surged by 34.4% year-on-year, indicating sustained demand in this segment.

**Saudi Arabia: Steady Growth**

The real estate market in the Kingdom of Saudi Arabia continues to offer attractive opportunities across key asset classes, supported by Vision 2030 initiatives, foreign ownership reforms, and sustained demand driven by the regional headquarters program for global companies. The Grade A office market in Riyadh maintained strong performance, with occupancy rates stabilizing at approximately 98% and rents for premium offices rising by 5.5% year-on-year. This was bolstered by the relocation of more than 700 regional headquarters to the Kingdom, surpassing the target set under Vision 2030. Industrial and logistics assets also maintained strong momentum, with industrial rents in key centers rising by 9.9% in Dammam and 5.3% in Jeddah. The sector continues to benefit from the reshaping of trade routes and the sustainability of non-oil economic activity. Meanwhile, the fundamentals of the retail sector remained robust, with rents in major regional shopping malls in Jeddah increasing by 13.0% year-on-year, as experience-based destinations continued to attract consumer demand. Based on these trends and the Center’s Real Estate Sector Index score of 3.3 out of 5.0, the report expects the Saudi real estate market to remain stable during the second half of 2026, with selective growth opportunities available in key asset classes. The residential sector is undergoing a phase of recalibration regarding affordability levels, while rental demand remains strong. Vision 2030 initiatives, foreign ownership reforms, and demand from the regional headquarters program are expected to continue supporting office and logistics assets. Grade A offices, logistics facilities, affordable housing projects, and tourism-related developments are likely to remain among the best-performing sectors.

**UAE: Strong Fundamentals**

The real estate market in the United Arab Emirates remains strong, despite a moderation in activity following recent regional geopolitical tensions, as the market shifts to a more balanced growth pace after a prolonged period of expansion. While the residential market in Dubai is experiencing a slowdown, Abu Dhabi continues to record healthy levels of demand; for instance, residential transaction values reached approximately AED 44 billion in the first quarter of 2026. Office, industrial, and logistics assets remain among the best-performing sectors in the market. Rents for premium offices in Dubai rose by 17.2% year-on-year, coinciding with growth in Grade A and Grade B office rents by 19.0% and 23.4%, respectively. Office occupancy rates in Abu Dhabi stood at 98%, while industrial rents grew by 18.2% in the emirate’s top industrial hubs, reflecting sustained tenant demand and continued investment in strategic sectors. Looking ahead to the second half of 2026, and based on the Center’s Real Estate Sector Index score of 3.4 out of 5.0, the report expects the UAE real estate market to maintain stability despite moderated activity. Reforms supporting expanded foreign ownership and industrial sector development continue to enhance the UAE’s long-term investment appeal.

**Growing Demand for High-Quality Office Assets**

The Center stated that as GCC real estate markets transition from rapid expansion to a more sustainable growth path, investors are increasingly shifting toward high-quality office assets, logistics facilities, and residential markets supported by structural demand drivers, rather than relying on broad-based market value increases. Despite near-term geopolitical and macroeconomic challenges, strong economic fundamentals and government reforms in Kuwait, Saudi Arabia, and the UAE continue to enhance the resilience and long-term investment attractiveness of these markets.