Al-Watan: 8.2% growth in residential property sales to KD 427 million in the second quarter
A report by National Bank of Kuwait (NBK) indicated that real estate sales remained weak during the second quarter of the year, continuing the downturn witnessed in the first quarter, despite the market showing early signs of stability as geopolitical tensions eased following a temporary peace agreement between the United States and Iran.
The report noted that the composition of real estate activity changed during the second quarter, as residential sales recovered, partially offsetting the persistent weakness in the investment real estate sector, while commercial real estate transactions recorded a sharp decline after their strong performance in the first quarter.
The report also recorded the first quarterly growth in real estate prices during the second quarter in a year, driven by rising residential property prices. However, the market’s outlook for the remainder of the year remains tied to developments in the Gulf conflict; any collapse in the ceasefire agreement leading to renewed hostilities and the closure of the Strait of Hormuz would negatively impact investor and market participant confidence.
While maintaining a cautiously optimistic view regarding the prospects for real estate activity recovery in 2026, the report noted that total real estate sales in the second quarter fell to 826 million dinars (-8.2% quarter-on-quarter, and -17.8% year-on-year), marking a second consecutive quarterly decline. Second-quarter sales value was the lowest in over two years, significantly below the record level of 1.3 billion dinars recorded in the fourth quarter of 2025, which was the highest in a decade. The decline resulted from a drop in sales in the commercial sector, known for its high volatility, which fell by nearly half to 112 million dinars (-47.4% quarter-on-quarter, and +7.9% year-on-year) after strong activity in the first quarter. The decline was also contributed to by a second consecutive quarterly drop in investment sector activity, with sales reaching 287 million dinars (-1.6% quarter-on-quarter, and -40.5% year-on-year), the lowest level in two years, reflecting the impact of regional geopolitical uncertainty on investor sentiment. The weak performance in this sector also aligns with bank data indicating a slowdown in credit growth directed toward real estate activities.
The report covered residential real estate sales, which rose during the second quarter to 427 million dinars (+8.2% quarter-on-quarter, and +2% year-on-year), offsetting part of the first-quarter decline and reaching their highest level in three consecutive quarters, while the number of completed transactions also recovered. This improvement suggests that underlying demand may be strengthening, despite ongoing geopolitical and macroeconomic uncertainty. Residential sales also experienced a sharp quarterly decline of 33%, after reaching a historic high of 591 million dinars in the fourth quarter of 2025; however, they recorded a strong annual increase of 13.9%. This occurred despite a clear loss of momentum in March, when residential sales fell to 91 million dinars (a 46% monthly decline).
Meanwhile, real estate prices showed early signs of stability during the second quarter, according to the NBK Real Estate Price Index. Total prices rose by 1% compared to the previous quarter, ending three consecutive quarters of decline, although they remained 5.8% lower than levels recorded in the same period last year.
The report noted that residential property prices recorded the strongest improvement, rising 3.8 percent compared to the previous quarter, marking the first quarterly increase since the second quarter of 2025. However, they remained below last year’s levels (-10 percent year-on-year). The rise indicates that the sharp correction in prices witnessed over the past year is gradually losing momentum, driven by improving residential demand and a gradual restoration of confidence following a de-escalation of regional tensions.
The report also highlighted a continued, albeit limited, decline in investment property prices during the second quarter (-1.8 percent quarter-on-quarter, and -0.9 percent year-on-year), which generally aligns with weak investment sales activity and ongoing investor caution.
The report concluded that the recovery in residential sales and the stabilization of overall prices suggest that the market may be moving past the severe weakness that characterized the first quarter. However, achieving a sustainable recovery requires broader improvement in investment activity, which likely depends on the stabilization of regional conditions. Furthermore, the recent escalation in tensions warrants maintaining a cautious outlook regarding the prospects for a significant increase in real estate activity for the remainder of the year.
