Logistics deals keep Kuwaiti real estate ticking over

• Pressure eased on struggling sector
• Real estate deal value up 7%
• Non-oil sector growth continues

A near doubling in the value of logistics deals drove an otherwise struggling real estate sector in Kuwait in the first six months of this year, as the Gulf state’s non-oil business activity keeps growing.

The latest Ministry of Justice data, out this week, showed the value of transactions linked to warehouses totaled KD16.8 million ($55 million) in the first half of 2024, almost double the KD8.5 million recorded in the second half of 2023.

The number of contracts similarly went from four to nine.

S&P Global reported in June that Kuwaiti companies were expected to drastically increase hiring as new business orders, particularly from overseas, increased for the 17th month in a row and at the fastest pace since data collection began in September 2018.

---

---

“Kuwait real estate activity was stable in 2022-23 as the post-pandemic demand continued to normalise amid a high interest rate environment,” says MR Raghu, chief executive of Marmore Mena Intelligence, a research subsidiary of Kuwait Financial Center (Markaz). 

“The [warehousing] segment is seeing increased demand amid rise in production from non-oil businesses and an uptick in project activity.”

The logistics sector, along with four new exhibition-linked contracts that yielded KD10.8 million from January to June, contributed to a more than 7 percent growth in real estate deal value from the previous six months, for a total of KD 1.619 billion, up 8 percent from KD1.5 billion.

Anshuman Magazine, CBRE’s chairman and chief executive for India, South East Asia, Middle East & Africa, says: “As ecommerce continues to thrive, the demand for storage and fulfilment facilities naturally increases.  

“Similarly, the non-oil sector’s growth necessitates additional warehousing space for raw materials, finished goods and machinery.

“The rise in exhibition activity suggests a potentially stronger economy, increased foreign investment and industry growth.”

A Kuwaiti online marketplace, 4Sale, said at the end of May that its consumer segment experienced 11 percent revenue growth in 2023, with direct online transactions accounting for more than 90 percent of total sales, up from 65 percent in 2019.

• Kuwaiti businesses struggling to meet demand as orders surge
• Kuwait opens wealth fund office in Saudi Arabia
• Beyout becomes Kuwait’s first stock market listing in two years

The news is far more nuanced otherwise, according to the Ministry of Justice data.

Private property transactions, investment deals and commercial contracts all decreased, with the latter two falling 8 percent and 11.5 percent by volume, respectively. 

Nevertheless, non-oil sector growth and the surge in warehousing activity may have a “delayed ripple effect” on other real estate segments, Magazine says.

“For example, increased office space requirements might emerge as new companies establish themselves,” he says. 

“Government initiatives aimed at economic diversification and infrastructure development could also play a role in shaping the future of the real estate market…[and] could enhance the attractiveness of certain locations, potentially leading to increased demand for specific property types.”

Just this week, local media reported that the Kuwait Investment Authority (KIA) was moving forward with the development of a major logistics hub in northern Kuwait, the Abdali Warehouses and Northern Border Crossings Project.

Meanwhile work is nearing completion on the 5.8 million sq m Al-Shadadiya Industrial Zone to the south of Kuwait City, according to Magazine.

On the residential side, development is ongoing at Jaber Al Ahmad, a new 150,000 sq m mixed-use project 25 kilometres west of Kuwait City, overlooking Kuwait Bay.