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Boston, MA -- (SBWire) -- 12/11/2012 --The Kuwait Real Estate report examines the commercial office, retail, industrial and construction segments throughout the kingdom in the context of a recovering market which is backed by government spending and robust economic growth.

With a focus on the principal cities of Salmiya, al-Jahra and Kuwait City, the report covers the rental market performance in terms of rates and yields over the past 18 months and examines how best to maximise returns in the commercial real estate market, while minimising investment risk and exploring the impact of the government-fed construction boom on a market which is stabilising after a tough few years.

Nevertheless, Kuwait's various real estate sectors are developing in different directions and at varying rates. The commercial market in general remains positive and it is recovering. The most recent data - covering H112 - corroborates expectations that the market is stabilising, although it has yet to settle down and is characterised by frequent, although ultimately minor, fluctuations in rental rates.

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We retain a broadly sanguine outlook on the Kuwaiti economy's prospects in 2012 and 2013. Elevated global hydrocarbon prices will allow the government to keep fiscal spending high, driving domestic consumption, while oil production looks set to remain near capacity in the months ahead. While our outlook on fixed investment is less positive, we nevertheless forecast real GDP growth of 4.5% and 3.7% in 2012 and 2013 respectively, down only modestly on estimated growth of 5.7% in 2011.

Key Points

- The September 25 ruling by Kuwait's Constitutional Court, rejecting a government move to amend the current electoral law, will further embolden the opposition. New elections likely to be called in the next few weeks will undoubtedly deliver another opposition-dominated parliament. With both sides firmly at loggerheads and the opposition becoming more radicalised, a further period of political deadlock looks certain, with grave consequences for the country's economic future.
- The outlook for the Kuwaiti construction sector continues to be favourable as high oil prices mean the economy remains strong and government commitment to stimulus does not waver. Construction industry value is forecast to rise from US$2.5bn in 2012 to US$3.4bn by 2016 and US$5.0bn by 2021.
- The KWD37bn Kuwait Development Plan is expected to stimulate growth in the residential sector, while the Kuwait Investment Authority will invest KWD1bn in the commercial and investment segments. Projects being developed include the construction of the business hub Silk City at an estimated cost of US$77bn. Large infrastructure projects in the pipeline, such as a new railway and metro system, will also be a springboard for further sector expansion.

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