Tag Archives: kuwait recession

Kuwait, Retail

Retail Recession in Kuwait

Posted on by ryuker
01
Jan

Things haven’t been that good when it comes to retail in Kuwait. From stores in the avenues to the stores in Hawalli, the retail industry is changing big time. Last week, we had some goods at Kuwait customs and when we went there it wasn’t as busy as it used to be in the past. We asked around and the labor there were complaining that imports have decreased so much and it keeps decreasing. The trucks that transports goods were charging 25 KD per trip and now they are charging 10 KD only. I have discussed this issue with multiple business owners and they mostly blame the changes in the industry.

Al-Rehab Complex: Multiple business owners that I know very well complained how their customers changed the way they purchase video games. When it comes to software, they purchase online from Playstation Network, Nintendo eShop, Xbox Games Store. Even if someone wants the collector’s edition, they buy it from Amazon. The problem even the most loyal customers to Al-Rehab Complex stopped going there and they started to buy online. Buying directly from Amazon for collector’s edition games is cheaper than buying from Al-Rehab Complex.

The Avenues: The Avenues has the highest foot traffic in Kuwait, but for the past 2.5 years. You see constant sales going on. I am surprised to see Sales going on for that long, but it isn’t stopping at all and I don’t think it will stop anytime soon. Business owners are blaming the leave of expats families, reduction in purchase power, and purchasing online from stores overseas.

Ibn Khaldoun St: Even the silicon valley of Kuwait have been hit big time. I talked to multiple business owners and their main problem is that people are buying from Amazon. Of course people will buy from Amazon, they offer lower prices and very fast deliveries. I am getting my stuff within 3-4 days, which is extremely fast for a shipment coming from the US. The stores in Kuwait can’t compete with Amazon since Amazon have a very large economy of scale.
The trend will continue where retail will suffer and online purchases will increase. Retail recession has started few years ago, but lets see how 2020 goes.
Real Estate

What Will Happen To Real Estate After The Summer

Posted on by ryuker
01
Jul

Everyone is wondering what will happen to the real estate market in Kuwait after this summer. People in Kuwait are worried that a lot of expats are leaving Kuwait for good. Most of those who are leaving for good were either laid off from the government or from private companies. The rest can’t afford to stay in Kuwait anymore, because it is getting extremely expensive. A lot of those people said that their kids school tuition is ridiculous and having their kids go back to their homes will save them so much. I don’t blame expats for leaving Kuwait, and I understand how expensive Kuwait became the past 2 years. The government increased the prices of gas, electricity, water, and medical fees. Kuwait is at a stage where they need the additional income due to the low oil prices for the past 3-4 years. I believe rents will be lower in residential towers, so after the summer will be a great time to negotiate. Even in commercial towers you see vacancy increasing, but landlords don’t want to lower prices. You see companies leaving their offices in Kuwait City, but the landlord doesn’t want to drop their rent prices. They would rather keep the office empty for a whole year or more, and not lower their pricing and have someone rent it. I realized that landlords in Kuwait have so much ego and most of them aren’t logical at all. Even the listed companies operates the same exact way. I can’t believe that they would rather satisfy their ego rather than the shareholders.

“Prices will continue to drop and expats should negotiate their rents and get better deals because vacancy is increasing and will continue to increase.”

Real Estate

Real Estate Recession in Kuwait

Posted on by ryuker
03
Apr

Real estate in Kuwait has been crashing since summer 2017, and it will continue to get worst in the upcoming months. This time the recession will be worse than all the previous years and I will list all the reasons below.

1- Increase of interest rates : Most real estate investors in Kuwait invested 30% from their pockets and the rest is a loan from the bank. Interest rates were very low for a very long time, so they got used to pay small installments. Now interest rates are increasing, and the installments average per year is increasing.

2-Vacancy : Vacancy has been increasing more than ever, and most renters in the market are expats. Expats are leaving Kuwait due to the increase of cost of living leading to more vacancy. The increase in vacancy is creating an issue for landlords who borrowed money to build their properties, because their expenses is increasing (interest rate increase), and their income is decreasing (increase in vacancy).

3- Cost of Living : Cost of living is increasing in Kuwait forcing expats to leave the country. During the last 2 years, the government increase the cost of gas, electricity, water, and medical fees. There is also the tax on wire transfers for expats, which goes up to 5% per transaction.

4- The Overall Economy : The economy has been going down and the purchase power has been decreasing. The income of restaurants, retail, and businesses is declining all the way. You see retail have constant Sale to get rid of the supplies they have. You also see stores and businesses shutting down and laying off employees.

The problem with the Kuwaiti real estate market is that it is filled with junky properties. There are very few nice properties in the market, and very few properties are well maintained. Real Estate agents are more desperate than ever to sell any real estate. They really don’t like it when someone tell them that the market is crashing, and they always say that the real estate market will appreciate.

The real estate market in Kuwait is crashing and it will continue to do so. It is a buyers and renters market, they are the ones who will negotiate from a position of strength. For those who are renting, you can negotiate your rent, because vacancy is increasing on daily basis.