Awakening the Housing Market: A Crucial Economic Measure
In the heart of the Gulf, Kuwait, a country known for its rich oil reserves and vibrant culture, faces a significant challenge: a housing shortage that has left many waiting for up to 15 years to secure a home.
According to data from the Public Authority for Housing Welfare (PAHW), from 2014 to 2021, a total of 67,102 housing units were distributed, averaging around 8,300 units per year. However, this falls short of meeting the growing demand, as the total number of government housing applicants currently stands at 103,110.
The acute shortage of land, with approximately 75% being desert, primarily used for grazing and recreational activities, further complicates the situation. To address this, the Kuwaiti government has passed Law No 118 in 2023, aiming to engage the private sector and attract foreign and local investment in forming cities, residential areas, and related infrastructure.
The Fourth Master Plan, unveiled in 2023, outlines urban policies for land use until 2040, focusing on economic, social, and environmental development of urban areas to accommodate population growth. The plan also emphasises the need for adequate land for residential, commercial, and investment purposes, effective land governance, enforceable legal rights, and protection for all aspects of real estate.
In an effort to stimulate economic activity, real estate plays a crucial role in Kuwait's national economy, contributing to GDP growth and generating employment. To further boost this sector, a proposed Mortgage Law is scheduled to be introduced, enabling commercial banks to offer mortgages up to KD200,000 with repayment periods extending to 25 years.
The government, recognising the importance of private sector participation, has directed relevant state bodies to speed up the removal of encroachments on state properties and the implementation of projects through private sector participation. This could potentially reduce housing supply constraints and price pressures.
Ongoing and new residential city projects, such as Al-Khiran, Nawaf Al-Ahmad, Al- Sabriyah, Al-Mutlaa City, South Saad Al-Abdullah City, and South Sabah Al-Ahmad City, are expected to ease Kuwait's housing pressures upon completion.
Despite these efforts, the issue of frequent encroachments on state land remains a concern, reflecting the need for stricter enforcement and protection of state properties. The government has taken steps in this direction, with the Kuwaiti Cabinet directing relevant bodies to address this issue.
With a population density of 286 people per square kilometer, Kuwait ranks 50th in terms of most densely populated nations in the world. As the country continues to grow, addressing its housing crisis will be crucial to maintaining a high quality of life for its citizens.
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