Kuwait office rents drop 50% from peak

Rents in commercial properties across Kuwait have fallen by more than 50 percent from their peak in 2008, Global Investment House has said in a new report. It said that vacancy rates in office building are hovering between 20-25 percent due to a "severe oversupply". Selling prices have also suffered in the central business area of Kuwait City and have declined by up to 60 percent compared to Q4 2008, the report added. Earlier this year, Kuwait Investment Authority (KIA) said it intends to allocate KD1bn to invest in the local commercial property market in an attempt to stabilise the stagnant segment. Global said: "In our view, the commercial segment will continue to suffer from the current state of oversupply in the short to medium term. "We believe that even if asset prices and rental rates reach a state of stabilisation in the near future, there are still no solid fundamental signs of price improvements in the horizon." Jones Lang LaSalle said in August international companies were showing greater caution in the Middle East following the Arab Spring and investment in the region's real estate markets would continue to slump in the near-term. Analysts said the outlook for a number of real estate markets in the MENA region "remained clouded" by the continuing political, economic and social impacts associated with the uprisings. Predicting when commercial property rents in the Gulf region might rebound, the report said Jeddah and Riyadh were likely to upturn first, followed by Doha, Dubai and lastly Abu Dhabi.