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Economic Insight
28.01.2026
Property sales in Q4 2025 reached strong levels, supported by a significant increase in residential sales and robust commercial sales. For the full year, sales came in at KD4.4 billion, the best on record. This increase was aided by gains in the investment and commercial segments as well as a rise in residential plot sales, with sellers perhaps offloading empty residential plots before the residential land monopoly law came into effect this year. The prospects for the real estate market in 2026 look positive, with sales momentum supported by potential further monetary easing, legislation including granting foreign shareholders the right to own property (excluding private residences) and the anticipated approval of the real estate financing law on top of activation of the residential land monopoly law to curb hoarding of idle residential lands.
Residential activity drives sales higher in Q4 2025
Total real estate sales reached KD 1.3 billion in Q4 2025, surpassing the previous quarterly peak recorded in Q2 2014. This increase was driven by a sharp acceleration in residential sales to KD587 million (+48% q/q; +29% y/y), the strongest quarterly reading since Q3 2021. (Chart 1.) The surge was primarily driven by a pronounced increase in residential plot sales in the Sabah Al-Ahmad coastal area (KD 129 million), perhaps reflecting the abovementioned implementation of the residential land monopoly in January 2026.
Stripping out these transactions, residential sales growth would have otherwise been much less strong (+15.8% q/q; +0.6% y/y) and resulted in an overall decline in the value of real estate transactions in Q4 (-3.5% q/q). Commercial activity, the most volatile segment, remained robust at KD303 million, albeit below the exceptional KD441 million recorded in Q3 2025. Sales in this segment were supported by several large-ticket deals, including sizable land sales in Al-Farwaniya and Kuwait City (KD63 million) and the sale of two commercial buildings in the Hawalli and Kuwait City governorates worth KD60 million in total. Meanwhile, investment property sales rose modestly in Q4 (+7.3% q/q), despite a decline in transaction volumes.
Real estate sales in 2025 hits a historical high
For the full year 2025, total sales were 27% higher than the previous year and the best performance in more than two decades of available data. This was underpinned by strong activity in the commercial and investment segments. Commercial sales reached an all-time high of KD953 million, while investment property sales recorded the fastest growth among all segments (+39% y/y to KD1.67 billion). Meanwhile, residential sales continued to recover (+14.3% y/y to KD1.75 billion). The average transaction size in 2025 was down by -5.2%, which could indicate a possible shift toward smaller or lower-value units in outer areas.
The shift in sales toward the commercial and investment segments could reflect a change in investors’ sentiment toward income‑generating assets, partly in response to easing financial conditions. Moreover, amendments to investment housing regulations allied to government efforts to curb speculative activity in the residential segment (particularly through enforcement of the residential land monopoly law) likely redirected liquidity to the investment and commercial segments. Additional regulatory changes that permit non-Kuwaiti participation in the real estate market (June 2025), including listed companies, licensed funds, and investment portfolios (excluding residential land), have contributed to a strong rebound in the sector’s performance at Boursa Kuwait with the Real Estate Index (BKRE) expanding by 49.9% in 2025. We also note that bank credit for real estate purposes saw solid growth of 5.2% in 2025. (Chart 2.)
Divergent sectoral price dynamics in Q4 2025
Prices, according to our real estate price index, continued to decline on a quarterly basis, but at a more moderate pace (-0.3% q/q from -3.1% in Q3), reflecting signs of stabilization rather than a broad-based recovery. This was driven by a rebound in investment prices of 1.4% q/q, partially offsetting weakness in the residential segment. Residential prices fell for the second consecutive quarter, though at a slower rate (-1.7% q/q). On a year-on-year basis, the overall price index slipped into negative territory for the first time since Q4 2024, driven by a marked deceleration in investment price rises (0.4% y/y from 5.3% in Q3), alongside a deeper fall in residential prices (-4.7% y/y from -1.8%). (Chart 3.) A sustained recovery in residential prices could hinge on the approval of the real estate financing law, which is expected to enhance liquidity and broaden access to housing finance.
PAHW launches prequalification invitations for three residential projects
The Public Authority for Housing and Welfare (PAHW) continued to advance infrastructure plans across several major housing projects in Q4 2025. Execution remained uneven, though. As of October 2025, the completion of main road works reached 49.2% in South Sa’ad Al‑Abdullah and, in December, 75.8% in South Sabah Al‑Ahmad. Moreover, PAHW has also signed several contracts to set up the electricity grid in South Sabah Al-Ahmad city. (Chart 4.) Furthermore, it initiated prequalification for three large-scale residential development projects, reflecting a strategic shift toward a long‑term supervisory role, with development contracts structured for 30 years. The designated sites span Al-Mutla (2.12 million sqm), East Sa’ad Al‑Abdullah (1.02 million sqm), and West Sa’ad Al‑Abdullah and Jaber Al‑Ahmad (1.01 million sqm in total). This follows the earlier introduction of a ‘real estate developer’ model, including the appointment of consultants to master plan three residential areas exceeding 5,000 units. At the same time, PAHW has maintained the suspension of plot distributions since July 2024, pending legislative reforms, most notably the mortgage law and broader revisions to allocation mechanisms for units. As a result, existing housing applications, which approached 100,000 by late 2024, reached 103,110 by June 2025. Meanwhile, Kuwait Credit Bank approvals for government plot loans rose for a third consecutive quarter in Q4 (+22% q/q to KD74.6 million), while disbursements rebounded modestly (+4.6% q/q to KD85 million). As for the full 2025, approved government plot loans fell sharply (by 49% y/y to KD221 million), with disbursements showing a more moderate contraction (–10.8% to KD363 million).