Kuwait eases property laws around foreign ownership

Kuwait is gradually opening its real estate market to foreign ownership.

It has now updated its law to allow entities licensed by the Kuwait Direct Investment Promotion Authority (KDIPA), companies listed on the Kuwaiti stock exchange and licensed real estate funds and investment companies to own property in the country for their operations or for employee housing.

While limited in its remit, the law represents a significant change in the Kuwaiti property market, where ownership has historically been restricted to citizens, nationals from other member states of the GCC and diplomatic entities.

Zacky Sajjad, a partner at real estate company Cavendish Maxwell, said similar initiatives in other GCC countries have helped to increase the size of the market and improve transparency.

“Kuwait’s recent reforms are a positive first step in opening up the real estate market to foreign ownership, and a potentially significant step towards economic diversification and attracting international investment,” Sajjad said.

Kuwait migrant origins

The amended law also allows for Arab nationals inheriting property from their Kuwaiti mother to be exempt from a mandatory disposal rule. This means they will no longer be required to sell the property within two years from the date of inheritance.

KDIPA is a government agency that promotes foreign direct investment in Kuwait. It will outline conditions surrounding property ownership for the entities that it licenses, including restrictions on “speculation”, in an upcoming decree.

In November new rules required citizens from outside the six GCC members – Kuwait, Saudi Arabia, the UAE, Oman, Qatar and Bahrain – to live in Kuwait for 10 years before gaining access to the property market, according to local news reports.

They also limit non-GCC purchases of real estate to residential property and to one home no larger than 1,000 square metres, among other conditions.

Non-Kuwaiti nationals make up more than two-thirds of Kuwait’s 4.3 million population.

Kuwait’s real estate market rebounded last year. The value of transactions increased by 34 percent year on year, driven by rising wealth, visa relaxations and lower interest rates.

Investment and commercial properties have led the growth, and are likely to grow again with the new law, said Raghu Mandagolathur, CEO of Marmore Mena Intelligence, a research subsidiary of Kuwait Financial Centre.

“Banks and real estate companies, which had been unable to own real estate because of their foreign ownership, would now be able to invest in the sector,” Mandagolathur said.

The amended law is the latest in a series of reforms announced in recent months that include changes in legislation around vacant land and in the electronic real estate broker system. A new mortgage law is close to finalisation. 

Matthew Green, head of research at CBRE Mena, said the new mortgage regulation is likely to ”significantly increase” liquidity in Kuwait’s real estate market.

“The move reflects a relaxation of the regulations which historically only permitted Kuwaiti and GCC ownership,” he said.

This article is originally published in Arabian Gulf Business Insight.