Kuwait Banks Role in Kuwait Real Estate Market
While in the United Arab Emirates almost every local commercial bank is involved in real estate financing, Kuwaiti banks watched Kuwait real estate and construction sector more critically.
The role of the banks
But while in the United Arab Emirates almost every local commercial bank is involved in real estate financing, Kuwaiti banks watched the world of architecture and cement more critically. “We don’t have an investment arm in real estate”, says Gulf Bank’s CEO Michel Accad. We have loans that are Kuwait real estate related and loans that are related to Kuwait investment companies and we would like to diverge away from that.
These are sectors that we would like to depend less on as we move forward. We would like our expansion into retail and commercial banking to be proportionately bigger as well as the proportion of business in infrastructure, logistics, and trade instead of loans to Kuwait investment companies and Kuwait real estate development
“The global meltdown affected financing and this hurt the banks who are a major player in real estate development anywhere in the world”, Rawaf Bourisli confirms.
“Banks are hesitating as a result. Eventually they will know who are the seasoned developers and who are not, so that they can avoid toxic assets.But during the boom everybody developed Kuwait real estate. Once banks are back into the lending business, then the development business can thrive again. For Action Real Estate it is not a challenge to find financing because we maintain our mandate as a development and operation company so we are one of the few like that.”
According to Rawaf Bourisli, there are two key challenges in his sector:
“Manpower and experience. These are very much available in Kuwait but we also need more. From a human resources point of view, a new working law has been passed and will be effective in the next six months. Taxes are low here, so it is a very appealing market for international players.”