Real Estate Kuwait 2012 | United Real Estate Company

Interview with Tariq M. AbdulSalam, Chairman of United Real Estate Company. Real estate activity is a prime activity in Kuwait. The demand for real estate investments in Kuwait is always hot, says Mr. AbdulSalam, who also expects the Kuwaiti real estate sector to remain active in the future to come.

Tariq M. AbdulSalam, Chairman of United Real Estate Company

Let us talk about the basics. The situation in Kuwait real estate sector is very bad right now. What is your outlook for the three main segments (residential, commercial and investments)?

By all means, real estate activity is one of the prime activities in Kuwait. It is a natural behaviour for two main reasons. First of all, we have to consider the wealth of Kuwait. The wealth of the government or also the private sector is relatively high and the purchasing capability of the people is high as well. Kuwait is a very small country, so the offers for the lots are very limited. Also, although this could be positive for the real estate industry there is a lack of internal investments. As we all know, Kuwait’s main economic activity lies in the Kuwait energy sector. Real Estate in Kuwait in 2012. Assessment and OutlookTherefore, other sectors like the Kuwait industrial sector are not quite as active in Kuwait. Because of the lack of internal opportunities, real estate is always a hot investment. The demand reflects that and thus is always high. As a result, the yield on real estate investment is low. It is proven to be the most interesting investment tool in Kuwait. So, the real estate sector in Kuwait is definitely active right now and will remain so in the future.

The financial situation in Kuwait, the region, and also in the global market is affecting a little the commercial side of real estate. However, we believe that it is only temporary. We think that it will rebound very quickly during the upcoming period of time.

Kuwait real estate market is one of the most challenging in the region, because of the strict laws, e.g. the laws prohibiting foreigners to own a property. How does United Real Estate Company operate in such an environment and do you feel United Real Estate Company is sort of pushed abroad?

Of course. In Kuwait, because of the shortage of lands, there were several laws presented by the Parliament to limit the institutions’ roles in real estate development. The main purpose is to give the major homes to the individuals. In Kuwait, now, only the local people can own a residential land. Companies are not allowed and neither are foreigners. Again, the main reason is the lack of space. Despite that, residential prices have almost doubled since the law was introduced (- maybe four years ago). This gives you a confirmation that although the prices are high, the situation will remain the same and it will continue to escalate.

United Real Estate Company is one of the leaders – if not the leader – out of all real estate companies in Kuwait. Many developers are also faced with challenges of overleveraging. Now, some of the properties don’t work well, so they are trying to leverage them even more. What is United Real Estate Company position in that regard? How do you position United Real Estate Company as a leader on the market?

Definitely, the financial crisis affected everybody during the last couple of years. Fortunately, United Real Estate Company as a real estate company was lucky because of several reasons which helped us go through that crisis in a positive way, reaching today a very healthy financial statement. That is mainly due to the conservative approach of the board of directors of United Real Estate Company. The diversification approach helped in that sense to help the company escape the crisis with a very good performance.

We believe that when a good location is purchased it could never be replaced…

Today, United Real Estate Company is managing its projects positively. We have not stopped a single one of them. The productivity of United Real Estate Company ongoing projects – despite the situation, despite the difficulty to obtain lending tools in the area – remains. United Real Estate Company has gained the trust of most of the regional banks. A majority of our projects is well-financed by them, besides our internal resources, and is doing very well from a developmental point of view.

If you look at your strategy five years from now, where do you see opportunities? How is United Real Estate Company going to play the market? What sort of challenges do you expect to encounter on the way?

In the long-run way, we are true believers of real estate. United Real Estate Company believes that it will remain a very solid investment, whether it is in Kuwait or anywhere in the world. We believe that when a good location is purchased it could never be replaced, so we intend on continuing our strategy of development. United Real Estate Company will continue acquiring lands and prime locations with different types of usage in different locations.

The challenges will definitely remain. We do not think that this situation is over, from the political to the financial point of view. There will be a continuation of turbulence in the region as well as globally. What happened during the financial crisis was not easy for anyone and we think that its reflection will be visible during following years. Yet some companies are adopting conservative strategic approaches which will definitely help them get through those troubles.

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