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Above, parliamentarians' move to open up Kuwait's property sector could help boost foreign investment.
Above, parliamentarians' move to open up Kuwait's property sector could help boost foreign investment.

Expats in Kuwait may win right to own homes

A proposed bill will allow foreigners to buy properties in the country, but it does not guarantee them residency visas.

Zakir Anwar, 35, was born in Kuwait. He is the son of an Indian Muslim who has lived and worked here since before the country gained independence in 1961. But because Kuwait's laws prohibit the vast majority of foreigners from gaining citizenship, Mr Anwar is not a Kuwaiti, and he probably never will be. As a result, Mr Anwar cannot own property in Kuwait and he has lived in rented accommodation with his family for his entire life.

Kuwait has been good to the Anwars: they own a successful computer supplies company called Anwarco Centre. But they have never owned a building that they can truly call their home. Mr Anwar has always been a tenant in the land of his birth. This could all change soon if a bill proposed by five MPs last week gets through the country's parliament. The legislation will allow some of Kuwait's two million expatriates - two thirds of the population, to buy apartments for the first time.

Mr Anwar said if his family could have bought a property in the past, he "would have saved millions by now." He said: "I live in a villa with my father and brother and we pay 2,000 Kuwaiti dinars (Dh25,600) every month. "I love Kuwait, but I go to Dubai every 20 days and I own a lot of properties there; yet I can't buy one here. Kuwait needs to give more rights to foreigners and let us buy what we want. It's not like applying for a job in the police."

Even if the legislation is approved by parliament, Kuwait's lethargic property sector is unlikely to undergo the dramatic transformation that Dubai witnessed in 2002, when pent-up foreign demand for properties was unleashed by opening the market, causing a building boom that would reshape the city forever. Instead, the proposed article restricts who can buy property and the types of dwellings they can purchase.

Non-Kuwaitis will have to get permission from the minister of the interior, be resident in the country for at least 10 years, have an unblemished criminal record and earn a suitable wage before being eligible. Each homeowner will be allowed to acquire one apartment with a maximum size of 350 square metres. An expatriate will also have to think carefully about buying a home to settle down when he or she retires: owning a property will not guarantee a residency visa.

One of the MPs who proposed the bill, Rola Dashti, who is also the chairwoman of Kuwait Economic Society, said this week that if a foreigner who buys property loses his job and has to leave the country, "he would then have to sell the flat". Despite the restrictions, the parliamentarians' tentative bid to pry open Kuwait's property market follows similar moves in many other parts of the Gulf, and it could help boost the country's pitifully low levels of foreign investment.

Perhaps unconcerned because of the vast revenue generated by oil sales, Kuwait has done the least out of the Gulf Co-operation Council countries to entice foreign investment. The United Nations estimates that the country attracts 10 times less foreign direct investment than its nearest GCC rival, Qatar, and much less than even the council's poor neighbour, Yemen. The property sector could have used the extra investment this year, when prices of investment properties contracted between 10 per cent and 30 per cent during the global financial crisis, according to a report by a Kuwaiti investment firm, Markaz. The contraction was caused by a slight drop in the population of expatriates, a shortage of liquidity and the financial distress of some investors in property.

However, Walid Samir, a financial analyst at Global Investment House, said the new legislation could take two years to get through parliament and provide a boost for property. Even then, Mr Samir said, Kuwait would struggle to fight off competition from southern Gulf cities such as Dubai. "Such a bill will create a new market for some demand, especially by expatriates," Mr Samir said. "Dubai is much more competitive than Kuwait because of the laws and the lifestyle. If you are buying from an investment point of view, you will go to a liquid market like Dubai."

He said Dubai's property market was still much more "advanced, mature, regulated and competitive" than Kuwait. Patricia Whelan, a long-term expatriate from Ireland, has lived in the city for 17 years and works in public relations for the British School of Kuwait. Her job provides her with accommodation but she said she had often thought about whether she would like to live through the Gulf's searing summers when she was older.

Ms Whelan said it was a good idea for the Gulf countries to welcome the expatriates and make them feel at home. She said: "I'd love to be given the option of owning a home." But it might take more enticements if the parched Arabian desert will ever truly replace the wet and fertile climate for many Europeans. "I think I'd still prefer the green of Ireland," Ms Whelan said. jcalderwood@thenational.ae

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