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Kuwaitization killing off rental investments as expat workers flee
| Published: | 8 May at 6 PM |
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Key residential areas in Kuwait are emptying fast as Kuwaitization takes its toll on the emirate’s rental market.
As many as 50,000 apartments are now vacant across Kuwait’s key residential districts as increasing numbers of expat workers leave the emirate and either head home or on to greener pastures elsewhere in the world. A large percentage of those leaving are victims of the emirate’s Kuwaitization programme’s job-cutting strategy. The nationalisation policy has resulted in terminated contracts as well as increased charges aimed at the expat population and their Kuwaiti and foreign employers.
Many of the vacant properties are located in areas popular with buy to let investors, with industry leaders expecting the decline in demand to continue over the next several months, leaving even more properties untenanted. Another 26,000 apartments are due to come onto the market later this year, with the likelihood of their remaining empty getting stronger by the month.
Union officials are warning some 75,000 units will need to be rented or sold to Kuwaitis in the domestic market in order to prevent a massive over-supply crisis. As a result of the expat exodus, rents in the city have fallen by around 13 per cent from an average of $920 to $798, with the growth of the expat population also falling by another 1.5 per cent following its drop by two percent in 2017.
Meanwhile, in Saudi Arabia, the Saudization of the kingdom’s labour force isn’t helping employers as locals are reluctant to work long hours and also lack the required skills for the jobs on offer. Many Saudis have been brought up with expectations that the state will support them from the cradle to the grave, and are only now coming face to face with reality. Added to this awakening is the fact that most expat jobs are culturally considered to be demeaning.
Saudis are unwilling to take on early shifts and are demanding double the wages paid to expat workers, even although they lack the necessary skills. A number of the kingdom’s gold shop owners are quietly holding on to their expat workers as well as paying their salaries in the vain hope the government will see sense and reverse the decree, and many Riyadh car rental agencies already shutting down, just ahead of the government’s Saudization of the sector.
As many as 50,000 apartments are now vacant across Kuwait’s key residential districts as increasing numbers of expat workers leave the emirate and either head home or on to greener pastures elsewhere in the world. A large percentage of those leaving are victims of the emirate’s Kuwaitization programme’s job-cutting strategy. The nationalisation policy has resulted in terminated contracts as well as increased charges aimed at the expat population and their Kuwaiti and foreign employers.
Many of the vacant properties are located in areas popular with buy to let investors, with industry leaders expecting the decline in demand to continue over the next several months, leaving even more properties untenanted. Another 26,000 apartments are due to come onto the market later this year, with the likelihood of their remaining empty getting stronger by the month.
Union officials are warning some 75,000 units will need to be rented or sold to Kuwaitis in the domestic market in order to prevent a massive over-supply crisis. As a result of the expat exodus, rents in the city have fallen by around 13 per cent from an average of $920 to $798, with the growth of the expat population also falling by another 1.5 per cent following its drop by two percent in 2017.
Meanwhile, in Saudi Arabia, the Saudization of the kingdom’s labour force isn’t helping employers as locals are reluctant to work long hours and also lack the required skills for the jobs on offer. Many Saudis have been brought up with expectations that the state will support them from the cradle to the grave, and are only now coming face to face with reality. Added to this awakening is the fact that most expat jobs are culturally considered to be demeaning.
Saudis are unwilling to take on early shifts and are demanding double the wages paid to expat workers, even although they lack the necessary skills. A number of the kingdom’s gold shop owners are quietly holding on to their expat workers as well as paying their salaries in the vain hope the government will see sense and reverse the decree, and many Riyadh car rental agencies already shutting down, just ahead of the government’s Saudization of the sector.
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