What Happened to Commercial Offices in Kuwait Post-Pandemic?

Since the Coronavirus crisis, the commercial office sector in Kuwait has experienced several fluctuations that were not easy to keep up with. This article aims to simplify the major changes in occupancy rates, office space, rental prices, and more, while also taking a quick look at future trends in Kuwait's commercial office market.

Table of Content

Overview of the Commercial Office Market in Kuwait

1. Total Space
2. Kuwait City: The Commercial Hub
3. Impact of the COVID-19 Pandemic

The Future of Commercial Offices in Kuwait

• Decline in Occupancy Rates
• Growth in Office Space

Leasing Rates in Kuwait Based on Office Size and Quality

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Overview of the Commercial Office Market in Kuwait

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1- Total Space

The total area of commercial offices in Kuwait is about 7.24 million square meters, including both public and private sector offices (2022 statistics). Private sector offices account for 53% of the total office space, with the public sector occupying the remaining 47%.

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2- Kuwait City: The Commercial Hub

Kuwait City is undoubtedly the most important city, containing 70% of the country's commercial offices. Additionally, commercial offices in the capital generate annual revenues of $314 million, attracting both investors and businesses.

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3- Impact of the COVID-19 Pandemic

The pandemic altered the real estate market globally, forcing many to work from home and leading to the closure of numerous establishments. 

This directly affected Kuwait's office market, with employment in Kuwait dropping from 2.93 million in 2019 to 2.76 million in 2021, resulting in approximately 170,000 job losses in less than 3 years. Consequently, the occupancy rates of commercial offices in the capital decreased from 94.7% in 2019 (pre-pandemic) to 84.8% in 2022.

Future projections indicate a continued decline in occupancy rates in Kuwait, reaching 80.6% by 2024 before starting to recover in 2025.

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The Future of Commercial Offices in Kuwait

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Decline in Occupancy Rates

• The after-effects of the pandemic are expected to continue affecting Kuwait's commercial offices until 2024, with a gradual recovery anticipated from 2025. The table below illustrates this trend:

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Growth in Office Space

Despite the decline in occupancy rates, the sector has seen growth in office spaces in Kuwait, affirming continued investment in commercial offices despite the challenges. This is illustrated by an increase of approximately 185,000 square meters in office space from 2019 to 2022, despite a slight drop in 2021.

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Leasing Rates in Kuwait Based on Office Size and Quality

Rental prices per square meter in Kuwait vary based on the quality and size of the office. The rates range as follows:

• High-quality offices: 6 to 14 KWD per m²
• Medium-quality offices: 5.5 to 12.7 KWD per m²
• Low-quality offices: 5.14 to 10.5 KWD per m²

The table below shows rental prices based on office size and quality:

In a nutshell, the commercial office sector in Kuwait has navigated through significant changes post-pandemic, with a mix of challenges and growth. 

While occupancy rates have declined, the sector has witnessed an expansion in office space and sustained investment, indicating a resilient market poised for gradual recovery. 

Rental prices reflect the quality and size of the offices, offering a range of options for businesses. As the world adapts to the new normal, Kuwait's commercial office sector seems set to rebound, adapting to the evolving needs of businesses and investors alike.