Commerce Ministry in Dialogue with CBK, CMA Regarding Appraisal Policy Adjustments
The Ministry of Commerce and Industry in Kuwait is contemplating new regulations for real estate appraisal, particularly for businesses and banks in possession of real estate assets. This potential overhaul, as reported by Al-Rai daily, is geared towards enhancing Kuwait's investment climate and ensuring precision in the classification of real estate assets by commercial entities.
Behind the scenes, prolonged discussions are underway with the Central Bank of Kuwait and the Capital Markets Authority to finalize these new regulations. The goal is to create guidelines based on current valuation principles that evolve with market dynamics.
The Ministry wrestles with the decision of whether to adopt existing regulations from these authorities or introduce tailor-made standards to strengthen the competency of professional appraisers and boost the reliability and confidence in the appraisal process.
In their current capacity, both the Central Bank and the Capital Markets Authority utilize their own principles for real estate valuation. The Central Bank often collaborates with institutions like Kuwait Finance House and Kuwait International Bank for such appraisals, while the Capital Markets Authority adheres to international accounting standards, including real estate appraisal standards.
Real estate appraisals primarily involve assessing rental income, market value, construction costs, and factors impacting a property's worth.
The Ministry's plans include refusing approvals for transactions unless appraisal reports adhere to the new guidelines. In addition, the Ministry intends to issue a certificate of registration for approved appraisers who meet its standards.
In the evolving landscape, it's worth noting that the new regulations will likely encompass mandatory compliance requirements, digital appraisal integration, and a broader scope, capturing various property types, such as built and under-construction real estate, vacant land, and residential units.[1]
The proposed regulations aim to establish a standardized approach to eliminate inconsistencies in valuation methodologies, especially for complex assets like Sukuk-compliant properties and mixed-use developments. By doing so, the regulations strive to promote market stability by enforcing appraisal rigor, anchoring valuations to Sharia-compliant financing practices, and streamlining processes through digital adoption, potentially reducing turnaround times to as low as 13.5 business days.[5]
The collaboration between the Central Bank of Kuwait, the Capital Markets Authority, and the Ministry of Commerce is a testament to cross-agency alignment, with the focus being on appraisals tied to secured lending and securitized assets.[1]
These proposed changes reflect Kuwait’s commitment to modernize its property sector while tackling risks in Islamic finance and capital markets.[1][4]
[1] https://www.local.kuwaittimes.net/article/861448[2] https://www.kfh.com/en/media-center/news-details/?NewsID=85[4] https://www.zawya.com/mena/en/press-release/company-announcements/kuwait-launches-digital-real-estate-appraisal-by-al-yasra-to-streamline-property-transactions-ADlbtxN38a[5] https://www.globaldata.com/industry-analysis/real-estate-professional-services/real-estate-appraisal-and-valuation-report-2026-key-trends-and-opportunities/report/analysis/global-real-estate-appraisal-and-valuation-forecasts-to-2025/more-info
- The Ministry of Commerce and Industry in Kuwait is considering new regulations for real estate appraisers, particularly for businesses and banks with real estate assets, aiming to create guidelines based on current valuation principles that evolve with market dynamics.
- The Central Bank of Kuwait and the Capital Markets Authority are part of prolonged discussions behind the scenes to finalize these new regulations, as the goal is to boost the reliability and confidence in the appraisal process.
- The Ministry is contemplating whether to adopt existing regulations from these authorities or introduce tailor-made standards to strengthen the competency of professional appraisers.
- In their current capacity, both the Central Bank and the Capital Markets Authority have their own principles for real estate valuation, with the Central Bank often collaborating with institutions like Kuwait Finance House and Kuwait International Bank for such appraisals.
- Real estate appraisers primarily assess rental income, market value, construction costs, and factors impacting a property's worth, and the Ministry plans to issue a certificate of registration for approved appraisers who meet its standards, possibly encompassing mandatory compliance requirements, digital appraisal integration, and a broader scope.
