From crisis to recovery: COVID-19, macroeconomic shocks, and the resilience of Kuwait's real estate market

PurposeThis study aims to examine the impact of the COVID-19 pandemic on Kuwait's real estate market and the influence of macroeconomic factors, including oil prices and US interest rates, using a multimethod econometric approach.Design/methodology/approachThis study uses interrupted time series (ITS), auto regressive integrated moving average (ARIMA) and auto regressive distributed lag (ARDL) models using monthly data from 2015 to 2024. ITS identifies structural breaks, ARIMA assesses price persistence and ARDL estimates macroeconomic effects.FindingsThe ITS model shows that the COVID-19 pandemic did not significantly lower real estate prices, reflecting market resilience. Post-pandemic, prices rose significantly due to investment and economic recovery. Oil prices positively impact real estate in the short run (1% increase leads to a 0.138% rise), but this effect fades over time, suggesting decoupling from oil fluctuations. The ARIMA model indicates price shocks persist before stabilizing, while ARIMA and ARDL confirm that US interest rates have no significant effect, highlighting the dominance of local financial conditions.Practical implicationsPolicymakers should ensure mortgage sustainability, prevent speculation and address affordability concerns through targeted housing policies. Given the sensitivity to oil price changes, diversification strategies and liquidity support are needed to mitigate risks from global monetary fluctuations.Originality/valueThis study integrates ITS, ARIMA and ARDL to provide a comprehensive framework for analyzing real estate market shocks in an oil-dependent economy. With limited literature on Kuwait's market, particularly post-COVID-19, it offers valuable insights for policymakers and investors.