JEDDAH, 6 July 2005 — Construction activity has picked up in Kuwait as the private sector has come into its own since the fall of Saddam Hussain. More than $8 billion in large-scale projects are planned or are under construction, according to a report by Middle East Economic Digest (MEED).
Record high oil prices, low interest rates and even lower inflation have driven economic growth, with real gross domestic product (GDP) rising by more than 6.5 percent in 2005, the report said.
Much of this new liquidity is being channeled into the real estate sector, with unprecedented levels of investment in private and public projects, according to Ayman Razek, general manager of MEED projects, the group’s online business tracker.
Razek said: “For years, the private sector has been unwilling to invest in civil infrastructure, but now Kuwait is undergoing a period of rejuvenation. Inward investment is on the rise again, and the economy has been boosted by high oil prices and increased liquidity.”
Local contractors estimate that more than $8 billion of private sector investment will be channeled into the construction industry over the next five years, in addition to $3 billion the government plans to spend out of its own resources.
If future build-operate-transfer (BOT) projects such as the residential and tourist developments of Failaka and Bubiyan islands are taken into account, this figure could rise even further to more than $40 billion, the report added.
Much of this investment will be in the growing shopping mall development arena, Razek said. “Kuwait is a captive market for mega-shopping malls, both for entertainment and for retail spending, and developers are aware that malls can be highly profitable.”
The construction sector will also benefit from the shortage of quality commercial and residential space, he said. “With the overall population expanding by 8 percent a year, Kuwait faces a severe housing shortage, and most real estate projects currently under development are focused on building commercial office space, hotels, and housing units.”
Key details of multi-million dollar construction projects in the Gulf Cooperation Council (GCC), Iran and Iraq are now available online on MEED Projects. MEED Projects was launched in 2004 in response to the ever-increasing number of short- and long-term projects in all sectors in the Middle East. The online business tracker provides valuable market information for consultants and contractors.
Razek explained: “The pace of construction activity in Kuwait is increasing so rapidly that it is becoming difficult to keep track of market developments — which is where MEED Projects comes into play.”
