Increased budget for Kuwait's real estate sector will result in dozens of new developments by 2020

The Public Authority for Housing Welfare (PAWH), responsible for building towns, neighbourhoods and homes for Kuwaitis, is spending almost KD1bn ($3.3bn) per year on new developments, aiming to hand over 36,000 residential plots in 2017. Generous government-backed instalment loans are being extended to enable citizens to build homes on their plots. Local media reported PAHW’s budget would be increased from KD911.3m ($3.02bn) to KD916.6m ($3.04bn) in FY 2018/19 for work on 28 projects to provide roads, housing plots, infrastructure, public buildings and amenities. The project development costs in two new neighbourhoods in Jaber Al Ahmad and Al Mutlaa cities were amended, rising from KD336m ($1.1bn) to KD388m ($1.3bn). Other projects are progressing as planned, with PAHW stating that by the end of 2018 a mosque, clinic, schools and shops would be handed over in the Wafra expansion project, where all the homes were due to be completed by 2020.

Major Projects

As it strives to clear the 100,000 applications on the housing waiting list that has built up over years, PAHW is also planning ahead for the needs of a young, growing population. Across the country, the authority is overseeing eight ongoing projects with a combined area of 17,398 ha, on which 56,614 homes are being built at Abu Halifa, Wafra, Jaber Al Ahmad, South Al Mutlaa, North West Sulaibikhat, Sabah Al Ahmad and West Abdullah Al Mubarak. Some homes will be apartments, while others will be villas or plots for Kuwaitis to build their own homes. The properties will range in size from 400 sq metres to 600 sq metres. For these communities, PAHW is commissioning 299 schools, 330 mosques, stations for the police, fire and ambulance, shops, clinics and government buildings.

Beyond the current projects, PAHW has six other schemes currently in the design phase to provide an additional 66,017 homes on 14,136 ha at South Sabah Al Ahmad, South Saad Al Abdullah, South Abdullah Al Mubarak, South Khaitan, East Taima and East Sabah Al Ahmad, as well as a low-cost housing scheme. Looking further ahead, PAHW is planning three new communities at Nawaf Al Ahmad, Al Sabriya and Al Khairan that will be built on 34,680 ha, providing an additional 139,530 properties for Kuwaitis.

International Firms

In March 2018 PAHW signed a KD29m ($96.1m) contract with the Turkish construction firm Limak to construct one of the projects currently in the design phase; South Abdullah Al Mubarak, which will have 3260 plots on 435.8 ha, and associated amenities including five schools, three kindergartens and a mosque. The construction company will also be responsible for the new community’s roads, drains, sewage system and telecoms infrastructure. This is not the first time in Kuwait’s history that international firms have been awarded construction contracts for government-funded communities.

On the surface, international firms delivering housing and building new towns and estates would appear to remove local real estate companies from the equation and reduce the overall demand for freehold apartments. However, the real estate market is segmented between homes for Kuwaitis and those for foreign residents, with the latter regarded as investment properties. Therefore, the additional supply of villas for Kuwaiti citizens is more than likely to have a minimal impact on the separate rental market for foreign residents. Real estate companies also recognise opportunities to build commercial premises, in addition to the civic buildings that will serve these new towns and cities for Kuwaitis.

However, some private developments are easing Kuwaiti demand for affordable and cost-efficient housing. Sabah Al Ahmad Sea City in the south of the country, for example, has been built by Kuwaitis who are able to afford seaside homes. The reclaimed, palm-shaped development hopes to allocate homes for 150,000 Kuwaiti citizens. Local real estate developer Athra plans to provide those residents with retail and leisure facilities in the form of the KD30m ($99.5m) Blue Water Mall.