Kuwait Construction

The decision to temporarily halt and revise the Kuwait Offset Programme (KOP), before reintroducing it next year, is widely seen as a sign of the government’s commitment to enhancing the business climate amidst fierce regional competition and following regulatory reforms.

Kuwait is seeing significant activity in its construction sector this year, with contracts worth $17.5bn already signed or on offer. There are also a number of large-scale projects already underway and at the stage of moving from the drawing-board to the development stage, adding further momentum. However, raw material supplies, including cement, are in short supply and could cause delays and cost increases.

With the government planning a series of big-ticket infrastructure investments and demand for private sector real estate developments heating up, Kuwait’s construction sector could be a strong performer over the next few years. However, concerns regarding project delays may have a dampener effect on investor interest.

The construction industry is looking to a series of projects, combined with increasing demand from the private sector, to generate momentum following a period of minimal growth and thin margins.

The construction industry in Kuwait is poised for significant growth on the back of major government investment in infrastructure projects and social facilities, according to data published in August. However, the continuing lack of an approved 2012 budget has effectively meant that the government cannot sign off on any new projects.

Building contractors in Kuwait will be hoping that the roll out of the state’s $108bn national development plan drives up activity in the sector, although political wrangling and red tape could mean key projects struggle to meet their 2014 deadlines.