Kuwaiti Construction Industry’s Growth Peaked at An Annual Rate of 23.2% in 2010

Date: 2015-09-17

“• The Kuwaiti construction industry’s growth peaked at an annual rate of 23.2% (in nominal terms) in 2010, after rebounding from the downturn in 2009. However, growth declined again during 2011–2013, at rates of 5.9%, 4.8% and 4.4% respectively. Over the forecast period, the industry is expected to recover due to affordable housing construction and planned infrastructural investments. Public sector investments in energy, residential and transport infrastructure are expected to be the key drivers for the industry’s growth over the forecast period.

• Construction is one of the most important industries in Kuwait’s economy, accounting for 1.7% of GDP in 2013. According to the Central Statistical Bureau (CSB), the construction industry’s gross value added at constant prices rose by 3.2%, from KWD832.7 million (US$3.0 billion) in 2012 to KWD860.4 million (US$3.0 billion) in 2013, driven by government efforts to diversifying the country into a non-oil economy. This growth was supported by government investments to improve the country’s infrastructure, education and healthcare, and build affordable homes to meet rising demand. The forecast-period outlook for construction is anticipated to be positive, due to new projects from the private sector, and increased demand for residential, commercial and infrastructure projects.

• In 2010 the Kuwaiti Parliament approved the Kuwait Development Plan to 2035, with a vision to establish the country as a financial and trade hub in the region. This plan includes the five consecutive development plans for each five-year period, with the first plan valued at KWD31.0 billion (US$108.2 billion) and implemented during 2010–2014. The plan aims to enhance economic diversification by developing the private sector and implementing a number of reforms. These include reducing red tape, improving access to land, expanding the energy and transport sectors, upgrading the education and healthcare systems, and protecting the environment. In August 2014, a new development plan for 2015–2020 was approved, which included projects that were delayed in the previous plan. 

• The research facilities category received significant investment during the review period. According to the Kuwait Foundation for the Advancement of Sciences (KFAS), a budget of KWD13.0 billion (US$45.8 billion) was allocated for research projects. The stimulus spending will enhance social projects and play a vital role in stimulating the country’s wider economic activity in terms of research and innovation.

• A series of infrastructure projects will be launched over the forecast period to improve roads, airports, railways, water and power supplies, which will ultimately lead to an all-round development and modernization of the country’s infrastructure. In 2014, the Kuwaiti government allocated KWD5.0 billion (US$17.5 billion) for the infrastructure construction projects. The main projects include the redevelopment of Kuwait international Airport (KIA), the Kuwait National Rail Road System, and the metro project. 

• In 2012, the government implemented measures to provide greater access to home loans for nationals. Housing loans for Kuwaiti women have increased from KWD45,000 (US$160,742) to KWD70,000 (US$250,044) in 2012 and by the end of 2013 increased further to KWD100,000 (US$351,600). Mortgage facilities will also help citizens with private funding for government housing, to own a property and upgrade existing ones. This has strengthened citizens’ purchasing power and increased demand for housing.”

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