Kuwait signs $17.5bn projects this year
Kuwait, August 15, 2014
Kuwait has signed contracts worth $17.5 billion, with a number of large-scale projects already underway and at the development stage, said a report
The new report released in mid-July said that the value of contracts in the pipeline for the year represents more than 50 per cent increase on $11.75 billion worth contract awarded last year, according to business consultancy Ventures Middle East.
However, raw material supplies, including cement, are in short supply and could cause delays and cost increases, it said.
The project values have nearly doubled over the past two years as Kuwait pushes on with infrastructure and housing development, awarding contracts at a pace that outstrips the regional average, said the report.
“The UAE, along with Saudi Arabia and Qatar, are the top three markets for the construction sector in 2014,” said Saleh Muradweij, managing director at Drake & Scull Construction, quoted by a business intelligence portal.
While Kuwait has set out its long-term programme for infrastructure and economic development, there are concerns it will struggle to keep to the planned timeframe. The country’s construction industry has in the past had to deal with projects being suspended or even cancelled.
Some of these problems have stemmed from bureaucratic difficulties. Projects falling foul of parliamentary oversight, with final approval for developments being stalled in the committee stage, have also slowed the flow, said the report.
According to a report by industry publication Cement World, regional demand for this and other building materials will surge as a result of increased infrastructure spending.
On the macro-economic front, supply shortages could increase inflationary pressure - directly through rising materials costs and indirectly should blockages in the supply pipeline slow the delivery of projects, in particular in the residential component of the industry where the private sector is more active.
Housing inflation, the increase in housing costs mainly fed via an imbalance between availability of residential stocks and demand, has been on the rise in Kuwait this year.
A report issued by the National Bank of Kuwait in July said rising core pressures, especially in the housing sector, were expected to drive inflation higher this year, estimated to average 3.5 per cent, well above last year’s average of 2.7 per cent.
However, the increasing demand for residential properties will boost the non-infrastructure component of the industry with the private sector likely to step up investments in housing developments, the report added. - TradeArabia News Service