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Have construction investors forgotten Kuwait?

by CW Guest Columnist on May 15, 2016

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Kuwait was booming in the run-up to 2007. Buoyed by national sentiment following the fall of Saddam Hussein, market confidence was on the rise, and construction contracts were enthusiastically handed out. Then, 2008’s economic downturn hit the country hard and increased pressure on value, especially within its real estate sector.

But unlike many other states in the region following the crash, Kuwait hasn’t remained downbeat for long, as Jeff Badman, senior vice president at Hill International Middle East, explains.

“Kuwait is probably one of the only countries in the GCC that is spending money,” he tells Construction Week.

“Saudi Arabia has suspended a lot of projects, and the UAE isn’t launching many new ones. Qatar is trying to save money, because it knows it has to push the projects associated with the 2022 FIFA World Cup, and Oman has battened down the hatches,” he continues.

But Kuwait is different. Badman asserts that the country’s construction industry is driven by oil and gas, and these sectors continue to receive funds.

“It is evident that money is being spent not only on infrastructure and buildings, but on things like the Kuwait National Petroleum Company’s (KNPC) Clean Fuels Project (CFP),” he says.

KNPC plans to construct a 615,000-barrels-per-day (bpd) world-scale refinery near Kuwait City, making it the largest chemical plant in the world when it opens. This is in addition to the efforts of Kuwait Petrochemical Refining Company, a subsidiary of Kuwait Petroleum Corporation (KPC) and a special-purpose outfit that is rolling out the Al Zour Refinery and a mega-petrochemical complex.

“There is also a lot of highway work underway to improve infrastructure under the Ministry of Public Works, as well as nine big hospitals under construction at the minute,” Badman continues.

“The main players in Kuwait are government-connected, and then there are a handful of private guys, but it is Kuwait Oil Company (KOC) and KNPC spending the money.

“The Kuwait University mega project is going on, and the Ministry of Electricity and Water also has a large number of projects underway.”

It is clear that the main drivers of Kuwait’s construction industry are the country’s government entities, besides large local contractors such as Mushrif, Kharafi & Sons, and Al Mulla Group.