City update: Kuwait

United tower is set to be complete in the third quarter of 2010.

Kuwait City can be well remembered as Kuwait’s capital even if geography is not your specialist subject. But, what also makes it stick in people’s minds is the fact that is the political, cultural and economic centre of the Middle Eastern country.

It is a business hub attracting world-wide investors who wish to seek opportunities in the market.

However, many developers are saying that the demand for commercial towers and office blocks has been drastically decreased and that, currently, there is an oversupply of these buildings.

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“Due to thecurrent situation, most companies have either halted their expansion or lowered their space requirement,” says Salhia Real Estate property department manager Bader Al Adsani. “Some have closed down parts of their activities so the demand has definitely and significantly reduced.”

That hasn’t stopped developers from rolling out projects though. The US $240 million (KWD69 million) United Tower, for example, which is located in the Al Sharq area of the city is due to be completed in the third quarter of next year.

“Concrete will soon reach the 23rd floor slab and all relevant electromechanical works and finishes are progressing,” says United Real Estate Company managing director and chairman Ahmad Al Sumait.

“We have 37 floors that need to be cast and cladding is yet to be completed.” Another development is the Aknan Tower, which is being managed by Aknan Global and is currently in the tender stage.

“Tenders are being evaluated and firms will be invited to bid [for contracts] in three to four month’s time,” reports Aknan Global director of real estate and investments Fawaz Al Najadah.

Aknan is a 24-storey commercial tower, which provides office spaces in the city. Construction on the project is set to begin in around three years.

But, Najadah also says that there is “an oversupply” of commercial towers. So why are developers still constructing buildings and what are they gaining from it?

“It is expected that the market will change its direction by the second half of this year. Hence, new construction projects are still feasible as some of these developments will not be operational for another two years,” explains Najadah.
“Moreover, today the building materials and construction costs will be lower because of the economic crisis.”

And, Adsani adds that there still is some demand due to relocation activities.