Kuwait exists in the shadow of its wealthy neighbours Qatar and Saudi Arabia in terms of international attention to its construction market for a number of reasons, many of them the fault of the tiny Gulf state itself.
The country has been slow to modernise almost all sectors of its economy, making an influx of international contractors that has been seen in neighbouring states non-existent. Even now, significant bureaucratic hurdles make setting up shop in Kuwait only a remote possibility for foreign firms – it was only this year, for example, that the government agreed to allow foreign banks to open more than one branch.
At the same time, a recent and much-reported study by Ventures Middle East claimed Kuwait’s construction market is expected to grow by 3.4% in 2014, buoyed by $15.8bn in government spending. It expects contract awards to top $17.5bn by the end of 2014, as the oil and gas sector – responsible for some 95% of government revenues – continues to keep Kuwait flush with cash.
It points to the ongoing $698.5mn KIA redevelopment project, which involves a huge redevelopment of the country’s airport. The expansion is set to see capacity grow to 20mn people, and a second terminal built capable of catering for another 12mn. The ambition is to cater for 50mn once the expansion project is finished.
Then there is the $20bn Kuwait Metro project, scheduled to cover more than 160km, as well as $10bn for more than 500km of rail tracks. The tender process is due to commence soon, with a view to the winning consortium being appointed in 2017 and the project opening by 2020.
Others are less bullish. Growth, according to the IMF, will remain poor, at between 1-2% in 2014 and a recent report by Kuwait Finance House revealed that while the infrastructure construction market is growing – set to reach $20.5bn in 2014 – delays over contract announcements and disputes over awards continue to dissuade foreign firms from throwing their hats into the ring in Kuwait.
It has always been thus in the country, where for years vast infrastructure masterplans have been released only to be quietly shelved. Who can forget Kuwait’s plan to build the world’s tallest tower – designed by architect Eric Kuhne – as part of its 2008 Madinat Al Hareer project, which was to see a whole new city built in Subiya?
Six years on, the project has still not broken ground.
A former Gulf-based construction expert and consultant, who declined to be named due to an ongoing project in the region, urged caution in an interview with Construction Week. Like other Gulf states there have been numerous cases in Kuwait of huge construction contract announcements for projects that ultimately never get built.
“The challenge has been to see domestic funding for the announced pipeline,” he said.
Engineering consultancy Atkins recently embarked on a restructuring of its Kuwait (and Bahrain) operations, which led to it moving staff out of the country in order to focus more closely on the UAE, Saudi Arabia and Qatar.
Middle East CEO Simon Moon said: “I think Kuwait has a massive amount of potential, a huge amount of wealth and a huge need to do the things that other GCC countries are doing. But they’ve not quite found the mechanisms to do that politically, stability-wise in terms of their government decision-making.
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