Real Estate & Construction

Kuwait’s Real Estate Megaprojects

Kuwait sees the launching of more publicly funded megaprojects in 2022-2023, promising a high level of activity in the construction sector for a decade.

The construction market in Kuwait is currently valued at over USD10 billion. Although residential projects financed by the private sector can be seen here and there, public mega-projects sponsored by the government continue to drive the sector. Many such projects that were put on hold since 2020 were resumed in 2022. And it is thanks to the multitude of these megaprojects that the construction sector in Kuwait is set to grow by 6% each year, between 2022 and 2025.

“Kuwait has approved more than USD60 billion for infrastructure, health, environment, and energy projects, with 5% of partnerships with the private sector,” according to Zawya. The sum will be spent on 14 major public projects. The most high-profile of the lot is, of course, Kuwait International Airport’s expansion. Some USD3.2 billion was set aside for the construction of Terminal 2, though more funding may be allotted to that project in 2023.

The Ministry of Public Works is the main player in the public construction sector. And the ministry is currently contemplating an ambitious railway project. Kuwait does not have a nationwide railway network, but it will soon have one. The procurement committee at the Ministry of Public Works has finished the detailed study of Kuwait’s railway network, and a tender will soon be held for the construction of its first phase. The beginning of construction work on Kuwait’s railway network has also reignited the idea of the Gulf Railway—a proposed railway, over 2,170km in length, which will connect the national railways of all GCC nations.

If you think building a nationwide railway system almost from scratch is ambitious, you have to read about the Silk City (locally known as Madinat al-Hareer) project. The billion-dollar project involves the construction of a new city in the Jahra Governorate, complete with its own seaport, airport, and housing for 700,000 people. Although the project is partly founded by China’s Belt and Road Initiative, Kuwait will also direct funds toward its infrastructure over the next couple of years.

Health-related development projects form another group of major public construction works. The New Maternity Hospital (NMH), under construction in Al-Sabah medical zone, is the most notable example. Built at a cost of nearly USD750 million by the Ministry of Public Works in cooperation with the Ministry of Health, the hospital will be ready to admit patients in 2023. “The NMH project is one of the projects registered in the five-year development plan. It is considered one of the basic components of the 2035 vision in the development of the healthcare infrastructure sector,” told the project’s chief engineer, Meshaal Al-Enezi, to Kuwait Times.

Beside the Ministry of Public Works, there are more organizations contributing to public construction. Kuwait Ministry of Housing is among the government bodies in a position to commission public projects. The First Group, part of Emeel Abdallah Group, is currently building a major villa project in Sabah Al Ahmad Sea City. The Ministry of Housing has extended KWD68 million (USD222 million) to the project, which is scheduled for completion in 2024.

In another housing program, USD6.9 billion has been authorized for the residential development to the south of Saad Al- Abdullah City. The government has given the green light to the “funding of South Saad Al-Abdullah Town and the rehabilitation of Souq Al-Mubarakiya in FY 2022-2023,” according to Zawya citing Abdulwahab Al-Rasheed, Kuwait’s Minister of Economy. The billion-dollar megaproject involves the development of over 11,400 plots of land in the area.

The urban development plans do not all involve the construction of new houses. The protection of old landmarks with a cultural significance is also part of the plan. Some USD20 million is set aside for the rehabilitation of Al-Mubarakiya Market, locally known as Souq Al-Mubarakiya. The historic bazaar used to be the heart of Kuwait City’s economy since around two centuries ago. Considered to be a cultural heritage site, the market was damaged by a fire in March 2022. Al-Mubarakiya Market’s quick rehabilitation is therefore considered of great importance. The maintenance of landmarks such as Al-Mubarakiya will help Kuwait keep alive symbols of its identity and way of life in the midst of a wave of construction and urban development.

The government’s focus on sustainable energy infrastructure is expected to be yet another contributor to the sector. “In 2021, the Kuwaiti government has increased investment in energy and climate infrastructure projects,” reported Zawya in December 2022, adding that the government “has planned to invest USD20 billion in upgrading the renewable energy industry by 2030.” This tallies with Kuwait’s ambitions for becoming largely reliant on clean energy by 2035. The cash injected by the government into energy infrastructure projects, meanwhile, will keep the construction sector active over the next couple of years—and hopefully the next decade.