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May 26, 2016

Report: Major rail projects to drive growth of Kuwait’s construction industry

The construction industry in Kuwait is expected to grow at a compound annual growth rate (CAGR) of 6.44% from 2016 to 2020, according to a report by Timetric

The construction industry in Kuwait is expected to grow at a compound annual growth rate (CAGR) of 6.44% from 2016 to 2020, according to a report by Timetric.

This is due to the government developing projects in areas including rail, infrastructure, road, and airport under its Vision 2035 programme.

Titled ‘Construction in Kuwait – Key Trends and Opportunities to 2020‘, the report says the construction sector is set to benefit from the government initiatives to develop rail infrastructure through a public private partnership (PPP) model under the Gulf Cooperation Council’s (GCC) projects. The Kuwaiti authorities have allocated KWD2.1bn ($7bn) to implement the 171km Kuwait Metro Rail by 2020.

Greater focus is being given to rail development as a means to reduce the growing congestion on the country’s roads.

"The Kuwaiti authorities have allocated KWD2.1bn ($7bn) to implement the 171km Kuwait Metro Rail by 2020."

Another significant project is the long-distance Kuwait National Rail Road System, which is expected to be completed by 2018. The KWD3bn ($10bn) project is planned to be constructed through a build, operate and transfer (BOT) model under the government’s five-year development programme (2015-2020).

An agreement was signed between the governments of Japan and Kuwait to exchange expertise and knowledge for developing public transport infrastructure in Kuwait. The development holds a promising outlook for the construction industry as its will lead to greater investments in infrastructure, transport, and tourism sectors, predicts Timetric.

The report also details the other factors influencing growth, including the healthcare, industry, educational facilities, and housing projects.

However, a volatile oil market and an unappealing business environment pose a threat to the prosperity of the country’s construction industry. Its expenditure budget in 2016 witnessed a decline of 1.6% due to falling oil prices as the economy is heavily dependent on oil revenue.

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