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.

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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.

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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.