The Kuwaiti construction industry will continue to show positive signs of growth over the next five years, according to a report by Timetric's Construction Intelligence Centre (CIC).
The sector is expected to reach $15.6 billion by 2020 with investment in healthcare, educational facilities and new housing projects along with other infrastructure projects contributing to the industries future growth.
According to the report, the industry's output value rose at a compound annual growth rate (CAGR) of 5.23 per cent in real terms, during the review period (2011-2015), and is forecast to accelerate to 6.44 per cent over the forecast period (2016-2020), notably as a result of the government's initiatives to boost infrastructure development.
Timetric's CIC forecasts the value of the industry to rise in real terms from $10.1 billion in 2015 to $13.8 billion in 2020.
Danny Richards, Lead Economist at Timetric's CIC said: “The country's attractive PPP policies and regulatory framework encouraged foreign and domestic investors to invest in the country's railways, highways and road and seaport infrastructure.
“Looking forward, the market will continue to expand up until 2020, driven by increased investments in transport infrastructure, including through the Kuwait five-year development program 2015-2020.”
However, as Kuwait generates 95 per cent of its total export earnings from the oil and gas sector, low oil prices and the poor business environment will diminish growth prospects during the early part of the forecast period, the report said.
The infrastructure construction was the third-largest market in the Kuwaiti construction industry in the last five years, accounting for 20.5 per cent of the total industry's value in 2015. The market grew at a CAGR of 8.82 per cent in nominal terms, increasing from KWD446.8 million ($1.6 billion) in 2011 to KWD626.6 million ($2.1 billion) in 2015.
Timetric's CIC expects infrastructure construction to become the industry's largest market in 2020. It is forecast to record a CAGR of 19.22 per cent in nominal terms, to value KWD1.5 billion ($5.0 billion) in 2020.
This growth will be driven by the government's plan to develop the country's infrastructure through PPPs.