KUWAIT CITY, Jan 8: The construction sector in Kuwait witnessed a significant increase in bank financing during November 2024, with loans provided to residents and non-residents rising by 72 million dinars (16.5 percent) compared to October, reaching 507.4 million dinars, reports Al-Seyassah daily. This marks a substantial annual growth of 337.9 million dinars (199.4 percent) compared to the 169.4 million dinars recorded in November 2023. Over the first 11 months of 2024, total financing for the sector reached approximately 3.4 billion dinars.

According to the Central Bank of Kuwait’s monthly statistics for November, the accumulated balance of construction financing saw a slight monthly decline of 0.3 percent (10 million dinars), falling from 3.058 dinars billion in October to 3.048 billion dinars in November. However, on an annual basis, the balance grew by 424 million dinars (16.1 percent), up from 2.624 billion dinars in November 2023. For the entirety of 2023, aggregated financing by local banks to the construction sector rose by 14 million dinars (0.7 percent), increasing from 1.740 billion dinars in 2022 to 1.754 billion dinars. Fluctuations in Construction Financing During 2024 Nonetheless, construction financing fluctuated significantly throughout 2024 -- January: 156.8 million dinars, February: 416.3 million dinars, March: 313.7 million dinars, April: 137 million dinars, May: 119.2 million dinars, June: 405.6 million dinars, July: 174.6 million dinars, August: 281.5 million dinars, September: 467.9 million dinars and October: 435.4 million dinars. The annual increase in the accumulated financing balance reached 425 million dinars, reflecting a 16 percent rise. Despite the increase in financing, the construction sector faces significant challenges. A major issue has been the decline in project launches, contract awards, and delayed payments to contractors over the past five years.

Additionally, rising construction costs, driven by labor shortages and wage increases, have severely impacted the cost and timeline of residential projects. Real estate experts highlight that the labor shortage is not only quantitative but also qualitative, with the market losing large numbers of experienced workers in the two years following the COVID-19 pandemic. Local banks in Kuwait saw their total assets rise by 4.84 percent (4.22 billion dinars) annually, reaching 91.41 billion dinars by the end of November 2024, compared to 87.19 billion dinars in November 2023. Monthly asset growth stood at 1.4 billion dinars.

The key contributors to this growth included: -- 12.67 percent annual increase in foreign assets to 27.53 billion dinars. -- 4.07 percent rise in claims on the private sector to 47.07 billion dinars. -- 17.67 percent increase in other assets to 3.33 billion dinars. However, claims on public institutions declined by 5.72 percent to 3.46 billion dinars, while government demands dropped by 32.05 percent. The value of credit facilities provided by the banks increased by 745 million dinars during November to reach 57.118 billion dinars compared to 56.373 billion dinars in October. Personal credit facilities stood at 19.273 billion dinars. Deposits also rose by 332 million dinars during November, totaling 53.690 billion dinars. Despite these gains, the private sector deposits in foreign currencies decreased slightly by 0.1 percent, totaling 1.9 billion dinars; meanwhile, the balances of the local banks’ claims on the Central Bank in dinars, represented by bonds, dropped by 25.3 percent to 1.7 billion dinars. The substantial increase in financing for Kuwait’s construction sector underscores the sector’s importance to the national economy. However, persistent challenges, such as labor shortages and rising costs, call for strategic interventions to ensure sustainable growth and development. The local banks’ robust performance and asset growth provide a solid foundation for addressing these challenges and supporting the sector’s recovery and expansion.