KUWAIT CITY, Feb 16: The construction sector in Kuwait is facing many challenges, the most important of which is the decline in the launch and award of projects and the signing of contracts in the last five years. There have also been delays in payments owed to contractors. The sector is also grappling with the worsening issue of rising construction costs, driven by a labor shortage that has led to an unprecedented increase in wages. Real estate experts have confirmed that the labor shortage is not only a matter of quantity but also quality. The real estate market has witnessed the departure of a large number of experienced workers over the past two years, following the end of the COVID-19 pandemic.

Meanwhile, local banks’ financing for the construction sector for residents and non-residents decreased by KD 61.8 million, or 12.1 percent, every month in December, reaching KD 445.5 million compared to KD 507.3 million in November. However, financing increased on an annual basis by KD 211.4 million, or 90.3 percent, compared to KD 234.1 million in December 2023. The total financing provided by banks to the construction sector in 2024 amounted to approximately KD 3.86 billion. According to the monthly statistics issued by the Central Bank of Kuwait for December, the accumulated balance of construction financing provided by local banks to residents and non-residents declined by 6.8 percent, or KD 208 million, from KD 3.048 billion in November to KD 2.840 billion in December.

On an annual basis, the balance increased by KD 261 million (10.1 percent) compared to KD 2.579 billion in December 2023. The statistics also revealed that the total financing provided by local banks to the construction sector during 2023 rose to KD 1.754 billion, a 0.7 percent increase compared to KD 1.740 billion in 2022. On the other hand, data from the Central Bank of Kuwait revealed an increase in the volume of deposits in local banks for both residents and non-residents during 2024, rising by about KD 816 million, or 1.5 percent, to reach KD 53.823 billion by the end of December 2024, compared to KD 53 billion in December 2023. Government deposits increased by approximately KD 390 million, reaching KD 5.083 billion by the end of December 2024, compared to KD 4.694 billion at the end of December 2023. Private sector deposits also rose by about KD 795 million, reaching KD 41.485 billion by the end of December 2024, compared to KD 40.690 billion in December 2023. The financial data at the end of December 2024 also showed an increase in the balances of bank credit facilities for economic sectors, rising by KD 3.6 billion to reach KD 57.17 billion.

By Mahmoud Shendi
Al-Seyassah/Arab Times Staff