Interview: Ali Khalil, CEO, Kuwait Financial Centre (Markaz), on market innovation, technological opportunities and strategic challenges
How do you see the financial services sector evolving in response to efforts to diversify the economy?
ALI KHALIL: The financial services sector acts as a key enabler, allocating capital to the areas of the economy most likely to grow and deliver returns. Given the scale of development required, the government’s budget allocations – around KD2bn ($6.5bn) in recent years – are far from sufficient. This means private sector participation, supported by financial institutions, will be critical. Investment companies will raise capital, while banks will provide loans to fund large-scale projects. These include infrastructure, such as power generation in both conventional and sustainable forms, as well as real estate development. There is also growing private sector involvement in social infrastructure – education, with more private universities and schools, and health care. The private sector’s role will span equity markets, debt markets and lending, and financial institutions are well placed to support this diversification drive.
In what ways is the investment banking sector adapting to global financial trends, such as sustainable financing and digitalisation?
KHALIL: Investment banks have been steadily increasing their budgets in recent years to keep pace with the trend towards digitalisation. Competitive pressures have pushed institutions to adapt quickly, even if certain functions must be outsourced. However, outsourcing options are more limited than in markets such as Europe or the US, partly due to regulations that require certain data to remain in-country and impose restrictions on cloud usage. Nonetheless, progress is being made and the sector is catching up. On sustainable financing, the market is still in its early stages. Instruments such as green bonds have yet to take hold at scale. For these to gain traction, leadership will likely need to come from the government and large quasi-government institutions, which can issue offerings of sufficient size to make the market viable.
What role does real estate investment play in the financial ecosystem, and how is the sector adapting to market volatility and urbanisation challenges?
KHALIL: Real estate has long been a preferred asset class for investors, particularly family offices and older generations. It is relatively straightforward to invest in, often sharia-compliant without complex structuring and generally more liquid than many other asset types.
Kuwait is highly urbanised, with most of the population living in the metropolitan area and smaller districts such as Jahra, Ahmadi and Mangaf. Urban development is reinforced by government-led projects that provide communal facilities and major commercial nodes. Public-private partnership models – such as build-operate-transfer arrangements – have been central to this process. Notable shopping centres and office developments have been built on government-leased land, creating focal points for economic activity.
To what extent do you see environmental, social and governance (ESG) principles being integrated into investment strategies?
KHALIL: ESG adoption remains at an early stage. While some institutions voluntarily published ESG reports as far back as the mid-2010s, it has only recently become mandatory for companies listed on the Premier Market. As a result, more firms are now integrating ESG metrics into their key performance indicators. In practice, governance standards in Kuwait are strong and sustainability is becoming a higher priority for companies. On the environmental side, additional regulations would help align the market with more developed economies. Real estate investment is a clear example: developers are incorporating energy-efficient designs and electric vehicle (EV) charging points, even though electricity is heavily subsidised and widespread EV adoption remains limited. While the regulatory framework is steadily evolving, there is a growing recognition that proactive ESG integration can enhance long-term asset value.
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