Kuwait’s construction and real estate sectors showed renewed signs of growing momentum in 2025. The Fourth Kuwait Master Plan 2040, the long-term national economic diversification plan that was launched in September 2023, underpins growth in both sectors as the government spearheads infrastructure mega-projects and the building of new residential cities. Kuwait is increasingly turning to the private sector and seeking public-private partnerships (PPPs) to fund housing developments, and transport and renewable energy projects, with Chinese firms playing a more prominent role.
New legislation, notably Law No. 60 of 2025 concerning financing and liquidity, sets a public debt ceiling at KD30bn ($97.6bn). Approved in March 2025, the public debt law will support government financing for large-scale infrastructure works, driving long-term growth in the construction sector and creating a more stable project pipeline. The law will allow the government an avenue to borrow from international markets for the first time since the previous debt law expired in 2017.
Kuwait’s residential sector is expected to benefit from ramped up government efforts to tackle the country’s housing shortage and attract foreign direct investment (FDI). In February 2025 amendments made to foreign ownership property laws created a more investor-friendly environment. Moreover, a proposed housing finance law will improve access to mortgages and home ownership, bolstering the real estate sector. Looking ahead, steady economic recovery is set to boost growth in the construction and real estate sectors. The IMF forecasts Kuwait’s real GDP will expand by 2.6% in 2025, rebounding from a 2.6% contraction in 2024.
Structure & Oversight
The main government entities that oversee and guide the construction and real estate sectors are the Public Authority for Housing Welfare (PAHW) and the Ministry of Public Works (MPW). The PAHW is the main executive arm for providing Kuwaiti citizens with homes, the regulation of housing policies, allocation of units and supervision of related projects; while the MPW oversees public infrastructure and procurement processes, and awards public works contracts. Also playing an oversight role is the Environment Public Authority, the main environmental public entity promoting sustainable construction and the monitoring of air quality, water and waste management. Other important government entities include the Public Authority for Roads and Transport, responsible for managing road and transport infrastructure; and the Kuwait Authority for Partnership Projects (KAPP), the government agency promoting PPP models and private investment. As Kuwait ramps up the use of renewable energy, the role of the Ministry of Electricity and Water and Renewable Energy (MEWRE) is becoming increasingly important in advancing sustainable construction initiatives amid the country’s aim to become carbon neutral by 2060.
Public Spending
The government’s policy on construction and real estate closely aligns with the Fourth Kuwait Master Plan 2040, aimed at reducing the country’s reliance on oil revenue and transforming it into a regional financial and commercial centre. The government is prioritising large-scale infrastructure works including housing, transport, utilities, renewable energy and urban development projects. This focus will continue to drive momentum and demand in the construction and real estate markets over the medium and long term. The government allocated KD1.7bn ($5.7bn) to MEWRE for infrastructure, energy and services projects in its FY 2025/26 budget approved in March 2025, ensuring a robust pipeline that anchors contractor order books.
In the first half of 2025 the government awarded $1.8bn in contracts, driving growth in construction, transport and infrastructure projects. Project activity in Kuwait surged in 2024, reaching the highest value since 2017, with KD2.7bn ($8.8bn) worth of projects awarded that year, an increase of 44% from the previous year, according to National Bank of Kuwait (NBK). This significant growth was driven by strong activity in the power, water and construction sectors, with the latter (including residential housing developments) accounting for 50% of all project awards. As of February 2025 Kuwait had nearly 300 ongoing infrastructure projects, including those in the bid and execution phases, with a net value of $115bn, according to global consultancy firm KPMG. The construction sector also has the largest share of the ongoing infrastructure projects in the country, accounting for 48% of the overall projects and worth approximately $56bn.
In recent years, public infrastructure projects have stalled and experienced lengthy delays due to disagreements between the government and Parliament. However, the temporary suspension of Parliament in May 2025 is expected to help the government boost its flexibility in decision-making, execute infrastructure projects and implement long-awaited structural reforms, including proposed new laws set to benefit the construction and real estate sectors. To address delays and accelerate construction, KAPP is looking to shorten the tender cycle of 32-34 months and reduce the average time of 8-9 months that it takes to complete a project proposal with feasibility studies within the country.
New Legislation
In February 2025 Kuwait amended a 1979 property ownership law to enhance its real estate landscape and attract more FDI. The new decree expands the property ownership rights of expatriates with certain restrictions, and allows listed shareholding companies, real estate funds and investment portfolios with non-Kuwaiti ownership to buy real estate. This opens the door for foreign investors, including high-income-earning expatriates to participate in property development, stimulating growth and competition in the sector and, notably, in upscale luxury home sales.
Furthermore, a proposed mortgage law that would allow banks to provide housing finance is expected to spur residential developments with far-reaching implications for both buyers and developers. If passed, Kuwait is set to enter a new era of housing finance, enabling banks to offer mortgages of up to KD200,000 ($651,000) over 25-year repayment periods. The law is expected to boost real estate activity by making home ownership more accessible, impacting demand and property prices.
Major Companies
The construction market within Kuwait is competitive yet fragmented, comprised of a number of prominent local firms and major international companies, including Chinese, South Korean, Turkish, Indian and European contractors, vying for market share. The top-10 contracting companies behind mega-projects and urban transformation operating in Kuwait execute projects worth a combined $14.2bn, according to 2024 market analysis by MEED, a business intelligence provider. Turkish contractor Limak had $5.6bn worth of projects under execution, the highest amount in the country. Limak secured contracts in 2016 and 2023 to build a second terminal at Kuwait International Airport, strengthening its position within the construction market. Shapoorji Pallonji, India’s construction conglomerate with construction projects in Kuwait valued at $1.4bn; Kuwait’s Al Saker General Trading, executing contracts worth $1.4bn; and Chinese state-owned China State Construction Engineering Corporation (CSCEC) with $1.3bn in contracts, rank second, third and fourth place, respectively. Other top Kuwaiti contracting companies operating in the country include Wara Construction with projects worth $800m. Gulf United Construction had contracts totalling $700m; First Group for General Trading and Contracting with around $500m; and Al Moasher Joint Venture, executing contracts worth approximately $500m.
Foreign Presence
Kuwait’s building construction market is moderately concentrated, with the sector not dominated by a few large firms. A number of large Kuwaiti companies involved in large scale infrastructure projects and civil engineering works each hold a significant market share. This includes Marafie Group, Mohammed Abdulmohsin Al Kharafi and Sons, Kuwait Company for Process Plant Construction and Contracting, Mushrif Trading and Contracting, Combined Group Contracting, and Sayed Hamid Behbehani and Sons.
A considerable number of Kuwaiti small and medium-sized enterprises also participate in the sector, creating a highly competitive landscape. As well, leading foreign construction companies with a significant presence in the infrastructure and construction markets include South Korea’s Hyundai Engineering and Construction, Japan’s JGC Holdings, Canada’s AtkinsRéalis and US-headquartered Fluor.
The Forbes list of most impactful real estate leaders in MENA place four Kuwait-based real estate developers in its top-50 list. Mabanee is the highest ranked Kuwaiti company at 27th, with $5.1bn in total assets and a focus on hotel, residential and shopping developments. Kuwait Real Estate Company ranks 42nd with $1.4bn in assets providing residential buildings, mixed-use retail and office spaces, car parks and facility management. Tamdeen Real Estate Company and National Real Estate Company are 43rd and 44th, respectively.
The growing presence of government-owned companies from China, Kuwait’s largest trading partner, that participate in both completed and ongoing mega-projects in the sector is notable. In March 2025 China Gezhouba Group, a leading construction and engineering company, signed $557.5m in contracts to help build the new 64.4-sq-km South Saad Al Abdullah residential city, as well as the construction and maintenance of roads, electricity services and water infrastructure in the city. More recently, in September 2025 the Kuwaiti government announced that an unnamed Chinese company will build the North Kabd plant, the country’s largest wastewater treatment facility. Reflecting the size and importance of China’s involvement in Kuwait’s construction sector, in February 2024 the Kuwaiti government established a dedicated committee overseeing the implementation of agreements and memoranda signed with Beijing.
Size & Performance
Kuwait’s construction market size was valued at $15.4bn in 2025, and projected to reach $20.2bn in 2030, with a compound annual growth rate (CAGR) of 5.7%, according to estimates by Mordor Intelligence, an Indian market research company. In terms of non-oil revenue, Kuwait’s construction and real estate sectors are important contributors to the economy. Real estate, rental and construction activities contributed an estimated 9% to Kuwait’s GDP in 2024, according to research by Kuwait University. The construction sector is driven by ongoing and planned mega-developments and infrastructure works. According to a February 2025 KPMG report, the sector is also a significant contributor to FDI, with a 16% share of total foreign investment made in the country.
Kuwait boasts a portfolio of planned but unawarded projects worth over $164bn, making it the seventh-largest construction market in MENA, according to UK-based data analytics firm GlobalData. If these projects, mostly comprised of large-scale infrastructure and urban development projects, are awarded, it would provide a robust domestic pipeline for local and foreign contractors. In 2025 GlobalData expects Kuwait’s construction industry to grow by 4.5% in real terms, bolstered partly by an improving economy. Over the longer term, Kuwait’s construction industry is forecast to record a CAGR of 5.1% between 2026 and 2029, supported by public funding on renewable energy, transport, and oil and gas projects.
Real Estate
An attractive destination for expatriates, who make up 68.6% of Kuwait’s population of 5m, according to the Public Authority for Civil Information, high demand for limited housing stock and limited availability of land, are pushing up real estate prices, especially in Kuwait City. The value of real estate transactions increased 34% from KD2.8bn ($9.1bn) in 2023 to KD3.7bn ($12.1bn) in 2024, with residential deals dominating the sector. Real estate activity showed a rebound supported by optimism about market reforms, according to a July 2025 report by NBK. Total real estate sales grew to KD1bn ($3.3bn) during the second quarter of 2025, marking a 15.5% year-on-year increase. This rise was driven by an increase in investment sector sales in apartments and buildings, reaching an 11-year high. The residential segment has lagged behind, constrained by affordability issues and a lack of fresh supply. However, the multi-year fall in sales prices within Kuwait’s residential sector seems to have abated, with prices now almost flat, according to NBK. The residential sector accounted for 35% of the country’s construction market share in 2024 and its market size is projected to post a CAGR of 6.5% between 2025 and 2030, according to Mordor Intelligence.
Residential property transactions in Kuwait are forecast to reach $4.9bn in 2025, and experience a CAGR of 1.5% from 2025-29, according to data platform Statista. This increase is supported by a number of factors, including rising land prices and rental values in the investment and commercial segments, lower interest rates, government investment in major housing developments in new cities, increasing demand for high-end luxury properties, a backlog of housing units, and the anticipated approval of the mortgage law that would improve access to home financing. Commercial property sales remained broadly stable around KD104m ($338.6m) in the second quarter of 2025 but fell sharply by 65% year-on-year due to high-value deals completed in the corresponding period in 2024. NBK highlights the subdued performance in the commercial segment reflects still-cautious overall business sentiment, and a shift in capital towards more liquid or higher-yielding real estate classes. In 2025 commercial development displayed mixed momentum. However, construction of the $660m Shuwaikh Port logistics city is under way, overseen by Kuwait Ports Authority, which is expected to drive expansion and add warehouses, offices, a shopping mall and other retail spaces by 2028. In 2023-24, office rental rates remained mostly flat, influenced by a fluctuating demand and an increase in remote work. Commercial occupancy is stable in prime areas but vacancy rates are high in secondary locations.
Building Materials
In 2024 the prices of building materials, such as cement, concrete, iron, steel and timber remained volatile. Geopolitical tensions and tariffs have contributed to global supply chain disruptions, higher shipping costs and increased prices of imported raw materials impacting Kuwait’s construction and real estate sectors. The Ministry of Commerce and Industry (MoCI) subsidizes building materials based on market conditions to help mitigate rising costs. Still, higher raw material costs for homebuilders in Kuwait are reflected in rising average costs for private housing construction, showing a 35% increase from $554 to $749.50 per sq metre between 2020 and 2024, according to Mordor Intelligence. In Kuwait the average cement import price increased to $122 per tonne in 2024, up 8.7% from 2023. In response, in February 2024 the MoCI launched a 10-member committee to monitor the rising cost of building materials.
Moreover, a persistent lack of skilled workers, exacerbated by experienced migrant workers leaving the country after the Covid-19 pandemic, continues to drive up construction costs and cause project delays. The sector relies heavily on foreign labour. The number of construction workers, the majority being foreign workers, reached 251,557 in June 2024, according to Central Statistics Bureau data.
Major Projects
Under the Fourth Kuwait Master Plan 2040, formerly known as Vision 2035, the development of infrastructure mega-projects and large-scale housing developments is a government priority, underpinning construction activity over the medium and long term. The plan seeks to establish Kuwait as a major logistics and commercial centre within the region in response to an evolving global energy market. The ongoing $3.2bn construction of the Mubarak Al Kabeer Port on Boubyan Island is a cornerstone of the country’s development plan. After several delays, the third and final phase of the project is set to advance following initial agreements signed in September 2023 and a contract awarded in early 2025 to CSCEC, the world’s largest engineering and construction company by revenue. CSCEC will manage and operate the Mubarak Al Kabeer Port throughout each of its phases. Port construction is nearing its final stages and is expected to be complete by the end of 2026. Other significant infrastructure mega-projects under way target the housing sector, as Kuwait seeks to address an acute housing shortage and meet growing demand for residential units amid a population increase. The government is spearheading major urban development and the construction of several new cities, strengthening long-cycle demand while creating additional opportunities for FDI.
Ongoing projects to transform desert into new cities – South Al Mutlaa and South Saad Al Abdullah – are progressing. As of September 2025, the South Saad Al Abdullah city was 43.6% completed and ahead of schedule. With an estimated construction cost of $30bn, the large-scale residential development aims to build 23,551 units, including standardised villas and mid-rise blocks, providing a pipeline of robust housing construction. Construction at the South Al Mutlaa city, the country’s largest housing project, is also gaining momentum. The urban development initiative is slated to build 28,363 units, including villas, with a completion rate of 26.5% as of October 2024.
Major transport projects are also advancing. The construction of Kuwait International Airport’s new $4.3bn Terminal 2 is nearing completion. Elsewhere, the Kuwait National Rail Road (KNRR) project, first unveiled in 2009 that aims to connect Kuwait with other Gulf countries, has gained pace. In April 2025 the government signed a contract with Turkish engineering firm Proyapı to design the first phase of the plan. By contrast, the proposed 160-km Kuwait metro network, was cancelled in November 2023 due to a lack of funding. Other important projects include the $790m Kuwait Medical City, aimed at developing a major health care facility, announced in March 2025. Contractor bids are under review, with completion to be expected by the end of 2030.
Private Funding
In recent years, lower levels of private participation and FDI in public infrastructure projects hindered the growth of project finance in Kuwait and, in turn, the construction sector. Public funding dominates Kuwait’s construction market, accounting for a 71% market share in 2024, according to Mordor Intelligence. In a May 2025 report NBK noted that the government must reverse the country’s historically low rate of FDI, for the country to achieve its diversification and infrastructure goals under its long-term plan. A key challenge foreign investors face is the country’s complex regulatory framework, known for its frequent changes in policy and procedures in the tendering process, slowing project execution and dampening profitability.
The role of private capital and developers, particularly within housing development projects, has increased in the past few years. Kuwait’s construction market size for private funding is projected to experience CAGR of 6.3% from 2025-30, according to Mordor Intelligence. The Fourth Kuwait Master Plan 2040 is promoting alternative sources of financing and private involvement to fill gaps in funding for infrastructure, housing development, transport, water and waste treatment and renewable energy projects, mainly through PPP models. The government hopes such an approach will de-risk large projects and reduce delays and cost overruns that have impacted past infrastructure projects, while leveraging private expertise. The government is moving away from being an operator of infrastructure works and is instead assuming more of regulatory role, reflecting global trends, according to KPMG.
Notable examples of the PPP approach are the KNRR project, where ownership is shared between the public and private sectors, including Proyapı, and China’s involvement with the operation and management of the Mubarak Al Kabeer Port. Moreover, the housing segment best exemplifies the increased participation of the private sector in the construction market, as the government encourages private real estate companies and contractors to address the country’s housing backlog and provide affordable housing to families. As of September 2025, there were 105,000 applicants on the housing waiting list, with demand expected to rise to 197,000 by 2035.
In September 2025 the government announced that it was seeking local and international private firms to bid for 30-year contracts to build three new residential cities: Al Khiran, Nawaf Al Ahmad and Al Sabriyah covering more than 300 ha, located to the north and west of Kuwait City. Combined, the housing developments are expected to provide an estimated 170,000 housing units. This is the first bidding process under a real estate development law approved in 2023 and enacted in September 2025, opening Kuwait’s housing sector to private investment. It allows the government to set up joint companies with local and foreign private firms to build new housing to sell to Kuwaiti citizens and bolster the construction and real estate sectors. Abdulatif Al Meshari, the minister of state for housing affairs, said in September 2025 that Kuwait is seeking to promote private investment and engage private real estate companies and local and foreign banks.
Outlook
Geopolitical tensions, oil price fluctuations and market volatility due to the US tariff policy will continue to impact Kuwait’s construction and real estate sector, while on the domestic front labour shortages and elevated costs of construction materials create challenges. However, on the back of momentum gained in 2025, coupled with forecasted real GDP growth, new far-reaching reforms and projected rising private investment, the sectors are poised for future expansion. With its focus on infrastructure mega-projects, Kuwait Master Plan 2040 offers developers a robust project pipeline, positioning the sectors for growth over the long term. The construction and real estate sectors will continue to significantly contribute to the country’s economy and development over the coming years.
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