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Construction costs in Kuwait have increased, but relatively lesser than its GCC neighbours, driven by climbing commodity prices, higher logistics costs and material supply shortages, Kuwait Financial Centre (Markaz) said in a new report titled ‘Cost of Construction in Kuwait and its Components.’
Substantial price increases in primary raw materials such as structural steel beams, reinforcing steel, softwood timber for framing, copper pipe and copper cable, along with labour shortages, within the GCC’s construction sector, led to a steep rise in construction costs in recent years.
Furthermore, geopolitical conflicts and disruptions in the global supply chain have increased the construction cost in GCC.
The cost of building a private housing unit with a built-up area of 1,240 square metres (sqm) stood at $741 per sqm. Despite inflated costs, this remains lower than the cost of construction of villas and high rises in Saudi Arabia, and UAE, which averages at $1,396 sqm and $1,835 sqm, respectively, the report said.
According to Markaz, Kuwait’s relatively lower construction costs than the UAE and Saudi Arabia are likely due to the government’s willingness to offer subsided prices on construction materials, implement price monitoring policies, and ban the import and re-export of key building materials such as lumber and iron.
Kuwait’s price hikes in construction goods, such as iron, steel and cement, have ranged from 8.7 percent to upwards of 100 percent from January to early June 2022, the report said, adding that the price of domestically manufactured steel bars grew by 37.2 percent year-by-year in March 2022.
Markaz estimated that commodity prices will remain higher than their five-year averages while metal prices are projected to remain at historically elevated levels.
(Writing by P Deol; Editing by Anoop Menon)
