Kuwait gets ready for new real estate spending spree

Billions to be spent on redevelopment of Failaka as a tourist city and on main port at Bubiyan

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By  Eudore Chand Published  February 26, 2005

Kuwait has, at last, joined other Gulf Co-operation Council member states in the race to build massive developments and grab a share of tourism dollars, as well as attract regional and global investments. It is embarking on a multibillion-dollar project to transform a historical island into a major tourism resort. The Gulf country plans to spend another couple of billion dollars on constructing a new port and a business township. Among the six GCC countries, Kuwait has lagged behind in terms of major development projects. The spree was kicked off late last century by Dubai in the UAE, with its Dubai Marina and Palm Islands projects. Bahrain has its Bahrain Financial Harbour, Durrat Al Bahrain and Al Areen; Qatar The Pearl; Oman The Wave; and Saudi Arabia has projects like City Fanar and Jubail 2. Gulf countries so far — with the exception of Kuwait — are busy constructing either new waterfront developments or are reclaiming land from the sea to build huge projects. Both target the tourist dollar and foreign investment, mostly in freehold real estate developments. Though a latecomer, Kuwait has adopted the pattern set by some of the other GCC states like UAE, Bahrain and Qatar. It has established an entity; Kuwait Islands and Mega Projects Development Agency, which is headed by Jassem Al Oun, who also heads the country’s Executive Authority of the Divided Zone Agreements. Some of the other GCC states also have officials in charge of the real estate development projects and include Mohammed Alabbar, Sultan bin Sulayem and Mohammed Al Gergawi in Dubai; Esam Janahi in Bahrain; and Akbar Al Baker in Qatar. Al Oun has started on a search for partners who will put their money into the redevelopment of a 43 km2 island into a major tourism resort. “The countdown has started for the largest development project since Kuwait’s liberation from seven months of Iraqi occupation in February 1991,” he said. More than 120 companies have joined together to form nine various groupings in their bid for the contract to redevelop 26 km2 of Failaka Island, located some 20 kilometers east of Kuwait City, reports said. The promoter has distributed the documents containing the ‘terms of reference’ to the identified groups at the end of last year. The consortia must submit their bids within three months and the winner will be picked between April and June, said Al Oun, who expected the deal to be signed in September 2005. Construction work could be spread over the next ten years and projections call for investments of between US $2 billion to $3 billion, Oun said. Once construction is completed, the as yet mostly flat desert island will become a luxurious holiday resort with hotels, chalets and entertainment facilities. These will be created on the basis of build-operate-transfer (BOT) agreements, which will last for 30 years and can be renewed for a fresh term. Failaka Island was used as a heavily mined military base during the Iraqi occupation of Kuwait. Some of the Kuwaiti families who evacuated the island during the Iraqi invasion have since begun renovating their homes. However, the government has bought off many of the former residences on the island, which now hosts a large Kuwait armed forces presence. Failaka was the scene of an attack in October 2002 when two Kuwaiti gunmen killed a US marine during war games. Of the nine islands that Kuwait governs, only Failaka has a major presence. Bubiyan Island in the north is the largest, where the country is planning a major port that will be built at a cost of approximately US $850 million. Al Oun said the construction will cover five phases and be completed over the next six years. He explained that the idea of a port was mooted early last year. The Kuwait Cabinet ordered a feasibility report last April; the completed study shows that Kuwait could raise its container handling operations from 800 000 TEUs (20-foot containers) annually to 2.4 million TEUs if it built a major port on Bubiyan Island. The report revealed that existing port facilities will not be able to cope with the pressure on their facilities much longer, as they are running at full operational capacities. The Gulf state also looks set to have a ‘Kuwait Business Town’, on which work is due to begin soon, according to reports. The concept of Kuwait Business Town is to create a business community in Kuwait City along the lines of mini cities in Dubai and Qatar, but on a smaller scale. It will occupy an area of more than 11 000 m2 of prime real estate, said Abdul Hamid Mihrez, the assistant vice-president at Global Investment Company.

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