Kuwait: Construction hit hard by price hike
The repercussions of the ongoing war between Russia and Ukraine continue to negatively affect many Arab countries, including Kuwait. One of the main markets affected by the price hike is the local construction sector.
There are defects in the contracts of some construction projects, which increases the possibility of being exposed to a wave of termination of contracts between contractors, entities and individuals, part of which has already started. Some contractors refused to implement contracts that they had signed at the beginning of the year but did not start implementing due to reasons related to the issuance of licenses or considerations related to either party.
They justified this with compelling reasons related to an unprecedented increase in the prices of construction goods. This led to high inflation rates that strained the contractors’ ability to continue with the implementation. It was learned that contractors reported to some clients that they were unable to bear the difference from their budget unless the contract value was reconsidered.
According to informed sources, the increase in construction prices prompted some contractors to take protective measures to avoid incurring losses from the price difference that would be incurred if the contracts signed four months ago were to proceed.
They asked the owners of the plots to either cancel the existing contracts between them or reconsider the estimated value based on recent prices. The series of price hikes in construction goods is diverse and includes increases ranging between 8.7 percent and more than 100 percent from January to early June. The recently-recorded increases lead to losses or the implementation of the project with lower quality.
