The commercial real estate market in Kuwait is witnessing a boom as a result of a combination of factors, most notably the dearth of commercial real estate, accompanied by high demand, and talks about the government's move to amend laws to open doors for foreign companies.
The Al Hamra tower project is perfect example of this boom.
It is a landmark for the commercial real estate sector in Kuwait, as it would be the tallest tower in the country.
It will also be the first 'sculptured' skyscraper in the world, rather than being symmetrical it will have two tilting walls.
According to Kuwait International Bank (KIB), office rent rates maintained their previous trends, despite the increase in rents for new premises.
KIB pointed out that the number of commercial complexes and towers that are being created will lead to an increase in the supply of office space over demand during the coming year.
KIB added that this might be the beginning of a crisis unless the government undertakes a radical change in laws to stimulate more foreign investment to enter the Kuwaiti market.
Increase in commercial land prices
The Bank's report pointed at the increase of commercial land prices by 12.9% to 18.7%, while residential land prices increased by 35.2% to 53.6%.
Hamid Al Suhail, director of marketing and leasing at the Al Hamra project, confirmed that commercial land prices increase by 30% annually as a result of supply shortages.
In regard to office unit rentals, the prices begin at KD11 per square meter.
Al Suhail expected that 750,000 square meters of office spaces would come online during 2008-2010; and that the amount of available space would be doubled within the coming three years.
There are now more than 40 office buildings under construction or in an advanced stage of design in Kuwait.
According to Suhail, the biggest players in this sector are: Salehia, United Real Estate Company, and Al Hamra.
Most investors in Kuwait are Kuwaiti nationals since the investment and business administration in Kuwait are difficult for foreigners to access under the prevailing laws.
However, Suhail appears optimistic with regard to opening doors for foreign investments in Kuwait soon, especially since the tax on foreign investment in the state has been reduced recently from 55% to 15%.
The Al Hamra project
Upon completion, Al Hamra tower will cover 22,000 square meters and reach 412 meters in height, making it the tallest building in Kuwait. It will overtake the nearby Liberation Tower, the current tallest building which stands at an altitude of 372 meters.
Moreover, Suhail added that the size of the tower would equal the combined size of the five biggest office towers in Kuwait.
Al Hamra Tower will also be the tallest 'sculptured' tower in the world as well as the tallest stone-clad skyscraper.
Regarding the tower's design, whereas almost all skyscrapers are symmetrical over their main axis. Al-Hamra Tower has two tilting walls, one on each side, moving up in the air more than 50 meters away from their original location to almost 350 meters in height.
About 195,000 cubic meters of concrete, 6,000 tons of metal structures and 38,000 tons of iron will be used in building the tower, which will be installed with 40 elevators, some of which will run at speeds of up to 10 meters per second with a payload of up to 40 people.
Furthermore, there will two service elevators with a payload of up to seven tons. The complex will contain a 77-storey tower; each floor will contain only three offices. Each floor covers an area of approximately 2,400 square meters.
As many as 290 piles with a capacity of 1,200 tons each were put in the foundation. Concrete mix design was developed by the contractor specifically for the job as it is the first time that concrete strength above 600kg/m2 has been used.
The special mix took a lengthy research in the company's laboratories, as the constituents available in Kuwait were not adequate for this high performance, and they succeeded in reaching on site strength of 1000kg/m2.
Project investment
Regarding the volume of investment in the project, Suhail affirmed that the investment will value up to $1bn, while the value of land exceeds KD100m, and the cost of the tower's construction is valued at KD150m.
Of course, the basic trend will be towards rental residential units. But the company hinted that it will consider the idea of selling entire floors in the tower and not just individual units.
Today, there is no law in Kuwait that regulates the sale of offices, and it is therefore not possible at the present time to buy office units in Kuwait, but Suhail hopes that this reality will change in the near future.
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