BUILT TO LIVE
TBY talks to HE Yasser Hassan Abul, Minister of State for Housing Affairs, on his role as chair of the Public Authority of Housing Welfare (PAHW) and the role of the private sector in building houses.
How do you envision future housing developments in the country and could you tell us more about current projects?
In the short term, the Public Authority of Housing Welfare (PAHW), which I chair, has set an ambitious target of allocating 60,000 units over a five-year period, from 2015-2020, as per the second development plan. Furthermore, PAHW has succeeded in maintaining close coordination with other government entities to implement the government program and its ongoing strategic plan. In doing so, PAHW has exceeded previous targets and managed to distribute 45,746 units during the period from 2014 until 2016, compared to 96,938 units for the period from 1956 until 2013, representing 46% of the units of the past 58 years in just three years. In the long term, since PAHW is fully convinced that continuing the current approach in the provision of residential care is too expensive and unsustainable and will not solve the housing challenge. We are concentrating our efforts on the development of a sustainability strategy. For this, we work with the Kuwait Credit Bank (KCB) and other relevant parties. This requires a fundamental shift in the philosophy of providing residential care from securing the housing units through PAHW to the activation of public-private partnerships and developing sustainable communities with a social environment that complies with best industry standards. The practical application of this vision would result in the creation of investment opportunities, lift the burden from the state budget, and set the plan for long-term financial sustainability by converting the non-residential lands into income-producing assets to transform to a self-financing entity. In city development, PAHW typically engages in housing projects through the development of comprehensive new cities. These cities are designed according to a master plan, outlining an attractive value proposition and besides housing including social and economic components such as schools, hospitals, commercial and retail areas, and in some cases industrial zones. PAHW liaises with key government stakeholders to design the appropriate scale of infrastructure including roads and utilities based on the expected demand from these projects. These projects will be developed through a constructive partnership with the private sector that consider the end users' needs in terms of standard or affordability.
How would you describe Kuwait's progress in achieving its 2020 objectives, and what is the role of the Ministry of Housing affairs here?
In 2015, PAHW signed a program strategic consulting (PSC) agreement to provide technical and strategic support for the former housing programs and manage PAHW's megaprojects. These projects include the new Cities of Al-Khairan with 35,000 housing units, South Saad Al-Abdullah with 25,000 units, and North Al-Mutlaa with 52,000 units, amongst others. These will be executed by creating urban communities on best international standards and funded by public private partnerships. Through these partnerships, we strive for an efficient utilization of resources an alleviation of the burden of financing projects away from the state and to leverage on the expertise of the private sectors and transfer the skills, knowledge, and abilities from the private sector to the public sector. In addition, we seek to adopt a smart cities agenda where we also aim to rationalize energy usage. We are investing in attracting highly skilled calibers for all level of positions to enhance the efficiency and the delivery of these projects.
How do envision more involvement of the private sector in the construction and housing sector?
To drive private-sector participation in the development of housing projects, we plan to adopt a PPP framework that relies on an existing legislative setup, adoption of best practices in PPP project structuring, as well as close interaction with the private sector throughout development and tendering life cycle. The new legal setup provides the necessary tools for attracting investors and lenders such as allowing for foreign ownership of project companies, providing lenders security over the project contracts, and dictating a clear and transparent procurement process. Applied in several ongoing PPP procurements in Kuwait, PAHW does not envisage any major challenges in implementing the PPP law for its real estate and housing projects. In terms of PPP project structuring, PAHW will adopt appropriate risk allocation between the public and private sector, which aims to allocate the risks to the party best able to manage them. Finally, PAHW is engaging the private sector throughout the development and procurement of PPP projects, and will be organizing roadshows for prospective bidders to outline up and coming opportunities and how these will be tendered. Since May 2016, PAHW has the authority to tender PPPs without involving the Kuwait Authority for Partnerships Projects (KAPP) and will we be fully responsible for the tender process.
What are the opportunities for foreign investors, and global construction firms, to participate in the country's housing projects?
With the implementation of new regulations, we strive to attract new investors to Kuwait by providing a more comprehensive road map and guidance in the implementation and operation of future megaprojects. The new investment resolution allows joint ventures, partnerships, and BOTs now fully licensed. Investment and commercial zones include private schools and universities, private hospitals and other medical centers, malls and entertainment parks, logistics parks, museums and cultural centers, hotels and resorts, and residential complexes.
What are you ambitions for the year ahead?
For the year ahead, PAHW is planning to tender five investment packages in Jaber Al-Ahmed and Sabah Al-Ahmed cities, for which a team of advisors, from PwC, Dar Al-Handasah, and Al-Markaza has been appointed. The developments include plots for residential and retail plots, as well as malls, business centers, and industrial and storage zones. The intention is to encourage suitably qualified local, regional, and international companies to invest. PAHW's one-year plan is to continue in meeting the demand for housing and reduce the waiting list backlog, as well as accelerating private-sector engagement. Another ambition is to build our first smart and environment-friendly city in Kuwait and in line with international standards, the Saad Al-Abdullah project.