Kuwait Projects Co (KIPCO), the Gulf state’s largest investment company, said on Sunday construction had begun on its $2.0-$2.5bn real estate project in Kuwait, which has been downsized by around half from its original estimated cost.

The mixed-use project, which had previously been valued at $5bn, was scaled down after an earlier estimate did not take into account the area for infrastructure and services required by the government, said Tawfiq al-Jarrah, executive director of the Hessah Al Mubarak scheme, located on the outskirts of Kuwait City.

Banks will provide financing for half of the project, with KIPCO funding the remainder directly, he said.

The land plot measures around 227,000 square metres, the company said on Sunday. That is down from the 380,000-square-metre size previously earmarked.

Large scale infrastructure and construction schemes have struggled to get off the ground in Kuwait because of political infighting and cumbersome bureaucracy.

Meanwhile, property markets across the Gulf have had to contend with lower government spending and reduced investor confidence as a result of a more than two year slump in oil prices.

Kuwait’s Burgan Bank will be among the main lenders to the project, al-Jarrah said at a press conference about the development. The bank is 64.4 percent owned by KIPCO.

KIPCO was negotiating financing with other lenders, he added.

[Source:-Gulfbusinesss]