Private solution to public housing

A new law has been proposed to solve a housing shortage that has left 84,000 Kuwaitis on a waiting list for a government home.

Construction at Sabah al Ahmed, one of five cities being built, was started in January and is expected to house 110,00 people.

KUWAIT CITY // New private-sector shareholding companies would be allowed to build residential areas for the public sector under a proposed new law intended to solve a housing shortage that has left 84,000 Kuwaitis on a waiting list for a government home. The minister of state for housing affairs, Ahmad al Fahad al Sabah, said the new law was in its "final stages" after meeting with parliament's housing affairs committee last week.

The law will allow established companies that successfully bid on housing projects to create new companies for building the developments, in which they hold 50 per cent of the shares. The remaining shares will go to citizens, and the new companies will eventually be registered on the Kuwait Stock Exchange independently. In return for building residential areas and handing them over to the government, the companies will be allowed to operate the cities' "investment areas", said Eisa Khodadah, the deputy general manager for investment affairs and private sector projects at the Public Authority for Housing Welfare (PAHW), which has been negotiating the law with parliament's housing affairs committee.

The investment areas can include commercial centres, private hospitals, private universities, recreational and industrial areas - anything the companies want to build to turn a profit. Mr Khodadah said the Build Operate Transfer (BOT) contracts for the cities will allow the companies to operate their investments for "30 or 40" years before handing them over to the state. Kuwait's current BOT law, passed last year, limits the term of BOT contracts to 30 years, or 40 years for "special" projects. Mr Khodadah said the new law would give the investors enough time to build the residential areas and still make a profit before they had to turn them over to the government.

He said the new law would apply to new cities in Al Khairan and Al Mutlaa, which are two of six major residential developments currently under planning or construction in Kuwait. The PAHW estimates that 72,000 new residential units will be completed by 2017. But with some 8,000 Kuwaitis joining the waiting list for a house every year, the new cities will not completely solve the housing crisis. "We need more, and we are trying to solve this problem with the municipality. Getting land is a big problem," Mr Khodadah said.

One of the main obstacles to new residential areas is Kuwait Oil Company's iron grip on the state's distribution of land. About 90 per cent of Kuwait's land is owned by the government, and the ministry of oil has the final say on its allocation. In the past "we had deep negotiations with KOC and we reached a settlement in order to get land that would satisfy more than 50,000 housing units, but all of a sudden, they changed their mind", said Hasan Johar, a member of parliament who used to serve on the parliamentary housing committee.

"Their excuses are technicalities like pipelines. In Kuwait it's crazy - unbelievable. They want more than two kilometres between oil pipelines and residential areas, but in Texas, for example, the distance is only about 21 feet [six metres]," Mr Johar said. Land is so expensive in Kuwait that the vast majority would rather wait to receive land from the government than buy it themselves, but many now have to wait for about 16 years, he said.

Kuwait's generous welfare system gives every male citizen who is married or has children the right to apply for a plot of land in a residential area of at least 400 square metres in size, and about 30 per cent of applicants take the land with a government-built house or apartment. Women can also apply for residences in some areas. Men can also receive a 70,000 Kuwaiti dinar (Dh900,000), interest-free loan for a house and the land from a government bank, which is paid back at no more than 100 dinars every month. The plots are sold for about 3,000 dinars, far below their real value.

The only snag for Kuwaitis is that they have little say about where they live, and because of the land restrictions, all of the new cities are being built in the windblown outskirts of Kuwait City. To entice young families into the desert, the government has increased the plot sizes in some of the developments to 600sqm. "Some land is too far from the city for me and I will not accept it, like in Sabah al Ahmad City," said Saqr al Batti, whose wife is on the waiting list for a house. Mr Batti cannot apply himself because he is a Bidoon, a stateless Kuwaiti, but he expects to get citizenship within the next few years, and when he does he can take his wife's position on the list.

The city Mr Batti referred to, Sabah Al Ahmad, is already being built and it will not be affected by the new law. The PAHW will supervise the construction of houses there before they are offered to Kuwaitis on the waiting list. When the city is finished, it will house 110,000 people in luxury four-bedroom villas with maid's quarters and diwaniyas, rooms where male Kuwaitis entertain their guests. The PAHW expects people to start moving in by 2012 or 2013.

Hussain Dashti, a resident engineer for the PAHW who is working on the project, said: "We are trying to finish it faster because people are waiting." He said the PAHW has subcontracted the design of the city to private companies to speed it up, something that has not been tried in Kuwait since the 1980s. The 35sqkm city will be lined with trees and other greenery to try to shelter residents from the sandstorms that blow through the area in the summer. And the harsh environment is providing its own challenges for engineers.

"The storm water drains are getting laid, but the sand keeps pouring back in and we have to lift it back out every two or three days," Mr Dashti said. "I think the government will ask less for the houses to encourage people to come here."