Building a New Town in Kuwait
Korea Land and Housing Corp. (LH) announced on Jan. 27 that it signed a preliminary agreement with Kuwait’s Public Authority of Hosing Welfare on its investment in South Saad Al Abdullah New Town in Kuwait on Jan. 24.
The preliminary agreement was designed to set the basic direction of the project before the official agreement and secure a stable business foundation between the parties by eliminating risk factors that can occur in the process. LH Corp. is aiming to sign an official agreement with the Kuwaiti government and establish a special purpose company by the end of this year.
The South Saad Al Abdullah New Town project began after the two governments signed a memorandum of understanding (MOU) on cooperation in Abdullah New Town development in May 2016. LH has been working on a 43.3 billion won (US$38.63 million) master plan and execution design since April 2017 at the request of Kuwait’s Public Authority of Hosing Welfare.
With the latest preliminary agreement, LH limited the range of investment by the special purpose company to be jointly established by LH and Kuwait’s Public Authority of Hosing Welfare to housing complexes for people in Kuwait. In this way, it removed the risks from vacancies in non-residential facilities, such as commerce and business, to be created in the New Town in the future.
In order to minimize the burden of investment, LH will develop the housing site, where 40,000 houses will be built, in four stages and limited the business scope of the special purpose company to the first stage of the housing complex project and construction of the model housing complex. The company also minimized the risks of investment retrieval for unsold houses and housing site by requiring Kuwait’s Public Authority of Hosing Welfare to acquire them at the price and time which are agreed by the two sides.