Kuwait’s coastal regions serve as vital hubs for urban development due to their strategic location along the Arabian Gulf. These areas host over 60% of the nation’s population and a majority of its infrastructure, underscoring their importance to national planning. This study examines the influence of natural factors—including terrain, climate, geological structure, and geographic location—on urban functions and service delivery across Kuwait’s coastal governorates. Utilizing data from 1990 to 2020, such as topographic maps, temperature records, wind patterns, and precipitation statistics, the study integrates spatial analysis and field observations to assess how environmental dynamics shape residential, recreational, and infrastructural development. Findings highlight the critical interplay between Kuwait’s arid climate, low-lying coastal topography, and sedimentary geological composition, all of which significantly impact construction practices, water resource management, and urban sustainability. The results offer insights into how small, resource-rich nations can manage environmental constraints to foster resilient and efficient urban systems. This research contributes to the broader discourse on sustainable coastal development in arid regions undergoing rapid urbanization.