‘Public spend drive to lead Qatar construction boom’

Despite concerns about long lead-times for many of the planned projects across the country and the potential for rising construction costs, Business Monitor International (BMI) has maintained an “overall bullish” outlook for Qatar’s construction sector.
“A strong commitment to public spending coupled with the most attractive and stable business environment in the region will help Qatar in achieving its ambitious infrastructure development targets to facilitate the 2022 FIFA World Cup and its own 2030 Vision,” BMI said in a recent report.
BMI’s country risk team believes that “Qatar’s economic growth will remain underpinned by the non-hydrocarbons sector over the coming quarters, with robust household consumption and construction activity making up for an ongoing stabilisation in hydrocarbons production.”
The country’s fiscal policy is set to remain strongly supportive of the economy: the government has signalled its intention to ratchet up both current spending and investment expenditure over 2013-14 fiscal.
BMI expects Qatar’s overall real GDP to grow by 5% in 2013 and 4.8% in 2014. In light of this outlook and as progress on many of the major projects is finally being made, it has revised upwards its forecast for the years leading up to the 2022 World Cup.
Average real growth for Qatar over BMI’s 2013-22 forecast period now stands at 8% a year.
Ahead of the 2022 World Cup, and in line with the country’s 2030 development plan, Qatar’s spending on infrastructure is expected to reach around $150bn over the next decade, the report said.
A series of infrastructure projects are in the pipeline, including a $1bn transport corridor project in Doha; a $20bn investment in roads; $40bn plan for railways; $15.5bn new airport project; $4bn for stadiums; $8bn to be spent on a deep-water seaport; tens of thousands of hotel rooms to be built; and even a new city.
For 2013, the Qatari government has initiated a major infrastructure upgrade of the road network in the country, which as BMI said, has begun to result in a sharp increase in contracts being awarded.
For example, it said construction supervision contracts for the $4.1bn Doha Expressway were awarded in April and for the $5bn Doha Bay Crossing in May. The country is believed to have one of the busiest road markets in GCC to date, with contacts awarded so far being valued in excess of $1.8bn.
This year, the government will be inviting bids from firms for the construction of a solar power plant in the country. The plant whose construction may commence in 2014, may cost $10bn-$20bn, and will have a generation capacity of 1,800 MW. It is likely to be completed by 2018. Meanwhile, plans are also underway for the launch of a tender for a 220 MW solar energy project this year.
Supporting BMI’s long-held view about increase in tourism-related investment, the Qatar Tourism Authority, in March 2013 indicated plans to invest $20bn on the country’s tourism infrastructure. Qatar is looking to build as many as 22 new hotels (before 2017), with a total capacity of 45,000 rooms. It is expected that as many as 60,000 rooms will be required during the world cup.