Construction industry in Qatar

The state of Qatar enjoys a vivid construction and real estate sector that caters to the enormous infrastructure and urban planning projects in the country. This intends to reflect a high profile image of Qatar architecture and a high quality infrastructure network that supports the robust growth of Qatar. [1]

Overview and growth of the industry

Figures from Qatar’s Statistics Authority (QSA) have revealed that Qatar’s construction market has made steady growth quarter-on-quarter in the first half, rising from 5.3 billion Qatari riyals (QR) in the third quarter of 2010 to QR 6.1 billion in the first quarter of 2011. New figures show that during the year 2011 it remained in steady line about QR 6 billion. The report reveals the construction industry, which slowed across the Middle East in 2008, is now playing a significant role in Qatar’s economic growth, expanding by 28 per cent in the first quarter of 2011 alone.[2]

Qatar’s construction industry has driven in more than USD 22 billion in new contract awards by 2012 and showing an increase from the USD 20.21 billion worth of contracts awarded in 2010, according to Research and Markets, the leading source for international market research and market data. The predicted surge in new construction project contracts reflect Qatar’s emergence as a premier business and investment destination for the Middle East region.[3]

IQPC Divisional Director Chris Corander said: “It is an exciting time in Qatar at the moment, with many developers, consultants and architects preparing themselves for the tendering of mega projects that will help Qatar to deliver its national strategy. Excellent project management skills and a clear vision will help Qatar realize its World Cup dream in time for 2022. The influx of construction companies and the pick-up of infrastructure projects in the region are in-line with QSA’s figures, and as the 2022 World Cup moves closer, Qatar’s commitment to delivering a successful project will intensify -- sparking further growth in the sector,” he said.[4]

Future spending

In a recent speech His Excellency Yousuf Hussein Kamal, the Minister of Finance and Economy, announced that for the 2011 to 2012 budget, 40 per cent of spending will be allocated to infrastructure projects, an even higher amount than in the previous year. The minister said that Qatar plans to invest between US$160 billion and $170 billion on infrastructure and oil and gas projects in the next 10 years. In January 2011 projects worth US$85 billion were under development in Qatar with other projects worth US$130 billion planned for the next three years.[5]

Main specific projects

- a new national railway system, including a Doha metro, light rail, freight and high speed lines (US$25 billion) slated for completion in 2025

- the completion of New Doha International Airport (US$10 billion), now nearing completion

- an entire new port (US$7 billion) being constructed on a “green field” site

- construction of the Qatar - Bahrain Causeway (US$4 billion)

- the huge Dohaland – Musheireb urban redevelopment (US$5.5 billion) in the heart of Doha

- and a planned Doha Bay Crossing (US$1 billion) linking the new airport with projects in the northern part of Doha.

In addition,  there is a major program for building and expanding roads (US$20 billion), water and wastewater facilities. For the FIFA World Cup, nine new stadiums are building with capacities of at least 43,000 each and three existing stadiums are being refurbished (US$5 billion). An additional 90,000 hotel rooms are planned.[6]

Main players

Unsurprisingly, such a huge development program has, and continues to attract new entrants to the construction market, and indeed many other areas of business.

Local construction companies:[7]

- Ashaghal (Public Works Authority) – oversee all infrastructure related projects and public amenities of the State (established on the basis of the Emir)

- Qatari Diar – under ownership of Ashaghal

- UDC (United Development Company)

- QDC (Qatar Dredging Company)

International construction companies (according to huge amount we chose just a few listed here):[8]

- Acc - Arabian Construction Co.Sal (Lebanon)

- Arab Contractors (O.A.O.) (Egypt)

- Bauer Ag (Germany)

- Bouygues (France)

- Cb&I (Usa)

- Cccc (China Communication Construction Co. Ltd.)

- Chiyoda Corporation (Japan) Middle East Hq

- Ctci Group (Taiwan)

- Daewoo Engineering & Construction (S.Korea)

- Gs Engineering & Construction (S.Korea)

- Halliburton Worldwide Ltd. & Kbr (Usa)

- Hyundai Engineering & Construction (S.Korea)

- Kbr (Usa)

- Larsen & Toubro Ltd (India)

- Leighton (Australia)

- Maire Tecnimont (Italy)

- Mc Connell Dowell (Australia)

- Mc Dermott (Usa)

- Mushrif Trading & Contracting (Kuwait)

- Nurol Cons- truction & Trading (Turkey)

- Stfa Construction Inc. (Turkey)

- Technip (France)

- Tekfen Construction (Turkey) 

- Vinci (France)

      

      There also exists Qatari Businessmen Association and we would be interested in membership to access the valuable contacts, communication channels, business consultancy and different activities as seminars, conferences or create business alliances etc.

      In addition, the procurement approach for infrastructure projects and private sector building remains traditional. Contracts tend to be lump sum.

     

      Financing

      While the oil and gas sector and IWPP sector have seen some very large project financings in recent years, infrastructure procurement continues to be publicly financed. Both the new airport and the port are being financed by the government. PPP has not arrived. But we can say that this is no bad thing, given the typically lengthy and complex procurement processes and greater inflexibility in the operational phase.

      Contract documentation

      Considering the size and complexity of the major projects under way in Qatar, the quality of contract documentation is often poor. Recently two new Qatari project management organizations have been established and hopefully good quality documentation will become more the norm.

      Our strategy to reach this target customer

      Our goal is exactly to contact, cooperate and develop as many relationships and partnerships with local construction companies mentioned above, as we can.

      It has to be said, that development in Qatar is also attributed to the country’s massive oil and gas reserves, which has acted as a catalyst in attracting key opportunities among its most important industries. Hosting the FIFA World Cup 2022 will allow Qatar to develop partnerships and opportunities with global investors and companies involved with construction, property and infrastructure development. Preparations for the highly anticipated international sporting event will cover all sectors of the country’s economy and is expected to involve around USD100 billion worth of projects over the next four years. [9]

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[1]Public Works Authority, Ashaghal: http://www.ashghal.gov.qa

[2]The Hindu, August 8, 2011: http://www.thehindu.com/business/Industry/article2335441.ece

[3] SME Advisor Middle East, April 28, 2011: http://www.smeadvisor.com/2011/04/qatar%E2%80%99s-construction-industry-to-see-influx/

[4] The Hindu, August 8, 2011: http://www.thehindu.com/business/Industry/article2335441.ece

[5] Who’s who legal, June 2011, http://www.whoswholegal.com/news/features/article/29005/qatars-construction-sector

[6] Who’s who legal, June 2011, http://www.whoswholegal.com/news/features/article/29005/qatars-construction-sector

[7] Qatar Construction: http://www.qatarconstruction.com/Contractors.htm

[8] Qatar Construction: http://www.qatarconstruction.com/Contractors.htm

[9] SME Advisor Middle East, April 28, 2011: http://www.smeadvisor.com/2011/04/qatar%E2%80%99s-construction-industry-to-see-influx/