Proven oil reserves in Qatar in excess of 25 billion barrels should enable the country to continue its output at current levels for 57 years. Its proven reserves of natural gas exceed 25 trillion cubic metres, more than 13 per cent of the world’s total and the third-largest in the world behind Russia and Iran.
This abundance of natural resources, coupled with a growing and diversifying economy, means enormous access to investment opportunities and incentives. The Qatari government has adopted a policy aimed at diversifying income resources, which is boosting the construction and infrastructure sectors in particular. Expansion in non-oil sectors is now key in Qatar, and the construction and real estate industries are benefiting from this strategy tremendously. The successful 2022 Fifa World Cup bid is likely to accelerate large-scale infrastructure projects such as Doha’s metro system and the Qatar-Bahrain causeway.
Qatar’s economic trajectory over the next decade will be profoundly influenced by investments and activities linked to hosting the World Cup, as well as other unprecedented infrastructure projects. Over the longer term, and well beyond 2022, Qatar hosting the World Cup will leave an indelible imprint on its economy and development. However, total investment spending tied to the event will make significant claims not only on public financial resources but also on Qatar’s scarce land, its environmental resources, its institutions and its people.
State spending
The Qatari government has reportedly allocated 40 per cent of its budget between now and 2016 to infrastructure development, including $15.5 billion (around Dh56.9 billion) to the setting up of a new international airport, $8 billion to building a deep water seaport, and $1 billion to developing a transport corridor in Doha. The government also plans to spend $20 billion on roads. According to a sector analysis report by Commercial Bank of Qatar, a further $48 billion will be spent on building air-conditioned football venues and $33 billion on developing Lusail City, the newest planned city in Qatar located in the northern part of the peninsula. The government has also allocated $50 billion to upgrade transport infrastructure, including the Doha Metro and new railway lines. Apart from that, tens of thousands of hotel rooms will be built in the country.
Driven by these infrastructure mega projects, Qatar’s non-hydrocarbon sector is slated to grow from 42 per cent to more than 50 per cent by 2015, according to a recent report published by Qatar National Bank (QNB Group). >
“The Qatar economy is booming and entering a new phase of growth predicated on diversifying from the traditional gas and oil sectors. Large investments in the construction, transport, real estate and petrochemical sectors will result in double-digit growth of the non-hydrocarbon sector over the next few years,” Joannes Mongardini, Head of Economics at QNB Group, says in the report.
However, a shortage of both technical staff and labour will continue to be one of the biggest challenges. This development will require people who have experience building efficient, cost-effective, high-tech systems in other countries, and Qatar has been struggling lately to attract enough skilled staff, despite offering above average remuneration.
Causes for concern
The construction sector is also likely to witness a shortage of raw materials between now and 2017, as this period is expected to be the peak for the sector. However, the government says it will ensure that such shortages do not lead to unexpected price rises. Both factors could lead to delays in project delivery. Therefore, the sector will have to bridge the gap during this time through mutual agreement with companies in Saudi Arabia and the UAE.
“Expected demand for concrete in Qatar alone is at least 100 million cubic metres in the next eight years,” said Khaled Awad, Chairman of Qatar-based construction consultancy Advanced Construction and Technology Services, in a statement issued during the Future Concrete 2013 conference in Doha last month.
“This is a very important indicator about the growth of large-scale construction projects in Qatar, which also represent a major challenge for industry players to comply with the required Qatari building standards and specifications,” he added.
After a slowdown in 2009 and 2010 in the wake of the global financial crisis, the construction sector in Qatar grew again from 2011 onwards by an average of 12.5 per cent a year. This rate of growth is expected to continue over the next decade, compared with forecast growth in European countries averaging just 1.7 per cent to 2020.
A lot of iconic projects are in full swing, topped by The Pearl – Qatar, a riviera-style man-made island developed in an exclusive environment in Doha. Currently one of the largest real estate developments in the GCC, it is also Qatar’s first international luxury residential development that offers international investors freehold ownership. The first investors took up residency in 2009, and the entire project, which is being built by United Development Company, is expected to be completed by 2015.
Another huge project is Msheireb in Downtown Doha, a project aimed at displaying innovative development and rediscovering local heritage and culture. The project is divided into six main character zones and will house 226 buildings to provide homes to 27,600 residents. It will include parks and green building technology, luxury hotels and a theatre.
Lusail City in the north-east of Doha will be developed over the next ten years. It will have residential and commercial areas, two marinas, schools, mosques, medical facilities, sports and entertainment venues, cultural facilities and shopping centres. The city will contain 25,000 residential units to accommodate approximately 200,000 residents.
Seef Lusail is a project connected to Lusail City under development by Seef Lusail Real Estate Development Company. Located at the Lusail waterfront, the 600,000-square-metre, multi-use development is designed by DP Architects, creators of iconic projects such as The Dubai Mall, The Address Dubai Marina, Doha Festival City, Dilmunia Health City in Bahrain and The Eighth Gate in Damascus.
Under construction
Nearly $60-billion worth of infrastructure projects are already under way. One key project is a $20-billion road improvement and expansion programme that will include the $687-million Lusail Expressway, Doha Expressway, Dukhan Freeway and the Doha Bay Crossing. Another $35-billion investment will cover the construction of a metropolitan railway in Doha, a high-speed rail link between New Doha International Airport and Doha City Centre and across the proposed Qatar-Bahrain causeway into Bahrain, in addition to a freight line that will link up with the wider GCC rail network. The $4-billion Qatar-Bahrain Causeway with its 45-kilometre-long fixed link between Qatar and Bahrain was seen as an important component of the World Cup bid in Fifa’s evaluation report, and will be given priority by the government. These projects are due to complete by 2030.
“Qatar is part of the GCC railway network. In phase one, we will build the link between Saudi Arabia and the New Port Project at Mesaieed, mainly for freight traffic. In future phases we shall then link Qatar with Bahrain and Saudi Arabia,” says Saad Ahmed Al Muhannadi, CEO of Qatar Railways Company.
“These lines will be suitable for high-speed trains allowing passengers to travel from Doha to the GCC,” he adds.
