While the IMF says that the economies of some of Qatar’s neighbours are likely to contract this year, dragged down by lower oil prices and falling demand in the property sector, the reverse is true for the gas-rich country. According to a report issued by the IMF in May, Qatar’s economy is expected to grow by almost 17% in 2009, nearly five times the predicted rate for the rest of the region.
It is no coincidence that the Qatari construction sector is expected to record a similar rate of growth, with the building industry being one of the main non-oil contributors to the country’s GDP, its share of the economy predicted to rise to 9.7% this year.
According to Muteab Al Saaq, the chairman of events firm Trance Continent, organiser of the recent 4th Qatar International Real Estate and Investment Exhibition in Doha, all indications are that Qatar’s construction sector will grow by 17.6% in 2009.
With the Qatari government continuing to invest in large-scale projects in order to position the country as an economic leader in the region, there will be significant investments spilling over to its real estate market, further sustaining the construction sector, Al Saaq told local media on May 21.
”This presents an opportunity for global investors and companies involved with construction, property and infrastructure development to assess the potential in investing within this highly stable economy,” he said.
Driven by solid demand, around 9000 new apartments are scheduled for completion by next year. A result of rising interest in Qatar as a tourism destination, some 80,000 hotel rooms will be added to the hospitality sector’s stocks over the next five years, and about $17bn will be poured into tourism infrastructure, according to figures released by the Qatar Tourism and Exhibitions Authority.
A recent study by market analyst Proleads Global put the value of major construction projects being carried out in Qatar as of the end of March at $82.5bn, with developments ranging across real estate, civil infrastructure, leisure and entertainment.
The pace of growth in the Qatari construction industry is unlikely to slow anytime soon, with the local economy having avoided the global downturn, said Ibrahim Jaidah, the managing director of Doha’s Arab Engineering Bureau.
“Whether it is government-owned or private sector, growth in Qatar is steady, healthy and mature,” Jaidah was quoted as saying by industry online publication Construction Week in early May. “Whether it’s hotels or high-rises, in Qatar more and more projects are happening, and there are quite a few currently on the design table.”
In fact, there are so many construction projects under way in Qatar that the growth could be building difficulties for itself. The Proleads report said that some 80% of projects are behind schedule, though none have budgetary difficulties. In some cases it could be the sheer number of developments that are creating shortages or a lack of skilled labour and materials in a highly active market.
However, both these potential difficulties have solutions at hand. Falling material costs, especially for steel and cement, have allowed some developers to renegotiate the budgets for major projects, and thanks to other Gulf states scaling back some of their construction programmes, the pool of experienced workers has suddenly become larger.
Shahzad Nasim, the managing director of infrastructure construction firm Meinhardt International, said that Qatar is drawing increasing numbers of industry professionals, along with overseas developers, due to its continued building expansion.
“With its massive investments in infrastructure development and continued focus on building activity, Qatar has attracted a lot of global attention in the past few years and many world leaders have evinced interest in starting operations,” Nasim said in an interview with The Gulf Times on May 26.
With its gas revenue locked in through long-term agreements with customers and estimates that its reserves will be able to meet current production levels for up to 200 years, Qatar is not going to have trouble funding the future expansion of its economy. With the construction sector both providing one of the pillars of the economy and the foundation stone on which the other sectors are built, the future of the industry itself looks rock solid.
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