Qatar's construction market slows down in 2011

06 September 2011

Qatar government remains dominant construction client

The award of a $434m contract to South Korea’s Hyundai Engineering & Construction to build the new Qatar National Museum is the latest of $5.1bn-worth of construction and infrastructure deals to have been awarded in Qatar in 2011.

Surprisingly, as Qatar prepares to tender more than $60bn worth of construction work as part of its impending World Cup 2022 infrastructure programme, its construction market has witnessed a marked drop in activity this year from 2010.

Total value of construction and infrastructure awards Qatar
Source: MEED projects

For the first six months of the year, $4bn-worth of construction and infrastructure contracts were awarded. This is almost 30 per cent lower than the $5.7bn-worth of construction and infrastructure deals awarded for the same period in 2010.

For the first three quarters of 2010, there was $7bn-worth of construction and infrastructure contracts awarded in Qatar. The award of a further $2bn-worth of new projects is required by the end of September, if the country’s construction sector is to match its performance last year. The $5.1bn-worth of construction projects awarded so far for 2011 is higher than the cost of projects – $3.7bn – awarded for the first three quarters in 2009. However, it is less than half of the $10.7bn-worth of projects awarded for the same period in 2008.

The government continues to be the dominant client in Qatar’s construction sector. Less than 17 per cent of the construction contracts awarded in 2011 have been in the private sector. As the world’s largest liquefied natural gas (LNG) exporter, the government will continue to invest heavily in the country’s construction development over the next decade.

Big deals have accounted for the majority of the construction work awarded in Qatar this year. Eight of the 23 construction contracts awarded have totalled $3.8bn, 75 per cent of the total projects awarded.

Transport projects have accounted for the biggest proportion of contract awards so far in 2011. The government has awarded $3.1bn-worth of transport projects to date, 60 per cent of the total construction and infrastructure awards.

The largest contract award of the year was the $1bn package awarded to the joint venture of Saudi Arabia’s Saudi Binladin Group and the local Qatari Diar for work on the Dukhan Highway. The project is part of Doha’s plans to spend $20bn over the next five years upgrading its road infrastructure.

In addition to its road programme, Doha is planning to spend $35bn on building integrated rail and metro networks over the next 10 years. In August, QDVC, a joint venture of Qatari Diar and France’s Vinci Construction, was awarded a $535m contract to carry out civil engineering works for the Lusail light-rail (LRT) project.

Education and cultural projects continue to play a large role in Qatar’s infrastructure development, as the government works towards its goal of creating a knowledge-based economy by 2030.

In addition to the national museum project, Qatar has already awarded a $212m contract to build the Faculty of Islamic Studies this year, and is expected to make a contract award on the estimated QR1bn ($274m) Qatar Central Library by the end of the year.

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