Qatar Construction Industry 2017 Written by Ventures Onsite for Project Qatar
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The Qatar Economy, 2016-2018 Qatar’s economy is considered to be highly reliable for foreign investments and businesses due to its abundance in terms of natural wealth, and its clear openness for attracting foreign investment. Foreign investment has played a key role in the construction boom. The country also has comprehensive and ambitious economic development and infrastructure programmes. Qatar is forecast to reach an annual growth rate of 3.4% in 2017, which is the highest forecast growth in the GCC, according to the IMF. Several measures such as efficiency enhancement in public spending, the financial sector growth and higher contribution of the private sector would help stimulate high growth. Inflation is kept under control through constant co-ordination between the financial and monetary policies to provide more support for the business environment and investments in the country. Significant recent regulatory reforms, such as the enhancements made to the sovereign tender and procurement process to improve transparency and encourage small business participation are likely to enhance economic diversification. Qatar’s ambitious project pipeline and key events, led by the FIFA 2022 World Cup, will aid in diversification away from its reliance on oil and gas. According to the Ministry of Development Planning and Statistics, despite lower oil prices, real economic growth in 2017 is expected to be 3.8%. In 2017 and 2018, hydrocarbon production is expected to again plateau, but solid expansion in non-hydrocarbon activities will sustain overall economic momentum. The following table provides the summary of the latest forecasts on the key macroeconomic indicators for the Qatar economy from 2016 to 2018. Table 1: Qatar: Key Macroeconomic Indicators, 2016 - 2018 Qatar—Macroeconomic indicators Real GDP growth (%) Nominal GDP growth (%) Consumer price inflation (%) Fiscal surplus (% of nominal GDP) Current account surplus (% of nominal GDP)
2016
2017
2018
3.9 -2.9 3.4 -7.8 -0.4
3.8 9.0 3.6 -7.9 0.9
3.2 9.1 3.8 -4.2 2.8
Source: Qatar Economic Outlook 2016-2018, June 2016, Estimates from Ministry of Development Planning and Statistics.
A value-added tax (VAT) of 5% is expected to take effect in Qatar from 2018, which comes as part of a GCC-wide agreement to offset budget deficits in the region. The decision to implement VAT comes as the government expects budget deficits for the next few years due to falling oil prices.
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Qatar Budget 2017 On December 15th, 2016, Qatar’s Ministry of Finance (MoF) released its budget for 2017 wherein it outlined its fiscal outlook for the coming year. The 2017 budget is based on an oil price assumption of US$ 45 per barrel and efforts to boost non-oil revenues. Capital spending is expected to increase in 2017 to support Qatar's preparation for the FIFA World Cup 2022 and economic diversification objectives. The government has also outlined in the budget its intent to further accelerate investment and infrastructure spending in the coming years. The main objective of the 2017 budget is to ensure that major projects in the key sectors are implemented and completed in addition to projects related to the 2022 World Cup and in line with the approved schedule. The highlights of the budget are as follows:
Revenues estimated at US$ 47 billion (QR 170.1 billion)
Expenditure estimated at US$ 54 billion (QR 198.4 billion)
Projected revenue 9% more than 2016 revenue
Budget deficit down 39.1% from US$ 13 billion (QR 46.5 billion) in 2016 to US$ 8 billion (QR 28.3 billion) in 2017. The deficit is expected to be taken care of by the issuance of debt instruments in the local and international financial markets.
Fund allocated to complete Labourers’ Hospital in the Industrial Area
US$ 26 billion (QR 93.2 billion) allocated for major projects
Major projects account for 47% of total expenditure
US$ 24 billion (QR 87.1 billion) allocated for health, education and infra projects
Total cost of committed projects stands at US$ 103 billion (QR 374 billion)
New projects worth US$ 13 billion (QR 46.1 billion) to be signed
Funds allocated for construction of 17 new schools and completion of another 28 schools
Projected inflation remains at acceptable levels
The 2017 budget, which complies with the provisions of Law No. 2 of 2015 on the state financial system, is in line with directives of HH the Emir Sheikh Tamim bin Hamad Al-Thani to achieve efficiency in current expenditure while maintaining allocations to implement approved major projects, which will contribute to Qatar's development. The budget is aligned with Qatar National Vision 2030, which focuses on the four main pillars of economic, social, human and environmental development. Also, the budget is focused on maximising efficiency in current expenditure.
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Allocations for major projects represent 47% of the total expenditure in 2017. This demonstrates. The government is also expected to sign contracts for new projects, which will include infrastructure and transportation projects worth US$ 7 billion (QR 25 billion), projects related to World Cup 2022 facilities amounting to US$ 2.3 billion (QR 8.5 billion), health and education projects worth US$ 2 billion (QR 5.8 billion), and projects in other sectors of a total value of US$ 2 billion (QR 6.8 billion). The implementation of major development projects would have a positive impact on economic growth as the International Monetary Fund is expecting Qatar to achieve an overall GDP growth rate of 3.4% in 2017, the highest in the GCC region. Also, the implementation of projects will help sustain development in non-oil sectors, which achieved a strong growth rate of 5.8% during the H1 2016. Allocations for the key sectors of health, education and infrastructure projects amount to US$ 24 billion (QR 87.1 billion), representing 43.9% of the total expenditure in the 2017 budget, reflecting the government's continued commitment to delivering high quality social services. Transportation and infrastructure projects, which represent a main pillar of sustainable development, have been allocated US$ 12 billion (QR42 billion), representing 21.2% of the total budgeted expenditure. As for total expenditure allocated to key sectors in the budget, health and education were allocated 22.7% while other sectors were allocated 56.1%. Qatar would continue to finance the deficit through issuing debt instruments in the local and international financial markets, while maintaining its reserves and investments. The government would also continue efforts to control inflation at acceptable levels through coordinated fiscal and monetary policies through cooperation between the Ministry of Finance and Qatar Central Bank, provided the projected inflation remain at acceptable levels.
Qatar Development Strategy 2017-2022 In October 2016, HE Prime Minister and Minister of Interior Sheikh Abdullah bin Nasser bin Khalifa Al-Thani held a ministerial meeting on a draft national development strategy (NDS) (2017 - 2022). During the meeting, HE Prime Minister and Minister of Interior Sheikh Abdullah bin Nasser bin Khalifa Al-Thani stressed on the need for ensuring coherence and compatibility between the proposed programs and projects in the second NDS (2017 - 2022) on the one hand, and the general plans for government projects during the upcoming period on the other hand, pointing to the need for focusing all efforts to support sustainability projects and realise the Qatar National Vision (QNV) 2030. The first NDS set out parameters for a fiscal reform programme that is now being implemented by the Ministry of Finance. As part of this wider reform effort, it will be vital for the next NDS to
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identify the aggregate resource envelope within which national development efforts will have to proceed to 2022, and the strategic considerations that ought to influence the allocation of those resources. Qatar is all set to formulate the next NDS (2017-22), which not only aims at creating conducive conditions for more private sector participation but also better manage financial resources and plan state spending within stringent budgetary constraints due to low oil prices. With oil prices now at lower levels, greater attention will be given to better management of financial resources and state expenditures. Private sector participation will also receive renewed attention in the second NDS. As part of its efforts to better assist investors and enhance foreign direct investment, the economic statistics department in the ministry has been continuously engaged in strengthening the process of data collection, compilation, analysis and dissemination.
Qatar National Vision (QNV) 2030 The Qatar National Vision 2030 (QNV2030) is a master vision and roadmap towards Qatar becoming an advanced society capable of sustainable development with the goal of providing a high standard of living for all citizens by 2030. Through defining long-term outcomes for the country, it provides a framework within which national strategies and implementation plans can be developed. It assists government-led strategies, policy, planning, and allocation of funds and resources towards a unified goal. Many companies and businesses make reference to QNV 2030 within their mission statements. QNV 2030 also sets out objectives in diversification towards growth in non-energy sectors. Qatar’s transformation into a knowledge-based economy is well underway and will continue to gather pace. .The National Vision addresses five major challenges facing Qatar:
Balancing modernisation and preserving traditions
Meeting the needs of today without compromising future needs
Managing growth
Maintaining equilibrium between Qataris and expatriates
Engaging in good environmental stewardship
The budget is aligned with QNV 2030, which focuses on the four main pillars namely: economic, social, human and environmental development.
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Human development – the development and promotion of education among all to create a sustainable and prosperous society.
Social development – the development of a just and caring society, capable of playing a key role in establishing global partnerships.
Economic development – the development of a diversified economic base to secure and maintain a high standard of living in the future.
Environmental development – to maintain a balance between economic and social development and ways of protecting the environment.
Qatar Construction Industry Overview Qatar is the fastest growing construction market in the Gulf region. The country’s 2017 budget has been received favourably by construction companies and experts alike and hence the construction sector is estimated to peak in H1 2017. According to experts, since Q4 2016, as the private sector became more confident in investing in healthcare and education, the construction sector had begun to gain momentum. Despite the economic crisis, the budget for infrastructure and construction received another increase to make sure that the projects can be completed in time. Qatar will invest up to US$ 13 billion in major infrastructure projects next year despite a slump in revenues resulting from low energy prices. Increasing the investment in mega projects reiterates Qatar’s commitment to achieving its goals. Spending will be up to US$ 13 billion on new projects in 2017. The country had already spent almost US$ 98 billion on large-scale projects. Most of the investment in the next few years will be in construction and transport as the country gears up to host the FIFA World Cup 2022. Construction would account for 45% of investment between 2015 and 2018, and transport almost 30%. A new set of construction codes will be released in Qatar by 2018. The total construction industry contractor awards in Qatar are expected to increase from US$ 18,909 million in 2016 to US$ 26,622 million in 2017 (refer Figure 1). As of 10th January 2017, the building construction sector registered the highest project value of 49% followed by the infrastructure construction sector (33%) and energy construction sector (18%) (refer Figure 2).
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Figure 1: Qatar: Construction Contractor Awards From 2016 To 2017 In US$ Million
Source: Ventures Onsite Projects Database: www.venturesonsite.com
Figure 2: Qatar: Total Construction Project Value as of 10th January 2017 In Percentage (%)
Source: Ventures Onsite Projects Database: www.venturesonsite.com
Growth Drivers QNV 2030 and FIFA World Cup 2022 are likely to be the key growth drivers for the construction industry in Qatar in the coming years. Qatar looks to become a developed nation by diversifying its economy achieving sustainable development and providing a high standard of living for its population through its Vision 2030. A number of infrastructure projects are expected to be
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undertaken by the government in preparation for the FIFA World Cup 2022 event, thus providing the necessary stimulus to the growth of the construction industry. The event was the major reason for Qatar not suffering a severe slowdown as some of its GCC neighbours in the wake of low oil prices.
Classification of the sectors The construction industry for this report is classified under building, infrastructure and energy construction sectors, which is further classified as follows:
Building construction includes, residential, commercial, mixed use, airports, sports facilities, hotels and recreational facilities , healthcare, education facilities and industrial projects
Infrastructure construction includes roads, bridges, railways, ports, sewerage
Energy construction includes power and water, and oil and gas
wastewater and
Overview of Outlook for the Qatar Building Construction Projects The building construction contractor awards are estimated to increase from US$ 12,073 million in 2016 to US$ 16,993 million in 2017. Qatar has set an ambitious target to develop the highest number of green or carbon-neutral buildings across the Middle East and North Africa (MENA) region by 2030. The move comes in line with the country’s strategic plan to reduce its carbon footprint and achieving sustainable development. According to latest Council on Tall Buildings and Urban Habitat's review, Qatar has completed four 200-metre-plus buildings in 2016. Qatar is set to witness an increase in the construction of new malls, hotels and mixed used developments including Lusail Smart City over the next few years. Residential According to the Ministry of Development Planning and Statistics, in the building permits issued during December 2016, according to their geographical distribution, Rayyan municipality (including Sheehaniya) comes at the top of the municipalities where the number of building permits issued were 198 permits, i.e. 35% of the total issued permits while Doha municipality came in second place with 133 permits, i.e. 23%, followed by municipality of Al Wakrah with 88 permits (15%), municipality of Al Da'ayen with 63 permits, i.e.11%. The rest of the municipalities were as follows : Umm Slal 59 permits (10%), Al Khor 24 permits (4%), and finally Al Shamal 9 permits (2%). In terms of type of permits issued, data indicates that the new building permits (residential and non-residential) constitutes 62% (356 permits) of the total building permits issued
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during the month of December 2016, while the percentage of additions permits constituted 35% (200 permits), and finally fencing permits with 3% (18 permits). By analysing new residential buildings permits data, the villas’ permits top the list, accounting for 51% (163 permits) of all new residential buildings permits, followed by dwellings of housing loans by 37% (118 permits) and apartments buildings by 9% (29 permits). On the other hand, commercial buildings were found to be in the forefront of non-residential buildings permits with 50% (19 permits), followed by industrial buildings e.g. workshops and factories with 21% (8 permits), followed by mosques with 13% (5 permits), then governmental buildings with 11% (4 permits). Comparing number of permits issued in December 2016 with those issued in the previous month, there was a general decrease of 6%. This decrease was noted in the municipalities of Al Khor (33%), Al Shamal (25%), Al Daayen (24%), Wakrah (13%), Rayyan (3%). On the other hand there was an increase in the municipalities of Umm Slal (31%), and Doha (2%). Doha is likely to continue to experience strong residential demand for mid-income housing as population growth continues. In November 2016, Qatar government had announced plans to offer quality housing for 32,000 workers through development of fully-integrated, full service, and wellthought-out communities across the country. To be developed with local partners in three phases, these are not labour camps or typical housing blocks or barracks, but a government-sponsored workers community project that features sustainable design and operations. The first phase features a 4,000-bed single residential facility (SRF) at Umm Salal Mohamed, while the second phase will provide a 28,000-bed integrated worker accommodation community (IWAC) facility at Al Khor area. As many as 32,000 expatriate workers will be provided with better accommodation and living conditions with the implementation of the first two phases, stated the report, citing a senior official of Qatar-based Daruna Development. Phase One will feature a city centre with retail, consular and health services, municipal utilities, plus sustainable technologies, and an expansion capability of 10,000 to 12,000 beds. Phase One and Two of the project represent 30% of the current government allocated permanent worker accommodation projects in Qatar. At almost US$ 45 billion (QAR164 billion), the project which is driven by the Lusail Real Estate Development Company is aimed to eventually accommodate approximately 450,000 people in 19 districts, containing waterfront villas, townhouses, residential skyscrapers, and 22 hotels. The completion date is set in late 2019, but the development is estimated to be fully operational by 2020. The project’s futuristic smart city approach will fit in with the country’s 2030 sustainability vision. Moreover, it is also of importance due to the fact that the final 2022 FIFA World Cup match will take place in the new city’s iconic stadium.
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Sports Facilities Qatar is gearing up to host the FIFA World Cup 2022 event and the various the venues, in a variety of shape and sizes, will each reflect a different aspect of Qatari culture. The Supreme Committee for Delivery & Legacy (SC) said construction on the Khalifa International Stadium is moving ahead at a rapid pace with the external cladding and LED screens rising around the exterior of the venue. This stadium is the due to be the first completed and will host matches through to the quarter-finals. The Qatar Foundation Stadium is the proposed venue for fixtures up to the quarter-final stage and is scheduled for completion by the end of 2019. The Lusail Stadium will see both the opening and final matches and the 80,000-seater stadium, placed within Lusail City is expected to be completed 2020-end. Currently seeing early works the 40,000-seat Ras Abu Aboud Stadium will bring the design for legacy concept to reality as one of the first sports venues ever designed at the outset to transform into a successful and dynamic mixed-use urban neighbourhood after the tournament is over. The decision as to whether Qatar will continue with the eight stadiums it has already planned for the 2022 World Cup or add one more will be made by the middle of 2017. Successful delivery of FIFA stadiums would additionally mean the country’s strengthened position for future bids. Hotels and Theme Parks The hotels and hospitality sector is one of the most promising for Qatar’s future as the tourism industry gathers momentum in the lead up to the Qatar 2022 World Cup. Qatar aims to be a onestop destination for all kinds of travel, including tourism, business trips, cultural events, conferences, education and sporting events. Through the Qatar National Tourism Sector Strategy 2030, Qatar has adopted a comprehensive approach to addressing sustainability in all aspects of the tourism industry, with a special focus on creating a sustainable hospitality sector in the country. Qatar's tourism industry is building momentum as it enters the second half of the decade, with an ambitious target of four million visitors by 2020, supported by US$ 40-45 billion worth of sector investment under the country's National Tourism Sector Strategy 2030 plan. The hotel sector supply pipeline until 2017 could include over 9,600 new hotel keys and 3,400 new hotel apartments. Doha has 41 hotel projects comprising a total of 11,722 rooms in its hotel construction pipeline, according to TopHotelProjects. Doha's busiest year for hotel openings is forecast to be 2017 with 14 new properties entering the market, including Pullman Doha West Bay (468 rooms), JW Marriott West Bay (297 rooms), Hilton Garden Inn Doha Al Sadd (225 rooms), and Millennium Plaza Doha (232 rooms). Qatar will play a pivotal role in the global billion dollar theme park and amusement industry. Highly innovative and creative theme park concepts in Qatar will be one of the key
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factors that will attract and drive millions of tourists and local residents to these entertainment destinations. Qatar is well prepared to be crowned as a fun destination in the MENA region with commercial establishments and state-of-the-art infrastructure. The country has metamorphosed itself into a global hub for tourism over the years, with visitors not only from the MENA region but worldwide. The Aqua Park is likely undergo expansion plans to be completed by 2019. Retail Qatar’s economic diversification strategy continues to create foreign investment opportunities across its burgeoning retail market, despite the sustained low oil prices. Qatar is expected to continue its aggressive retail expansion in the coming years as the supply of retail space is expected to nearly double in 2017. According to Alpen Capital, the Qatari retail market is expected to grow at a compound annual growth rate (CAGR) of 9.8% reaching US$ 284.5 billion in 2018, the fastest in the GCC region. The government has ambitious plans to develop its retail landscape to meet the rising demand of the growing population’s high level of personal consumption. Tourists are attracted to the country's retail sector in Qatar. The country has the potential to become a leading retail destination in the region based on the amount of space that will be available in the market. According to DTZ, over 1.3 million sqm of retail space is currently in various stages of construction and is scheduled to open by 2019. Qatar is expected to continue its aggressive expansion in the coming years as the supply of retail space is expected to more double to reach 1.9 million sqm of GLA by end of 2018, in light of the FIFA World Cup 2022, according to industry experts. Qatar’s rapidly growing population, coupled with its strong purchasing power per capita are strong fundamentals driving the growth of the retail sector. Qatar's Quality Group International and Global Real Estate Company, owned by Sheikh Ahmed bin Mohammed bin Saud Al Abdurrahman Al Thani, have recently signed a deal to launch a new 14,864 square metres shopping centre in Wakrah City. Work on the mall project is expected to be completed by mid-2017. The mall will have a full-fledged supermarket and department store spread on two floors, with ample and convenient parking facility in the basement and on the ground floor. 2017 will see the opening of two new modern, spacious and one-of-a-kind malls in Qatar: Doha Festival City Mall and Tawar Mall.
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Education Funds to the education sector remain at US$ 6 billion (QR 20.6 billion), representing 10.4% of the expenditure. They are allotted to complete 28 schools and nurseries and construct 17 new schools and nurseries. Funds are also allocated for new projects in Qatar University, including laboratories for the Faculty of Sciences and the Faculties of Education, Pharmacology, and Law. The money is also kept aside to complete the projects in the Qatar Foundation for Education, Science and Community Development, including infrastructure and transportation, and research facilities in Education City. Healthcare In 2017, planned spending to the healthcare sector stands at US$ 7 billion (QR 24.5 billion), which represents 12.3% of the expenditure. Projects in the healthcare sector include the expansion of Hamad General Hospital, Hamad Medical Corporation as well as pledged health centres that are expected to complete in Al Karaana, Al Ghuwariyah, Al Rawda, Al Muntazah, Al Naeem and Umm Salal, in addition to health centres under construction in Qatar University, Al Wajba, Al Waab, Muaither, and other health centres in Al Khor, Al Sadd, Al Shamal, Al Mashaf, Al Wakra, Ain Khalid, and the final construction phases at Sidra Medical and Research Centre. By the end of December 2017, there will be more than 1,100 newly-built hospital beds for residents in the new facilities across Qatar, according to Hamad Medical Corp. The projects include a women’s wellness center, a communicable diseases facility and three hospitals for workers. The expansion is part of a wider plan to boost state healthcare services, which have increasingly come under strain as the population rises. The launch of the new workers’ hospitals should help to ease the strain felt particularly by Hamad General Hospital’s emergency department, which is where many blue-collar expats seek treatment. In addition to building and expanding new facilities in central Doha, the plan also includes increasing the capacity of Al Khor and Al Wakrah hospitals to 500 beds each by 2030. The state-owned Private Engineering Office (PEO), which overseas high-profile developments in Qatar will deliver three new hospitals by early 2017. The hospitals, located in the Industrial Area, Mesaieed Industrial City and Ras Laffan in Qatar, will be handed over to the Ministry of Public Health by early 2017. Each new hospital will have a capacity of 120 new beds, outpatient clinics, ambulance services, operation theatres, a radiology department and laboratories. In addition, each of them will also contain an independent health center, green spaces and parking facilities.
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Airports Qatar has recently approved plans for the expansion of the new Hamad International Airport (HIA) in Doha that will help boost its ultimate capacity to more than 65 million passengers. The tendering process for the HIA project, which is the third phase of its development, will start in 2017. Industrial The Qatar government has announced plans to build a massive 6.3 square kilometer logistics and industrial park in southern Qatar. The project is aimed at making the country a regional hub for investment and logistics, reducing reliance on hydrocarbon income, and encouraging private sector commercial involvement. The development will provide over 1,500 plots of land in South Wakra, Birkat Al Awamer and Aba Saleel - areas close to Hamad Port, the Mesaieed Industrial City and the country's Orbital Highway. The logistics park will include refrigerated facilities for frozen and dry stores; showrooms, shops, commercial offices and labor camps; workshops for the maintenance and storage of cars; assembly and processing workshops for light industry; service centers and warehousing. The government has not announced a completion date for the project. Awarded in 2014, with news of possible operation of some parts in early 2017, Qatar Economic Zones (QEZ) is a 27-square kilometre three-part megaproject with a strategic focus on industrialgrade manufacturing, aviation and marine logistics as well as warehousing. The US$ 3.2 billion (QAR 11.6 billion) project is currently driven and managed by Manateq. Major Building Construction Projects in Qatar The table below lists the major building construction projects in Qatar. Table 2: Major Building Construction Projects in Qatar Project Name
Client
HIA - Airport City Project
NDIA Steering Committee
10,000
Msheireb Downtown Doha
Msheireb Properties
5,500
Lusail Golf Residential Development
Barwa Real Estate Company
4,940
Energy City Project - Phase 1
Energy City / Various Investors
3,000
Dara - Fox Hills
Barwa Real Estate Company
2,000
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Est. Value (US$ Million)
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Lusail Towers - Lusail Plaza
Qatari Diar Real Estate Investment Company (QDREIC)
1,900
Doha Festival City
Bawabat Al-Shamal
1,650
Seef Lusail Waterfront BP-25
Seef Lusail Real Estate Development Company
1,500
Mixed Use Development (Vendome Mall) at Lusail Entertainment City
Regency Group/United Developers
1,370
Doha Oasis Mixed Use Development
Halul Real Estate Investment Company
1,050
Source: Ventures Onsite Projects Database: www.venturesonsite.com
Overview of Outlook for the Qatar Infrastructure Construction Projects Qatar has remained one of the most attractive markets for infrastructure investors across the world. The country is set to pump in about US$ 13 billion on mega infrastructure projects in 2017 with a major focus on projects related to the FIFA World Cup 2022. The move comes as part of its strategy to achieve sustainable development and economic diversification. In 2016, the government accomplished many projects, including roads and sewage systems and pointed out that there were additional works to be undertaken in 2017 on the national infrastructure improvement for expressways, roads and intersections reconfiguration, as well as a sewagedrainage network update. Qatar’s Public Works Authority (Ashghal) is working on projects worth US$ 200 billion as the country races to boost its infrastructure ahead of the 2022 FIFA World Cup. These projects represented important opportunities that will encourage foreign investment and enhance partnerships. Most companies are upbeat about the ongoing works at the new Hamad Port and the Doha Metro project. The completion of major infrastructure projects in the country is expected to have a positive impact on Qatar’s economy. The infrastructure contractor awards are estimated to increase from US$ 5,336 million in 2016 to US$ 6,629 million in 2017. Roads, Flyovers, Ports Metros and Railways Funds were allocated to rail projects, worth US$ 3 billion (QR 10 billion), and for Hamad Port, along with a large number of roads including the Lusail Road, Al Rayyan Road, Dukkhan Road, the new Ring Road for trucks and the new Al Khor Road. Infrastructure projects include land reclamation in north and west Doha, Al Khor, Al Mashaf, Al Wakra and Al Wukair. Qatar’s Ministry of Municipality and Environment (MME) has announced plans to construct 15 pedestrian flyovers in Doha and its suburbs as part of its infrastructure development strategy. The
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design of the pedestrian flyovers has taken into consideration the technical development in construction and would employ the most sophisticated technologies to ensure user convenience. Qatar Rail has stated that by 2018, the ambitious Doha Metro project will achieve 70% project progress rate. Presently, there are as many as 37 stations of the Doha Metro project under construction with a workforce of more than 41,000 workers on site. A number of significant milestones were achieved in 2016; including the recent completion of viaducts on the Doha Metro project while a few months earlier, the company celebrated the completion of all tunneling works on the project. Qatar Rail is making progress toward the completion of the Doha Metro, the Lusail Light Rail (LRT) and the Long Distance Rail projects. Dependent on this progress is the Doha Metro works advancing as scheduled for a first-phase operational launch by 2020 involving three lines – Red, Green and Gold. Moreover, Qatar Rail will select contractors for building stations in Q2 2017. Under the supervision of Ashghal, the Expressway Programme is one of the world’s largest road infrastructure projects that will connect Doha with other cities through a set of advanced highways, roads and flyovers. The scope of this project includes the New Orbital Highway, Dukhan Highway, Al Rayyan Road and Lusail Expressway. It will deliver more than 20 major projects and more than 150 major interchanges (from traffic light junctions to four-level interchanges with tunnels and flyovers). Commenced in 2010, the project’s original date of delivery is expected to be in 2017. A US$ 7.5 billion Doha mega port plan in Qatar, which was originally intended to be completed in 2030, has now been brought forward by 10 years and will be operational by 2020. Infrastructure development and renovation works worth around QR2 billion (US$ 549 million) would be taken up at Doha Port in Q2 2017. The infrastructure development will be carried out in two phases starting from April 2017. Bridges In October 2016, the Ministry of Municipality and Environment announced it will construct 15 new pedestrian bridges in Doha and its suburbs. Construction will be according to the urban plan for the city of Doha and in coordination with the road department of the Ministry of Transport and Communications. Major Infrastructure Construction Projects in Qatar The table below lists the major infrastructure construction projects in Qatar.
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Table 3: Major Infrastructure Construction Projects in Qatar Project Name
Client
Est. Value (US$ Million)
Qatar National Rail Scheme
Qatar Railways Development Company
40,000
Local Roads & Drainage Programme
Public Works Authority (Ashghal)
14,600
Lusail Mixed Use Development Infrastructure Packages
Qatari Diar Real Estate Investment Company (QDREIC)
7,500
New Doha Port
New Port Project Steering Committee
7,000
New Orbital Highway - Phases 1, 2, 3&4
Public Works Authority (Ashghal)
4,655
Al Khor Expressway
Public Works Authority (Ashghal)
2,082
Dukhan Highway / Khalifa Avenue Project
Public Works Authority (Ashghal)
1,918
Lusail Expressway Project - Phase 1
Public Works Authority (Ashghal)
959
Construction & Upgradation of Rayyan Road Project 7- Contract 2
Public Works Authority (Ashghal)
940.5
Development of Al Bustan Street (North)
Public Works Authority (Ashghal)
786.3
Source: Ventures Onsite Projects Database: www.venturesonsite.com
Overview of Outlook for the Qatar Energy Construction Industry Qatar’s energy market remains a major strength, with strategic foreign investment, optimisation and restructuring expected to help Qatar weather the worst of international energy market volatility. Solar energy is likely to meet 20% of Qatar's energy demand by 2030. Kahramaa has committed to deploying approximately 200 MW solar energy by 2020. As Qatar looks towards attaining its National Vision 2030, developing smart cities and harnessing alternative sources of energy production, the Solar Smart-Grid Project launched by the Qatar Foundation (QF) is paving the way for the adoption of solar power as a key energy source for the country. According to Booz Allen Hamilton, deploying smart grids can help Qatari economy diversify from oil and gas. The energy contractor awards are expected to increase from US$ 1,500 million in 2016 to US$ 3,000 million in 2017.
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Power and Water Fast growing economy and rising population mean that demand for power and water from both industry and households in Qatar will increase manifolds. This trend is set to continue for some time, with a multi-billion dollar programme of infrastructure building in the lead-up to the 2022 FIFA World Cup, requiring increasingly more people, electricity and water. The water demand in Qatar is growing higher as increasingly more houses, industrial facilities and commercial establishments are being interconnected across the country. The energy sector has been a major target for investment by the Qatari government, with plans to invest US$ 22 billion in its power and water infrastructure up to 2020, according to Kahramaa. Figures released by the Permanent Population Committee (PPC) show that more than half (54%) of Qatar’s water requirement is met through desalinated water (sea water purified in huge plants). The usage of desalinated water is forecast to increase to 58% by 2020, which means desalination capacity would also need to be increased. Therefore water’s prudent management and use are part of the national goals that are enlisted in the QNV 2030. Qatar’s power supply is complemented by five plants and three satellite stations in and around Doha. The growth outlook for Qatar's power industry is largely positive, though investment remains focused primarily on thermal power, specifically natural gas fired power, with limited spending on solar (the sole focus of the renewables sector). Qatar boasts enormous natural gas reserves, ensuring supply security and making new natural gas capacity the most cost - effective option for development, although the country is committed to ambitious renewable energy targets under the Vision 2030 programme. Qatar Electricity & Water Company (QEWC) is likely to increase Qatar’s power capacity to 13.1 GW by 2018. Currently, Qatar’s power supply is complemented by five plants and three satellite stations in and around Doha. There is likely to be steady increase in the demand for electricity and water Qatar due to its economic development and population growth. According to experts, the demand for electricity in Qatar is likely to reach at least 46 TWh in 2022, compared to 36 TWh in 2015, with most of this growth coming from new industrial and residential needs, and many major power projects are underway to support these future generation requirements. According to Arab Petroleum Investments Corporation (Apicorp,) Qatar needs US$ 9 billion investment in its power sector during 2016-2020. An integrated US$ 0.8 billion (QR 3 billion) water and power project (IWPP); with a capacity of generating 2,520 MW of electricity and 136.5 mlgd (million gallons a day) of potable water will be set up on the southern side of Qatar. Dubbed as one of the largest power and water projects in the region, the Umm Al Houl Combined Power Plant will have a production capacity of 2,520 MW of electricity and 136 million gallons of drinking water per day. The integrated power and water project will help meet the rising power and water demand and will cover the upcoming
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economic zones. Umm Al Houl is expected to be completed in two phases. The first phase will be completed by 2017, with a production of 40 million gallons of water a day. The project will reach full capacity by mid-2018. The Umm Al Houl project would increase the country's current electricity output by 22% and water output by 25%. Umm Al Houl was chosen for the project due to availability of water and gas pipelines as well as low salinity of the water. The project is also part of the QNV 2030. There is likely to be another utility project in Qatar between 2018 and 2022 and will depend on how the grid moves. Other large projects include the Qatar Power Transmission System Expansion – Phase 12 by Kahramaa. This project has an estimated value of US$ 1.7 billion and is expected to finish in Q4 2017. Meanwhile, Phase 13 of the same project, which has an estimated value of US$ 2 billion, is expected to be completed in Q4 2018. Renewable energy is another area expected to play a key role in the national energy mix in Qatar by 2022. Qatar has ambitious plans for growth in terms of renewable electricity supply, with the government aiming for 1.8 GW of installed capacity in 2020 and 10 GW in 2030. With such favourable conditions along the country’s coastline, solar and wind energy generation will see plenty of opportunity. Many initiatives have been put in place at the moment by Qatari entities such as Kahramaa, QEWC, Qatar Petroleum and Qatar Foundation, to proliferate renewable energy in the nation. In fact, several solar projects are expected to come online over the next few years. Qatar plans to build around 1,000 MW of solar power generating capacity to diversify its energy mix away from hydrocarbons. Solar would be a key part of Qatar’s future energy mix and the introduction of wind power is expected by 2020, albeit at a smaller scale than solar, according to industry experts. Kahramaa has targeted a generation capacity of 200 MW solar power at 60 sites across the country by 2020. Qatar has already announced plans to set up 1,800 MW solar power capacity by 2020, which is expected to contribute up to 16% of the total power generation. The country has expressed intention to hold auctions for solar power projects on multiple occasions; however, these intentions have not yielded any substantial results so far. Under a longterm program, Qatar plans to set up 10 GW of solar power capacity by 2030. Interestingly, however, these targets or any other renewable energy targets are not listed under Qatar’s commitment to the United Nations through the Intended Nationally Determined Contribution (INDC). According to media reports, two national companies in Qatar are planning to set up a joint venture to invest in renewable energy projects. Kahramaa and Qatar Petroleum are planning to join forces to set up a US$ 500 million joint venture company with the purpose of investing in renewable energy projects.
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Oil and Gas A vigorous oil and gas sector will continue to play a central role in Qatar's economy, as it contributes greatly to economic development. Oil and gas are the largest sector accounting for over half the country’s GDP. The government is pushing for the diversification of industry in order to reduce its reliance on the oil and gas industry for revenues. The demand for natural gas will grow in 2017 but at a slower rate than in recent years. Qatar’s oil output is slated to be lower by more than 11% year-on-year in 2017, in line with the decision of the Organisation of the Petroleum Exporting Countries (Opec) to cut production. Qatar’s oil production is estimated at 0.62 million barrels per day (mbpd) in 2017 against 0.7 mbpd in the previous year, implying a fall of 11.43%. According to expert, post-2016, Qatar did not have any new liquefied natural gas (LNG) contracts coming into force and, with 30.1 bcm of contracts rolling off in the next ten years; it will have to start negotiating new contracts. According to BMI Research, the moratorium on upstream gas projects will limit the overall level of activity in the coming quarters, while work on a small number of enhanced oil recovery and redevelopment projects continues. Qatar has delayed the start-up of the Barzan gas project again after discovering a leak in the gas pipeline. The start-up of phase one is likely to be in 2017, further delaying the second phase into late 2017. The expansion of capacity from Barzan and the new Ras Laffan II condensates refinery, also set to become operational in 2017, will add to hydrocarbon output over 2017 and 2018, according to the Ministry of Development Planning and Statistics. According to Bank Audi’s Qatar Economic Report, Qatar is expected to see reduced investment in its oil and gas sector over the coming quarters as it attempts to diversify its economy under the QNV 2030. The majority of upstream investment over the next few years would focus on oil field developments.
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Major Energy Construction Projects in Qatar The table below lists the major energy construction projects in Qatar. Table 4: Major Energy Construction Projects in Qatar Project Name
Client
Est. Value (US$ Million)
Bul Hanine Redevelopment
Qatar Petroleum (QP)
Barzan North Field Development
ExxonMobil Corporation /Qatar Petroleum (QP)
Water Security Mega Reservoirs
Qatar General Electricity & Water Corporation (Kahramaa)
Facility D - IWPP (Umm Al Houl Power Plant)
Kahramaa/TEPCO/Mitsubishi Corporation
Facility E - IWPP
Qatar General Electricity & Water Corporation (Kahramaa)
3,000
Qatar Power Transmission System Expansion - Phase 13
Qatar General Electricity & Water Corporation (Kahramaa)
2,000
Al Shaheen Oil Field Development
Qatar Petroleum (QP)/Total
Qatar Power Transmission System Expansion - Phase 12
Qatar General Electricity & Water Corporation (Kahramaa)
1,700
Qatar Power Transmission System Expansion - Phase 11 - Stage 1
Qatar General Electricity & Water Corporation (Kahramaa)
1,200
Qatar Power Transmission System Expansion - Phase 11 - Stage 1 (Addendum)
Qatar General Electricity & Water Corporation (Kahramaa)
750
11,000
10,400
4,000
3,150
2,000
Source: Ventures Onsite Projects Database: www.venturesonsite.com
Future Outlook for the Qatar Construction Industry Qatar's budget outlines a clear intent to reduce the government deficit while also supporting growth through higher capital spending. The commitment to ramp up future capital spending indicates that public investment will continue to be main driver of economic growth in the
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future. The investment programme will also support the drivers of Qatar's long-term growth, as witnessed by the sizeable investments in the education, transport, and healthcare sectors. These investments will foster human capital accumulation, population growth, and private sector development in line with the QNV 2030. The budget has also paved the way for an increase in construction activities on various projects, which will lead to higher allocations for major projects during the coming fiscal years. The investment plan of US$ 13 billion (QR 46 billion) for the current year will impact positively on the construction sector. Qatar is likely to undergo a major construction boom with a substantial number of infrastructure, industrial and private building projects being undertaken, including extremely large projects such as the underground railway and stadiums to be built for the FIFA 2022 World Cup. According to the Ministry of Development Planning and Statistics, construction will continue to expand through to 2018, though its pace of growth will ebb as existing projects. Qatar has set the benchmark for the construction industry in terms of quality and number of contracts awarded in infrastructure. It is currently poised for an extended period of even more heightened activity maintaining a steady growth driven by the government’s long-term economic development plan.
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About Ventures ONSITE Ventures ONSITE, a product by Ventures Middle East, has been a market leader in tracking construction projects across the MENA region for more than 15 years. Ventures ONSITE provides accurate and detailed information on completed, current, and future construction projects as well as critical insights into the region’s construction industry. Request a demo today and experience how Ventures Onsite can help you Win More Construction Contracts!
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