DOHA: The construction costs in Qatar are much higher than the countries like US and Italy. An “International Construction Cost Report” released yesterday ranked Qatar as 15th most expensive country in the world in terms of construction costs and most expensive in the Middle East.
With a 20th world ranking, UAE has been placed second most expensive country in the GCC followed by Saudi Arabia. Hong Kong is the country with the world’s most exorbitant construction costs. US and Italy have been ranked below Qatar 16th and 17th place respectively.
The 2013 International Construction Cost Report released by Global Built Asset Consultancy EC Harris assumes significance in view of the recent forecasts that Qatar’s construction inflation would go up both in short-term and mid-term.
Market leaders in Qatar listed out higher prices of construction materials, huge demand for skill workers and higher cost of living key reasons for the country’s excessive construction costs.
“The prices of essential construction materials are higher in Qatar compared to other countries in the region. For instance, the current market price of steel rebar in Qatari market is QR2840/tonne. You will get the same for something less than QR300-350 from the neighbouring markets. Since some vital products like gabbro and limestone are mainly coming from outside, the cost of these products are obviously higher than the neighbouring countries”, market sources told The Peninsula.
“The salary package of construction professionals in Qatar is far higher than any other neighbouring countries. The prices of some of the key construction materials are extremely higher when you compare them with the neighbouring markets”, said Ahmad Jassim Al Jolo, President of Qatar Engineers’ Association.
The EC Harris report noted: “Beyond government driven projects, progress is relatively slow (in many projects in Qatar) with developers preferring to hold back from development in commercial schemes until the infrastructure is in place. There is also oversupply in commercial space.”
Qatar’s construction market is relatively small and historically has been associated with a steady rate of development. All of this is about to change with a set of major programmes linked to linked to the 2030 National Plan and FIFA World Cup 2022.
“Qatar’s resource challenge is related to the speed of proposed development. There is plenty of capacity in local supply chains as these have already been put in place in anticipation of a fast start to programme delivery. But contrast, there are potential constraints in the availability of construction professionals and some imported materials, mainly due to transport infrastructure. Currently, prices are stable, but have the potential to ramp up quickly if procurement is not accelerated and additional capacity built over the next two years.
We have already warned that the risk of high rates of inflation resulting from a peak of workload in Qatar from 2016 onwards. These programmes have got off to a slow start, so as yet there is little price escalation in the system. This could change as programme procurement accelerates unless steps are taken to further build industry capacity in local and regional markets.”, said Nick Smith, Head of Cost and Commercial, Middle East at EC Harris.
The annual study, which benchmarks building costs in selected 47 countries, found that relative construction costs across the globe have been affected by substantial fluctuations in currency throughout the year. With Gulf currencies closely tracking the US dollar, the impact of these fluctuations on Gulf countries has been limited.
The Peninsula
