Spending on new construction projects in Qatar plummets

Construction work at Khalifa Stadium

Peter Kovessy / Doha News

Reconstruction of Khalifa Stadium

Qatar’s spending on new construction and transport contracts has fallen by 92 percent in the first quarter of this year, according to the latest figures from a Dubai-based business intelligence firm.

From January to March, MEED Project data shows that Qatar awarded US$830 million in new contracts for construction projects.

But that means the first few months of 2016 were the slowest period for signing on new projects in more than five years, since Qatar was awarded the World Cup in December 2010, MEED said.

Photo for illustrative purposes only.

Mark Swallow/Flickr

Photo for illustrative purposes only.

The figures also reflect that spending is down more than 90 percent from the same period last year, and 70 percent less that the value of new contracts awarded in the last quarter of 2015, The National reported.

Tumbling global oil prices has influenced Qatar’s decision to focus on delivering its many under-construction projects ahead of taking on any new plans.

Existing projects

Among the projects going forward are the new Hamad Port, redevelopment of HMC’s medical city, construction of at least eight stadiums for the World Cup and the Doha Metro.

Qatar’s public works authority Ashghal is also in the midst of a $30 billion national infrastructure upgrade to create expressways, reconfigure roads and intersections and update sewage and drainage networks.

Qatar’s Ministry of Development, Planning and Statistics has previously said it expects construction – and the influx migrant unskilled and semi-skilled labor needed to create these projects – to peak in the first half of 2017, before tapering off as they near completion.

Previously, MEED forecast that Qatar would spend some $22 billion on new contracts in 2016.

While this is a 24 percent drop on the record $30 billion the government spent on new construction deals in 2015, it is in line with previous years’ spending.

For illustrative purposes only.

Peter Kovessy

For illustrative purposes only.

The prioritization of World Cup-related, existing projects has meant that ambitious ideas such as the 12km Sharq Crossing, which was due to link Hamad International Airport, Katara Cultural Village and the Dafna/West Bay business district, have been at least postponed.

This belt-tightening has been felt across the region, as MEED predicted earlier this year that there will be a 15 percent drop in the total value of contacts awarded across all GCC states through 2016.

Slowdown

Acknowledging this reality, some construction firms are already looking outside of Qatar for their next projects.

According to the organizers of the Project Qatar construction expo, there was a 15 percent drop in the number of exhibitors this year.

This week, George Ayach, general manager of IFP Qatar, told Gulf Times:

“We were expecting a major decrease in the number of participants this year but thankfully there was only a 15 percent drop, which means that low oil prices have created an impact in the budget of the country.

This had affected some of the contractors and exhibitors planning to join Project Qatar.”

However, with construction set to intensify on the World Cup projects, he said he was optimistic for “a much better 2017.”

While prospective new projects include a raft of hotels and apartments and the ongoing creation of the new city of Lusail, the slowdown has been felt by employees across most sectors in Qatar.

The infrastructure consortium QDVC was the latest to streamline its workforce, laying off 60 Filipinos this month, according to the Philippines’ Department of Labor and Employment.

Thoughts?

This article has been corrected to reflect that Qatar awarded $830 million, not billion, in contracts during the first quarter of this year.

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