Qatar must take action to avoid construction inflation in the country from reaching a whopping 18 percent a year from 2016 to 2019, a new report by asset consultancy group EC Harris has warned.

Qatar is investing some $160 billion in infrastructure and related projects in the run-up to the 2022 World Cup. Its construction sector is poised to expand by an average of 12 percent a year, but demand for materials has reached a fever pitch due to the sheer number of projects that are being undertaken.

Unless the matter is addressed now, it is likely that supply will not be able to keep up, boosting prices of such materials to the tune of billions of dollars, EC Harris said. Such inflation will likely cause a domino effect in project delays, which have already posed a significant problem, a locally-based analyst told Doha News.

To head off inflation, the report recommends that Qatar:

• Encourage local companies and international contractors to combine their skills to improve the existing supply chain;
• Make it easier for materials and labor to be transported by building new and improved accommodations ahead of the influx of expat workers needed to develop these projects; 
• Improve transparency in procurement processes to boost cost effectiveness; and
• Stagger the timing of construction projects away from the anticipated peak construction periods between 2016 and 2019, when possible.

Another way to head up these problems is to get Qatar’s new port online as soon as possible, the analyst said. 

He added that while construction inflation would not directly affect the prices of consumer goods here, the growing population could. 

Here’s the full report:

Thoughts?

Credit: Photo by Omar Chatriwala