BMI View: Qatar is the fastest- growing construction and infrastructure market in the GCC and remains one of our favourite construction markets, buoyed by huge government investment, a stable business environment and growing consumer demand. The 2022 FIFA World Cup is a catalyst for growth, but Qatar's need to diversify its economy will mean the majority of major infrastructure projects would be needed, even with the event. The industry is navigating capacity constraints seemingly well, although we still believe wage and material price pressures will be a drag.
Key Trends And Developments
Oil prices are a minimal downside risk to our forecast, given Qatar is the least exposed out of the six Gulf Cooperation Council (GCC) economies to the drop in oil prices, and we do not expect government spending or consumer confidence to be impacted over coming quarters. The government has spoken of the need to control spending, but officials stated explicitly in late 2015 that economic development projects would not be impacted. Qatar's fiscal breakeven price is estimated to be around USD60 per barrel (bbl) according to the IMF, and even though BMI forecasts USD51/bbl in 2016, the share of the economy dependent upon the oil and gas sector is expected to continue to decline over the forecast period, somewhat ameliorating the risk of sustained lower prices for Qatar's oil and gas exports.
Ahead of the 2022 FIFA World Cup and in line with the country's 2030 Vision development plan, Qatar's spending on infrastructure is expected to reach about USD150bn over the next decade. A series of infrastructure projects are in the pipeline, including USD20bn investment in roads; USD40bn to be invested in railways; USD4bn to be invested in stadiums; USD8bn to be spent on a deep-water seaport; tens of thousands of hotel rooms to be built and a new city.
With about USD67bn of transport projects in our Infrastructure Key Projects Database at the planning stage or under construction, which has been added to by the announcement of the expansion of the new Hamad International Airport, we have a bullish outlook for the sector, with real growth over the 2015-2019 period forecast to average 8.4%. The energy and utilities sector has been a major target for investment by the Qatari government, with plans to invest USD22bn in its power and water infrastructure up to 2020, according to the Qatar Electricity & Water Company.
It is the residential and non-residential building sector which will be the major driver of growth in Qatar's construction industry over the long term. Leveraging off improved infrastructure and the World Cup, developers are building major residential projects and the social infrastructure to go with them. Coupled with the hotels and stadiums being prepared for the World Cup, we see strong average real growth of 13.8% over our forecast period from 2015-2024. We note growth will accelerate in the run-up to 2022, but will falter in the aftermath of the World Cup - although Qatar's Vision 2030 should keep growth positive.
Demand for both materials and labour in Qatar and regionally will lead to price increases that affect the domestic construction industry. In order to mitigate these risks, Qatar is actively seeking to address logistical shortcomings in order to reduce shortages of needed materials. Further pressure on the industry could come from the fallout of an inquiry into how heavy rains in November 2015 resulted in significant damage roads and buildings.
|f = BMI forecast. Source: Qatar Statistics Authority, BMI|
|Construction industry value, QARbn||43.35||50.97||59.56||68.37||77.63||88.50||103.98|
|Construction Industry Value, Real Growth, % y-o-y||18.00||15.57||13.85||11.30||10.04||10.50||14.00|
|Construction Industry Value, % of GDP||5.7||7.4||8.0||8.3||8.6||9.1||9.8|
|Risk/Reward Index||Rewards||Industry Rewards||Country Rewards||Risks||Industry Risks||Country Risks|
The Qatar Infrastructure Report features BMI Research's market assessment and forecasts covering public procurement and spending on all major infrastructure and construction projects, including transportation and logistics by land, sea and air; power plants and utilities, and commercial construction and property development. The report analyses the impact of regulatory changes and the macroeconomic outlook and features competitive intelligence on contractors and suppliers.
BMI's Qatar Infrastructure Report provides industry professionals and strategists, sector analysts, investors, trade associations and regulatory bodies with independent forecasts and competitive intelligence on the Qatari infrastructure and construction industry.
- Benchmark BMI's independent infrastructure industry forecasts for Qatar to test other views - a key input for successful budgetary and planning in the Qatari infrastructure market.
- Target business opportunities and risks in the Qatari infrastructure sector through our reviews of latest industry trends, regulatory changes and major deals, projects and investments in Qatar.
- Assess the activities, strategy and market position of your competitors, partners and clients via our Company Profiles (inc. SWOTs, KPIs and latest activity).
BMI Industry View
Summary of BMI’s key industry forecasts, views and trend analysis covering infrastructure and construction, regulatory changes, major investments and projects and significant national and multinational company developments. These are broken down into construction (social, commercial and residential), transport (roads, railways, ports, airports, etc), and energy & utilities (powerplants, pipelines and so on).
Industry SWOT Analysis
Analysis of the major strengths, weaknesses, opportunities and threats within the infrastructure and construction sectors and within the broader political, economic and business environment.
BMI Industry Forecasts
Historic data series (up to 2012) and forecasts to end-2024 for all key industry indicators, supported by explicit assumptions, plus analysis of key developments in the market and risks to the main forecasts. Indicators include:
Construction: Industry value (USDbn); contribution to GDP (%); total capital investment (USDbn); real growth (%).
Construction industry real growth forecasts (%) and industry value (USDbn) forecasts for industry sectors are split into Residential and Non-residential and Infrastructure sectors. Where the data is available for particular countries the infrastructure is further broken down into indicators for the transport subsectors of roads, railways, airports and ports and the energy and utilities sub-sectors of power plants and transmission grids, oil & gas pipelines and water infrastructure. This dataset is unique to the market.
The reports also include analysis of latest projects across the infrastructure sectors (transport, utilities, commercial construction).
BMI’s Infrastructure Risk Reward Index
BMI’s Risk Reward Index provides investors (construction companies, suppliers and partners) looking for opportunities in the region with a clear country-comparative assessment of a market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points. These provide indices of highest to lowest appeal to investors, with each position explained.
An assessment of the competitive landscape and key challenges to entering the market. Details of the largest companies active in the sector across the sub-segments of the industry, including the key financial figures from some of the largest players in the sector.
Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape to generate company SWOT analyses. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.
The Infrastructure reports draw on an extensive network of primary sources, such as multilateral organisations, government departments, industry associations, chambers and company reports.
*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.