Qatar building materials costs to surge ahead of 2022

Wed Jun 24, 2015 8:18am EDT
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By Matt Smith

DUBAI (Reuters) - The cost of construction materials in Qatar is likely to jump as the host nation intensifies infrastructure building ahead of the 2022 World Cup, and other building projects could finish late as a result, industry experts say.

Qatar is set to spend more than $200 billion on the soccer tournament as part of a 2030 development plan, although tough contract terms and state bureaucracy have left some contractors in difficulties.

Corruption allegations at soccer’s governing body FIFA have put renewed media focus on Qatar, although Qatari officials say they are confident the 2022 tournament will go ahead as planned.

The high level of construction activity – predominantly in the capital Doha – is already making it hard for contractors to get workers and materials to sites.

"The pinch point will likely be in 2017-19 when the construction work peaks, but the government can take measures to mitigate that," said Nick Smith, Partner at engineering consultants Arcadis in Qatar. He predicted materials inflation would be about 3 percent in 2015.

"This will include early supply chain engagement, standardization of products and direct procurement of certain items. Qatar is already pursuing some of these initiatives."

Materials inflation could surge to 15-20 percent from 2018, said Steven Humphrey, a director at infrastructure specialists AECOM.

Qatar witnessed a similar phenomenon ahead of hosting the Asian Games in 2006. Also, construction inflation fluctuates more than general inflation and small markets such as Qatar are less able to absorb changes in workload, a report by Arcadis unit EC Harris states.   Continued...