Qatar building costs ranked highest in Middle East

Qatar remains the most expensive country in which to build across the Middle East, according to the 2013 International Construction Costs Report released by consultancy EC Harris.

The annual study, which benchmarks building costs in 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.

EC Harris said Qatar and the UAE remain in the top 20 most expensive locations to build in the world, while Saudi Arabia has continued to move up the cost curve.

Globally, the most expensive places to build have been named as Hong Kong, Switzerland, Denmark, Sweden and Macau.

Qatar was ranked 15th globally, with the UAE placed 20th and Saudi Arabia 21st.

Nick Smith, head of Cost and Commercial, Middle East at EC Harris, said: "Qatar's construction market is relatively small and historically has been associated with a steady rate of development, but all of this is about to change with a set of major programmes linked to the 2030 National Plan and the 2022 Qatar World Cup.

"This investment programme includes major elements of social infrastructure, transport and energy infrastructure to support population growth and economic diversification."

He added: "In previous reports, we have warned of 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."

EC Harris said Saudi Arabia is currently in the midst of the delivery of large social infrastructure and economic diversification programmes, including the construction of six new economic cities while the UAE has "turned a corner" after being under a cloud since the crash in 2008.

Smith added: "In 2013 we are seeing a more broadly based recovery in the Gulf markets, with a general shift to increased spending on social infrastructure in the wake of the Arab Spring and positive signs emerging that the construction markets in the UAE are set for recovery.

"Preparations for the World Cup in Qatar in 2022 are the most obvious manifestation of accelerated growth, but sustained growth is also expected in Saudi Arabia, which is in the midst of a large social investment programme.

"The emerging recovery in the UAE is particularly significant. The UAE is one of the Gulf's larger construction markets and the pipeline of projects is increasingly strong. However if the UAE does stage a recovery, it will be competing with both Saudi Arabia and Qatar for resources."