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Tue 26 Mar 2013 05:14 PM

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EC Harris warns over Qatar construction inflation

New report says 18% inflation peak could add billions of dollars to massive building boom

EC Harris warns over Qatar construction inflation
Construction of the World Cup 2022 in Qatar is likely to peak between 2016-19.

Cost inflation in Qatar's construction industry could reach up to 18 percent a year over the next decade, adding billions of dollars to the cost of building the Gulf state's future, a new report said on Tuesday.

Against a backdrop of unprecedented growth in Qatar and with projects valued at more than $100bn planned in the run up to the World Cup in 2022, EC Harris issued the warning.

It said that unless action is taken construction inflation in Qatar could reach 18% per annum to 2023.

EC Harris said the report draws specifically on the experiences of the UAE, as well as Singapore and the UK, to highlight relevant lessons which can be learnt from these countries.

Qatar's investment in capital projects and infrastructure - around $160bn over the next decade - to deliver the World Cup and the National Vision has resulted in its construction industry benefiting significantly from this growth.

Qatar's construction sector is poised to expand by an average of 12 percent a year, EC Harris added.

The report, based on analysis of commodity prices, local market conditions, labour costs and the expatriate workforce, said construction inflation is set to peak at 18 percent during the World Cup construction boom between 2016 and 2019.

However it added that there is time to take action by encouraging local companies and international contractors to combine their skills and by increasing the ease with which materials and labour can be transported.

It also recommended that Qatar should stagger the timing of construction projects to shift as much construction away from the anticipated peak construction period.

Terry Tommason, EC Harris's head of Property and Social Infrastructure Middle East, said: "Qatar has seen a remarkable transformation in less than a generation, and the exciting thing is we're only part-way on the journey.

"These are unique times for Qatar as the country witnesses an explosion of construction activity which will continue over the next decade. Growth in output on this scale is unprecedented, with GDP more than tripling over the last ten years. This is something to be celebrated and admired.

"However, this unprecedented growth brings challenge as well as opportunity. By taking action now, there is every reason to believe that construction inflation can be avoided."

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