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Sat 28 Apr 2007 12:00 AM

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Learning the lessons of rapid expansion

With a rapidly expanding commercial and residential construction sector, Qatar is facing up to material challenges and labour issues. Christopher Sell reports on how the local market is on a steep learning curve to realise its future ambitions.

While the UAE's progress continues unabated, to the west, Qatar's construction scene has steadily continued to develop. High-profile projects such as The Pearl-Qatar and Sama Dubai's ‘Dubai Towers Doha' are already underway and serve a dual-purpose of targeting a lucrative market, while heightening the cityscape and projecting a strong international identity.

To achieve this growth, however, the Qatar market is going to have to alter its current reliance on the UAE. Until now, its presence has acted as a boon to the country, since Dubai has been Qatar's traditional source of materials to a country that relies heavily on imports. With a growing number of projects, however, this is placing a greater strain on the system. Qatar is now looking to evolve its emphasis on local suppliers, to ensure major delays do not emerge and contractors have a reliable supply of materials.

According to Dr Eulian Roberts, chief executive, Qatar Science & Technology Park (QSTP), the boom is placing greater pressure on an infrastructure that is not adequately developed: "The local market is developing; however, the sheer number of construction projects currently underway in Qatar means that the capacity of the local market isn't sufficient to fulfill demand. However, it is common for international firms to develop joint ventures with local companies to enable them to work more effectively."

QSTP has been set up to accelerate the country's knowledge economy, acting as a home for technology-based companies and an incubator for start-up businesses. It will be developed in several phases with the original master plan proposing three significant phases of development over a 20-year period. Stage One, Phase One is currently under construction and development of this stage will continue for the next five years.

Located within Education City, QSTP is a 10 million m

centre featuring academic and research buildings, which will be directed by the Qatar Foundation Capital Projects Department. Qatar Foundation appointed Qatar Petroleum to manage the development of the city, who in turn appointed KEO International Consultants to provide project and construction management support. Woods Bagot is the architectural firm.

Roberts adds: "The construction market in Qatar is under significant pressure; often there are more projects than resources on the ground to fulfill them. This inevitably leads to challenges, particularly in terms of the labour force, which is carried out by the contractor. The availability of materials has also provided a challenge - almost all construction materials in Qatar are imported, which adds a significant time factor to the project and reduces predictability."

Dr Mahmoud El Khafif, regional manager, Gulf States, Bilfinger Berger agrees: "Like other members of the industry, we share certain concerns about the stretched resource lines and cost developments." And ACC director, Maher Merhebi, explains that the policy of relying on Dubai is not the only problem, citing the lack of infrastructure as well: "The Doha market does not offer the same ease of procurement and mobilising of required resources. The other striking point is that many regional contractors are less present, with more presence of local contractors.

"Because it is a relatively smaller market than the UAE, it relies heavily on being supplied from Dubai, and all of the suppliers do not find the necessity for keeping a lot of stock. And because of the current construction boom this policy is exacerbated." Marehbi believes, however, that economic forces will prevail and as the market matures, this attitude will change. "For now we rely heavily on the UAE office to assist in procurement. In the long term, you will see more suppliers locally based in Doha offering the same facilities to contractors, so you will procure from more locally-based suppliers."

ACC has four towers being built on The Pearl, including a $170 million, 26-storey residential tower in Porto Arabia in conjunction with United Development Company and KEO International. It is also working on the $50 million La Cigale tower and the $80 million Al Bida Tower.

Pierre Moerland, vice president of sales and marketing at real estate company, First Qatar, which is also involved with The Pearl, explains that the reasons to keep a close eye on the region are both financial - it has the highest GDP in the world - as well as the fact that figures indicate a population boom in the next few years. Currently there are 3,700 hotel rooms, but Moerland claims this is expected to grow by another 8,000 in three years. And according to a Global Investment House report in September 2006, there will be over 500,000 families coming to Qatar by 2012.

"The impression is that the Qatar government is aiming for high-end tourism and that fits in very well with our plans and with what we are developing," he says. Furthermore, Moerland believes that developments currently underway in Qatar will differ from Dubai in that the market will be more end-user orientated, hence products and finishes will be of a higher standard, with consumers more interested in the experience rather than a simple return on investment (ROI). "Instead of looking at the short term ROI, the end-user is more focused on the quality of products, the technology and whether it will be finished on time. And also the commitment from the developer, to not just develop the building but also to offer an exit strategy. These are the key trends, it is moving very fast and it is the right time to get into Qatar.

"We need the market to see this region for investment and are trying to point out that it isn't just the UAE. There is a lot of interest in Dubai obviously, but there are alternatives. The Pearl is one of the top projects in the region."

Moerland adds that First Qatar will shortly be announcing another international project, which will be connected to what the company is currently involved with.

The most high-profile project currently taking place in the Qatari capital is the Dubai Towers Doha. Located in the heart of the new business district and designed by Hazel Wong of RMJM (who was responsible for Dubai's Emirates Towers) at a height of 445m and 94 storeys, the tower will be the tallest in the country. It is not too much of a stretch to suggest that it will be to Doha, what the Emirates Towers are to Dubai. The tower is being developed by Sama Dubai, and the contractor is a joint venture between Al Habtoor and Al Jaber.

Hyder Consulting will be the structural engineers on the project and according to Rod Stewart, regional director, the company is well placed to capitalise on the country's growth when it does really take hold, which, according to experts, will happen in the next 12 to 18 months.

"Everyone would have recognised it has accelerated in the last couple of years; it was pretty slow three years ago. We were one of the consultants that stuck with it in the quiet times. We are quite well positioned to be involved. We have 100 staff [in Qatar] and are growing quite quickly."

With an affluent population and close proximity to one of the region's more flamboyant and progressive cities, not to mention access to well-established consultants and contractors, Qatar is well placed over the next five years to establish itself as one of the regions foremost centres. Whether it avoids the various pitfalls experienced by other countries in the GCC only time will tell.

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