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Fri 25 May 2012 12:39 PM

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Qatar construction costs seen rising 18%

MEED Tender Price Index forecasts price rise to 2017 amid major construction boom

Qatar construction costs seen rising 18%
A general view of Doha.

Construction costs in Qatar are expected to increase by 18 percent over the next five years as the Gulf state starts work on projects for the 2022 World Cup.

Based on data which has been sourced from more than 200 construction projects across a variety industry sectors, the MEED Tender Price Index (TPI) also predicted a four percent rise over the next year.

Emil Rademeyer, general manager for MEED Costs Indices, said: "Construction costs in Qatar are expected to increase by 18 per cent by 2017 as the country starts work on projects as it prepares to host the 2022 Fifa World Cup."

Next year's four percent rise will be driven by work starting on major new infrastructure projects such as the Doha Metro scheme, he added.

Overall, the index forecasts that over $15bn worth of construction contracts will be awarded in Qatar this year.

The value of contract awards is set to more than double from 2013 onwards and is forecast to peak in 2017 at $40bn.

According to new findings, a rapid increase in project awards and the resulting construction work on-site will strain Qatar's supply chain to breaking point.

With limited domestic production of construction materials and a dependence on foreign workers and staff, most resources are expected to be in short supply, driving up costs.

Shortages are expected for resources such as cement, rebar, steel, skilled and unskilled labour.

Rademeyer said: "For cement, Qatar is expected to have a shortfall reaching almost 3 million tonnes a year in 2015. The current production capacity of 6.2 million tonnes per annum will render a small surplus during 2012 and acute shortages form 2013 onwards."

Doha's port facilities are also expected to drive up costs. The existing port has a limited capacity which means that contractors have had to wait for imports coming through the port.

A new port, which is currently being built at Mesaieed is expected to alleviate the bottleneck, but it is not expected to start operations until 2016.

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