Welcome to the most expensive place to build in the Middle East

18 September 2013

Qatar has the highest construction costs in 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 across the globe, listed Qatar as the world’s 15th most expensive country to build in, ahead of the UAE at 20th place, and Saudi Arabia, which came 21st.

The Gulf state’s construction market is still relatively small and has developed slowly and steadily in the past, but all that is about to change with a set of major development programmes linked to the 2030 National Plan and the FIFA World Cup 2022.

Apart from preparing for the World Cup – and notwithstanding last week’s furore over whether the tournament should be moved to winter to avoid the scorching summer heat - Qatar’s investment programme includes social infrastructure, transport and energy infrastructure to support population growth, and economic diversification.

In a report earlier this year EC Harris predicted that construction output in Qatar would grow by more than 12% per annum as the 2022 World Cup nears.

The company predicted further that construction inflation would rise steadily, reaching a peak of 18% during the pre-tournament construction boom, which it said would occur between 2016 and 2019.

Qatar is listed as the 15th most expensive country to build in the world (Haakon S. Krohn/Wikimedia Commons)

EC Harris noted, however, that beyond government-driven projects, progress is relatively slow, with developers preferring to hold commercial schemes back until the infrastructure is in place.

There is even some oversupply in commercial space at present, the consultant said.

But it added that there may be constraints in the availability of construction professionals, and some imported materials – mainly due to transport infrastructure.

"Currently prices are stable," the report says, "but [they] have the potential to ramp up quickly if procurement is not accelerated and additional capacity built over the next two years."

Fluctuations in currency throughout the year affected the relative construction costs, the report said but since Gulf currencies closely track the US dollar, the impact of these fluctuations on Gulf countries has been limited.

Qatar was unaffected by the 2008 global financial crisis – its GDP kept rising as a result of increased output of natural gas.

Globally, Hong Kong is the most expensive country to build, followed by Switzerland, Denmark, Sweden, Macau, Australia, Japan, France, Singapore and Belgium.

Source: EC Harris

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