Qatar risks 18% construction inflation

27 March 2013

A new report by EC Harris says that unless action is taken, the Qatari construction industry could see annual inflation of 18% as the result of its building boom. The consultant says that with US$ 160 billion to be invested in infrastructure in Qatar over the next decade, the country’s construction sector is poised for average annual growth of +12% per year.

In order to avoid the risk of inflation, which EC Harris says could add billions of Dollars to the cost of construction, the consultant has advocated a series of steps. These include building capacity and capability in the existing supply chain, by encouraging local and international contractors to combine their skills, make it easier to transport labour and materials by improving the quality of accommodation for construction workers, revamp the procurement process to focus on best value, and where possible, stagger the implementation of construction projects.

A combination of Qatar’s National Vision 2030 – a national development plan covering the next two decades – and preparations for the 2022 World Cup is expected to see construction activity peak between 2016 and 2019. It is in these years that EC Harris says inflation in the industry could reach its peak level of 18%.

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.”

He added, “By taking action now, there is every reason to believe that construction inflation can be avoided. In doing so, Qatar would cement its position on the world stage – the World Cup host country with a world class approach to delivering infrastructure investment on a truly mass scale.”

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