Contractors see opportunities in Qatar's construction sector

Since the unveiling of Qatar National Vision 2030 in 2008, new infrastructure projects have made the construction sector the country’s fastest-growing non-hydrocarbons contributor. Qatar has seen a host of major hard infrastructure projects over the past decade, including Hamad Port (formerly the New Port Project), the Qatar Rail Development Programme (QRDP) and Hamad International Airport (HIA), the ongoing expansion of which will necessitate billions of dollars worth of construction. Over the next 15 years, spending on planned big-ticket transport projects will drive non-hydrocarbons growth in the state, which already witnessed a sharp increase in spending in recent months.

SPENDING: The 2014/15 budget is the largest in Qatar’s history, with spending set to increase by 13% to reach QR218.4bn ($59.9bn). This rise is being driven by expenditures on key development projects, with allocations for these projects expanding by 17% to reach QR87.5bn ($24bn). Infrastructure alone will account for QR75.6bn ($20.7bn) of total spending in 2014/15, a 22% increase over the previous year. According to a report published by the US State Department, Qatar’s government has allocated 40% of its budget through 2016 to infrastructure projects. Among the most high-profile of these are three major transportation projects – the QRDP, HIA and Hamad Port, which together account for more than $58bn worth of investments.

HAMAD PORT: Transportation infrastructure will be critical to meeting rising industry demand, and with materials inflation expected to reach 18% by 2018, Hamad Port represents a critical link to new material supply in the state. “One of the biggest risks to economic development is supply bottlenecks, which could drive up prices. Qatar needs the new port,” Rory Fyfe, senior economist at Qatar National Bank, told OBG.

Announced in 2007, Hamad Port is the world’s largest greenfield port project. Located between the Al Wakrah and Mesaieed municipalities, the $7.4bn project will replace Doha’s existing port, which is located in the centre of the city. The project includes a 4.5-sq-km area for the Qatar Emiri Naval Forces’ planned new base, with Qatar Economic Zone 3, or Um Alhoul, under development adjacent to the port. Um Alhoul is expected to be a hub for petrochemicals, building materials, maritime metals, logistics and food processing when its first phase of development finishes in February 2019.

The port was originally expected to open in three phases, with the third wrapping up in 2030, but the government announced in January 2014 that it will merge these phases and open the port a decade earlier, in 2020.

Phase one is set to finish in 2016, with an initial cargo handling capacity of 2m twenty-foot equivalent units (TEUs) and 2m tonnes of general cargo, compared to the existing port’s capacity of around 650,000 TEUs.

The project has already provided substantial opportunities for local and international contractors since it broke ground in 2011. In 2012, Middle East Dredging Company was awarded a $1.2bn contract for dredging, reclamation and breakwater construction, and Teyseer Contracting was awarded a $291m construction contract for the port’s container terminal infrastructure and utility buildings. In December 2014 Qatar Ports Management Company reported that the project was 53% completed, with a total of $4.2bn worth of contracts awarded, of which 53% went to Qatari firms.

Additional awards are expected in 2015.

HIA: HIA and Airport City, which together comprise the New Doha International Airport (NDIA) project, span a 29-sq-km site, of which 60% has been reclaimed from the Gulf. The huge development has already witnessed construction of the HIA’s 600,000-sq-metre first phase, which officially opened in April 2014. HIA’s passenger terminal, the state’s largest building, includes three concourses and 33 contact gates, which will expand to five concourses and 65 contact gates when the NDIA project is completed. HIA’s passenger terminal will be expanded by 50%, boosting annual passenger capacity to 53m, up from the current 36m. It will also bring the construction of Airport City, a sizeable mixed-use development expected to house 200,000 residents on completion (see new cities analysis). According to a report in Doha News, a second terminal could also be part of HIA’s long-term development plan.

QRDP: One of the most high-profile transport projects in the state, the QRDP has progressed steadily. Comprising three separate rail networks – the Lusail Light Rail Transit, Doha Metro, and long-distance freight and passenger lines – the QRDP is among the most expensive infrastructure projects in the state’s portfolio, with investments expected to reach $35bn-45bn. According to Qatar Rail’s February 2015 progress report on the Lusail Light Rail Transit, phase 2C1A is expected to be completed in April 2015. Phases 2C2 and 2C3 will finish in January 2019 and June 2020, respectively, while phases 2A and 2B are already completed.

METRO: Doha’s metro network will comprise 100 stations across four lines: green, red, gold and blue, with all but the blue line scheduled for mid-term completion. Major construction awards for the project started in June 2013, when Qatar Rail awarded $8.2bn worth of design-and-build contracts for the green and red lines, splitting red into two packages.

The $2bn red line north package was awarded to a consortium led by Italian firm Impregilo, and comprising South Korea’s SK Engineering & Construction and Qatar’s Galfar Al Misnad Engineering & Contracting. The $1.86bn red line south package was awarded to a consortium led by QDVC, a joint venture between Qatari Diar and France’s Vinci Construction Grand Projets, and including South Korea’s GS Engineering & Construction and Qatar’s Al Darwish Engineering. The $2.2bn green line contract was awarded to a consortium led by Germany’s PORR Bau, and including Saudi Arabia’s Bin-ladin Group and Qatar’s HBK Contracting, while South Korean firm Samsung C&T led a consortium including Spain’s Obrascón Huarte Lain and Qatar Building Company to win a contract for station construction.

In April 2014 Qatar Rail signed its largest rail contract to date, a $4.4bn award for construction of the gold line. A consortium led by Greek firm Aktor, and including Turkey’s STFA Group and Yapı Merkezi, as well as India’s Larsen & Toubro and Qatar’s Al Jaber Engineering, will complete 32 km of tunnel boring and construct 13 underground stations, with work expected to finish in 2018. At the end of February 2015, 10.22 km of the metro’s tunnels had been bored, out of the total 114 km. Also in February 2015 an $877m, 20-year systems contract for phase 1 of the metro was awarded to an international consortium led by Japan’s Mitsubishi Heavy Industries. The group is charged with turnkey construction of the fully automated system.

LONG-DISTANCE: Another highly anticipated railway tender in 2015 is for the 510-km long-distance freight and passenger network, of which the first phase of three is expected to finish in 2018. In February 2015 a list of pre-qualified bidders for phase one’s design-and-build contract was announced. The tender float date is June 2015, and awards are expected in July 2016.