The huge volume of construction projects underway in Qatar in preparation for the 2022 FIFA World Cup has helped make it the most expensive country to build in the Middle East, according to the 2012 International Construction Costs Report released by EC Harris.
The annual study, which benchmarks building costs in 53 countries across the globe, found that the volume of construction activity taking place in Qatar to prepare for the 2022 FIFA World Cup and to deliver the country’s National Vision, had caused the country to jump three places in the overall rankings, rising from 16th position in 2011 to the 13th most expensive country in which to build in this year’s report.
According to the report one of the primary reasons for this is the focus on large scale infrastructure projects with the Qatari government reported to have allocated 40 per cent of its overall budget between now and 2016 to improving both transportation networks and social infrastructure across the country.
Nick Smith, Head of Cost and Commercial Management for EC Harris in Qatar said, “Whilst this is undoubtedly an exciting time to work in Qatar’s construction industry, the sheer volume of work planned over the next twenty years will create fresh challenges around successful project delivery.
“Careful planning and a more strategic approach to supply chain management will be key to ensure companies do not become overstretched and are able to plan ahead so they can source additional labour, plant and materials before construction demand begins to peak.”
The United Arab Emirates rose one place to 17th overall from 18th in 2011 as the construction sector begins to improve following a string of government announcements particularly around major social infrastructure programmes.
Commercial projects in Dubai are also beginning to show signs of recovery with developments placed on hold during 2009 currently being reviewed, whilst in Abu Dhabi, firms are also looking to fill the currently under-supplied retail market.
However, the report did raise one concern for the UAE, suggesting that the need to compete with Saudi Arabia and Qatar for both labour and materials could lead to a further price escalation in the coming years.
This year’s report also showed that whilst construction costs in Saudi Arabia were markedly cheaper than in UAE or Qatar, Saudi Arabia rose eleven places in the league table moving from 36th place in 2011 to 25th in this year’s report.
This jump can be largely attributed to the continued investment in new airport and highways and a strong future pipeline of activity meaning that the country is likely to move up the table in years to come.
Smith added, “Saudi Arabia’s construction industry is entering a potentially vibrant period as an expanding young population is creating increased demand for housing whilst a developing tourism and leisure industry will see new hotels built in under-supplied Jeddah and Riyadh. Furthermore, construction of the Kingdom Tower in Jeddah will help to sustain the pipeline of work on both a short and mid-term basis.”
Overall, the study found that Switzerland was the most expensive country in which to build, followed by Denmark, Australia, Japan and Sweden.