Qatar Has Highest Construction Costs In ME

Qatar has the highest construction costs in the Middle East, and is the 13th most expensive country in the world to build in, according to a new report by consultancy EC Harris.

The annual International Construction Costs Report for 2012 found that the Gulf State had jumped up three places in the overall rankings from the 16th position last year.

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 has led to rise in costs, the study found.

“While 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,” said Nick Smith, head of Cost and Commercial Management for EC Harris in Qatar.

“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 report also found that the UAE rose one position on the overall index to rank 17th, mainly because of the improvement in the construction sector. While the government has announced major social infrastructure programmes in the country, other developments have also picked up.

“Commercial projects in Dubai are beginning to show signs of recovery with developments placed on hold during 2009 currently being reviewed. In Abu Dhabi, firms are also looking to fill the currently under-supplied retail market,” it said.

However, the report suggested that competition with Saudi Arabia and Qatar for both labour and materials could lead to a further price escalation in the UAE.

The report also found that although construction costs in Saudi Arabia were markedly cheaper than in UAE or Qatar, the Kingdom rose eleven places in the overall rankings from 36th place in 2011 to 25th this year.

“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,” it said.

Smith added: “Saudi Arabia’s construction industry is entering a potentially vibrant period as an expanding young population is creating increased demand for housing while 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 has the highest construction costs in the world, followed by Denmark, Australia, Japan and Sweden.