Qatar World Cup award to kickstart construction
Dubai's Arabtec likely to win tournament-related deals.
December 6, 2010 2:15 by Reuters
Qatar’s successful bid to host the 2022 soccer World Cup will speed up its construction programme and boost property prices, with contractors expected to flock to the Gulf state to snap up projects worth billions of dollars.
The world’s largest liquefied natural gas exporter will try to ease concerns about its lack of infrastructure by spending some $100 billion over the next five years, according to some estimates, as it rushes to prepare for soccer’s biggest tournament, the first to be held in the Arab world.
“This will catalyse a lot of infrastructure projects that have been progressing slowly or waiting in the wings,” Global Investment House said in a report. “Real estate prices are also likely to see movements in line with the venues with demand rising in certain areas more than others.”
Some projects in Qatar have stalled this year due to a property market slump. In August, Qatari developer Barwa Real Estate Co said it delayed its 30 billion riyals ($8.3 billion) Al Khor project due to sluggish market conditions.
“There will be a lot of infrastructure spending, with demand for cement and steel so Qatar National Cement , Industries Qatar will benefit in the long term plus real estate companies such as Barwa,” said Shakeel Sarwar, head of asset management at Securities & Investment Co (SICO) in Bahrain.
The World Cup win would also likely speed up work on the $3 billion 40-kilometre Qatar-Bahrain Causeway, Sarwar added
Over the next five years Qatar will build a $25 billion rail network, an $11 billion new airport and a $5.5 billion new deep water seaport.
The Gulf state will also spend billions more on 12 air-conditioned soccer stadiums, boosting its need for additional power capacity in a country where summer temperatures can soar to above 50 degrees Celsius.
Other projects include a $1 billion crossing linking the new airport with mega-projects in the northern part of the capital, Doha. It will also spend an additional $20 billion on new roads.
Doha’s index surged 3.6 percent to 8,477 points on Sunday, its highest finish since Oct. 5, 2008 and biggest gain for seven months on the first day’s trading since the country was chosen to host the World Cup.
International construction firms heading to Qatar for the first time will face tough competition from regional players such as Dubai’s Arabtec , the United Arab Emirates’ largest construction firm, which has won a series of Qatar contracts this year and is well established there.
“We are ready and our timing in Qatar was right so we can definitely contribute to the boom that is required,” said Ziad Makhzoumi, Arabtec’s chief financial officer.
“There will be other companies that are interested in coming to Qatar but they will be new to the market there and will not have the advantage of the infrastructure build that we already have.”
Other regional construction firms likely to bid for World Cup-related contracts include Dubai’s Drake & Scull , Egypt’s Orascom Construction Industries and Bahrain’s NASS Corporation.
With the completion of the Qatar-Bahrain Causeway, Bahrain will be the country in the Gulf Arab region likely to benefit most from the World Cup, with visitors expected to use it as a base.
“Qatar will expand its hotel capacity, but it wouldn’t be sensible to create excess capacity that would be redundant after the event, so it is likely to also rely on Bahrain’s hotel industry,” SICO’s Sarwar said.
JP Grobbelaar, Colliers International director of research, estimates Qatar has around 10,000 hotel rooms, with this figure set to rise to 17,000 by the end of 2011.
Bid leaders have promised 95,000 rooms will be available by 2022.
“Qatar could find itself in an oversupply situation. It will have to design hotels that could be used for different purposes after the tournament finishes,” Grobbelaar said.
(Editing by Jon Loades-Carter)