Qatar named MidEast’s most expensive construction market

Construction costs in Qatar remain the highest in the Middle East, followed by the UAE and Saudi Arabia, according to a new report released by EC Harris, the global built asset consultancy firm.

The ARCADIS International Construction Cost study benchmarks building costs in 43 countries across the globe and found that relative construction costs have been affected by currency fluctuations, commodity prices and increasing demand for development in many recovering economies throughout the year.

With Gulf currencies closely tracking the US dollar, the impact of these fluctuations on Gulf countries has been limited, it said.

It added that in the Gulf region, costs remain relatively modest, despite high levels of investment in transport infrastructure, such as the $200 billion GCC rail network, and extensive event-led construction in the shape of Qatar’s successful World Cup bid and Dubai’s 2020 World Expo.

Globally, Qatar ranked the 16th most expensive construction market, with the UAE (19) and Saudi Arabia (20).

“What remains to be seen is what impact the ongoing instability in the Middle East and recent weakness in oil prices will have on spending plans and, consequentially, pricing,” the report said.

“The Gulf region is less impacted by fluctuations in global currencies as market constraints are driving inflation and price movements,” said Terry Tommason, partner and head of property at EC Harris.

“Investment on social infrastructure, economic diversification investment and event-driven construction are three key trends positively influencing construction spend in the region.”

 Tommason added: “Of the OPEC members, Abu Dhabi, Qatar and Saudi Arabia are amongst the best placed to be able to continue to fund budget commitments, but with oil trading hovering around $50/barrel earlier this month, it is possible that current and capital spending priorities may come under review.”

Globally, Switzerland is the most expensive country in the world for construction while Japan and Singapore have seen significant relative cost reductions over the last year.

In contrast to last year’s index, European countries dominate the top ten. This is due, in part, to the ongoing economic recovery in the likes of the UK, Germany and France which is gradually translating into contractors demanding more for their services.

Meanwhile, currency devaluation in many emerging markets means that relative costs have dropped considerably in these areas. Costs in the likes of India, Indonesia, Malaysia, Thailand and Vietnam are now around 35 percent less that of the UK.

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