Qatar has long been one of the top markets in the Middle East, a view underlined by the level of activity in the market, and the government's commitment to infrastructure and the focus of regional construction companies on the sector. However, the country's fortunes over recent years appear to be a very mixed bag, “Qatar Infrastructure Report Q3 2010” released by Companiesandmarkets.com said. The newly revised data shows that Qatar's construction industry grew at an exceptional rate between 2006 and 2008. However, despite the historic high growth trend, Qatar's construction industry contracted in 2009, with industry value falling to QAR25.78 billion ($7.08 billion), a real contraction of 21.78 percent. Nonetheless, the report remained optimistic that Qatar will outperform other countries in the region - in the short term, the low base effects from 2009 will drive high growth in 2010 (forecast at 17 percent y-o-y). Over the next five years, growth is expected to average 9.9 percent between 2010 and 2014. The optimism is grounded on a number of factors: q Government investment plans: 36.9 percent of 2010/2011 fiscal budget (QAR43.5 billion/$11.9 billion) has been allocated for major capital projects, with infrastructure set to account for the majority of this - QAR35.5 billion ($9.7 billion). The country's comfortable fiscal position will enable it to continue to allocate large sums to the infrastructure sector; q Large infrastructure projects are under way and upcoming: $9 billion New Doha International Airport, $7 billion New Doha Port project, $13 billion Qatar-Bahrain Causeway, $17 billion development of a national rail network and a handful of power and water plants, including the $3.9 billion Ras Laffan C - the largest power and water plant in the region; q Attitude of construction industry players to the market: Saudi Binladin Group set up a joint venture (JV) with Qatari Diar Real Estate Investment Company in March 2010, to target Qatari construction projects, the UAE's Al Habtoor Leighton and Drake & Scull International have been eyeing up the sector; and, q Strong project finance and infrastructure business environment ratings means the country will continue to attract private investors to its infrastructure sector. Qatar scores in the 60s for both, indicating an attractive and safe project finance environment and a stable business environment with numerous opportunities. Government support for infrastructure projects is probably the biggest fundamental driver of growth in the sector. The government is in a comfortable position to afford capital investment outlays allocated in the budget. In April 2010, the government of Qatar announced its budget for the 2010/2011 fiscal year (April 1 to March 31). Capital projects will eat up 40 percent of the budget equal to QAR43.5 billion ($11.9 billion), with infrastructure accounting for the vast majority of that with QAR35.5 billion ($9.7 billion) allocated. Government's committment to infrastructure projects presents optimism for a number of large flagship infrastructure projects currently planned to eventuate over the medium term. Qatar is investing heavily in transport infrastructure, with a $22 billion national rail network planned, a new port and airport and the longest marine suspension bridge, which will link to Bahrain. In the energy and utilities sector, investments are ongoing into the power and water capacity build up, the report noted.
