Qatar’s construction sector is projected to expand by 14.1 percent in 2014, up from 13.6 percent in 2013, and may well accelerate faster in 2015.
The main driver is the government’s heavy investment in economic infrastructure, particularly local roads, expressways, the Doha metro and rail, and drains and sanitation at a pace that is likely to pick up over 2014 and 2015, according to Qatar Economic Outlook 2014-15.
The construction of new health centers and education facilities will also entail heavy spending. Private construction activity centered on residential and commercial real estate development, including new malls, hotels and labor accommodation, will also buttress construction growth.
The Economic Outlook also noted that the country’s manufacturing, sector too, will grow but not as quickly as either services or construction, nor as fast as in the recent past.
In 2014, its growth is seen moderating with declines in fertilizer and refined products. With global fertilizer prices falling, the opportunity cost of supplying feedstock to the industry is rising.
Other segments of manufacturing will grow but more slowly than in recent years as production capacity tightens.
In 2015, however, growth is set to come back higher on the back of a revival in output of refined products and petrochemicals, and as feedstock comes from Barzan.
Growing demand by construction for cement and metals linked to the large capital projects should encourage some investment in new capacity, prompting manufacturing growth to recover some of its earlier impetus.
Citing Qatar Central Bank’s real estate price index data, the report noted the country’s real estate transaction prices at end-2013 were 20.7 percent higher than a year earlier.
While land and building prices continue to appreciate, the average index level for 2013 (180.4) is still 6.1 percent lower than the index peak of August 2008 (192.2), the Economic Outlook said.
The Business Monitor International that tracks real estate rental prices for Qatar suggested that on the first nine months of 2013, average industrial rents declined by 7.7 percent (relative to January–June 2012) from QR98 to QR90 per square meter per month. Office rents increased by a mere 0.8 percent while retail rents remained constant.
Measured retail rental changes were probably affected by new government regulations introduced in 2013, including a two-year price freeze for existing tenants.