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Qatar adapts to post-Fifa market

24 January 2024

Commentary
John Bambridge
Analysis editor

For the past decade, Qatar has had clearly mapped out capital spending plans centred around Doha’s build-up to the 2022 Fifa World Cup and the associated redevelopment of the capital through a massive real estate and infrastructure upgrade programme.

As an economic strategy it was a simple but effective driver of both short-term growth and foreign direct investment, providing sustained support to the construction and services sectors. The infrastructure that was laid down in this period will also underpin organic growth for decades to come.

Yet just as the scale of the projects boom was dramatic, so too has been the recent drop-off in activity.

In 2014, there was about $27bn of construction and transport project awards, led by Doha rail schemes and an ambitious countrywide road-building programme. In 2023, there was only $1bn of awards in the same sectors.

The upshot is that demand for general contracting services is likewise in decline, driving many international and local contractors to look to other markets, especially Saudi Arabia, for work.

Amid the lack of a next big thing to aim for, Doha is reinvesting in the mainstay of the Qatari economy: its hydrocarbons sector, awarding projects worth more than $47bn between 2021 and 2023 – an extraordinary surge in work compared to the $4.1bn-worth of awards in the three years before that. The work is predominantly focused on processing liquefied natural gas for export, poising the country to continue to expand its global market share.

There has also been an upswing in power and water sector activity, with close to $8bn of awards across those two sectors in the past two years.

This fillip of additional hydrocarbons and utilities work will keep the projects market as a whole broadly healthy, and many general contractors will benefit from the nuts-and-bolts construction work that accompanies these schemes. A subset of contractors may also be able to reskill and upskill their workforce for the more specialist aspects of the work.

Outside of this gas sector investment, there is little clarity about the future of the country’s projects market. The Qatar National Vision 2030 is relatively opaque, speaking to development in general terms, but not identifying areas of strategic interest or specific investment ambitions.

One prospect is renewed transport investment, as Doha again eyes rail links with the rest of the GCC and fine tunes its road networks.

There are construction and transport projects worth about $14bn expected to be awarded in 2024 – and the letting of even a portion of this would help soften the sharp decline in the general contracting market. Yet the broader trend remains of the Qatari projects market being one of rapidly shifting priorities.

MEED's February 2024 special report on Qatar includes: 

> GOVERNMENT & ECONOMY: Qatar’s return to economic normality
> BANKING: Qatar’s banks adjust to new circumstances
> OIL & GAS: Qatar enters period of oil and gas consolidation
> POWER & WATER: Qatar power and water projects to take off
> CONSTRUCTION: Qatar construction enters reboot mode
> SPORTS: Qatar’s sporting vision transcends World Cup

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John Bambridge

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