Qatar Real Estate News
Recovery signs bring hope in construction sector
The construction costs have witnessed a steep decline by about 25 to 40 percent since last year, the time when the industry was at its boom.
According to sources in the construction industry, the cost of construction being quoted in tenders has now dropped to about 4000 per square meters for high quality construction.
Until late last year, before the onset of the global recession, the rates were in the rage QR5000 to QR6000 per square meters for high-quality building projects. The rates are applicable to both private and government projects. The low-quality projects have a much lower rate, say sources.
There has been a slowdown in the industry, compared to last year, and this is evident in the rates that the contractors have been quoting in their bids for both private and state projects, a source in the construction industry confirmed.
Atleast 60 percent of the cost of the project is kept aside for purchase of construction materials, and the rest 40 percent is spent on hiring labour, including contractor’s margins.
However, the sector is now showing signs of recovery. The demolitions happening in certain areas in Doha, may refuel construction booms and eventually make way for beginning new constructions. Demolitions are a way to bring buoyancy back to the industry, as new projects are being launched on razed sites, a source said.
The withdrawal of government subsidy is a good sign as it indicates that the local construction sector is getting back to normalcy with the worst phase being over, the source said.
Meanwhile, the Deloitte Middle East Report on the construction sector, has reported that the construction market in Qatar, UAE and Saudi Arabia offer good growth potential. Moreover, considerable funding allocated to infrastructure projects will be the key driver of growth. Qatar already has $10bn worth of strategic infrastructure projects planned, while UAE has allocated $275bn worth of projects in the pipeline.
Posted on 15/10/2009