(MENAFN- The Peninsula) Qatar is the second most attractive market in the world for investments in infrastructure. A global Infrastructure Investment Spending Index that measured world's 41 potential countries with the greatest potential for infrastructure investments ranked Qatar the most dynamic infrastructure market. UAE has overtaken Canada to make the third rank.
The globally reputed ARCADIS Global Infrastructure Investment Spending Index, ranked Singapore as the top market. The US and the UK have entered the top 10 for the first time, indicating improvement in their economies and fr the US in the growing need for investment in infrastructure.
Despite Qatar's hydrocarbon enriched positions the country is all experienced in harnessing private investment. Qatar has relied on access to cheap debt to finance investment. Looking ahead, there are expectations that government will seek to diversify funding streams further, accessing capital market finance to support spending plans.
A leading contractor based in Doha sees total infrastructure investments in Qatar breaching the $200bn mark in the next 10 years. Mohammad Moataz Al Khayyat, CEO, Al Khayyat Contracting and Trading, a leading international design and build company headquartered in Doha, Monday said that Qatar's state funding alone has been estimated to reach $160bn. He believes, however, that additional investments will pour in from the private sector to complement what the government is doing to boost infrastructure development in the country.
ARCADIS report noted access to finance will be critical for the top-tier countries scale up investment, including Qatar. In Qatar and the UAE in particular, national vision strategies combined with major international events have led to expectations of phenomenal peak spend in the next 4-5 years.
Almost half of the investment planned relates to transportation, with every major city in the region planning to build a metro system with lines being constructed simultaneously in a relatively short period of time. At the same time ports, airports and a heavy rail network are all under construction leading to increased competition for resources. The key risk in these markets therefore is inflation in construction resources from manpower and specialist skills to construction commodities.
"While the future prospects for Qatar's infrastructure projects market look promising, supply and construction costs issues will eventually surface and must have to be addressed, said Mohammad Moataz Al Khayyat. "Al Khayyat is currently developing many projects, and is feeling the burden of rising construction costs. By Al Khayyat's estimates, prices of construction materials have increased by as much as 5-10 percent in the last twelve months", he said.
In its "Qatar: Avoiding the Inflation Bubble" report from 2012, ARCADIS predicted that construction inflation could reach 18 percent between 2016 and 2019. However, given overall investment levels around the region mean up to 20 percent construction inflation is more probable. This is compounded because of the firm deadlines around projects related to Qatar's 2022 FIFA World Cup and Dubai's 2020 World Expo.
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