Transport Continues To Drive Growth
The awarding of the final line of the Doha metro to be tendered and the commencement of construction on key highway projects further supports our view that Qatar's transport sector has entered into a period of significant growth. Investment in the transport sector is a key government priority as Qatar looks to ease congestion in Doha, facilitate the diversification of the economy and cater for the upcoming Fifa World Cup in 2022.
The USD4.4bn Gold line of Doha's metro has been awarded to the ALYSJ joint venture (JV), which is headed by Greek firm Aktor, with India's Larsen & Toubro, Turkey's Yapi Merkezi and STFA, and Qatar's Al Jaber Engineering. The development of Doha's metro network is the major factor underpinning our forecasts in for Qatar's rail transport sector; we expect strong growth from 2014 onwards, averaging 11.5% over our 10-year forecast period.
We note that due to Qatar's and the region's lack of existing rail infrastructure, there are huge opportunities for international firms to enter the market. Looking at selected companies for Doha's metro lines, the reliance on international firms for the development of Qatar's railway is apparent. Vinci, GS Engineering and Construction, Darwish Engineering, Impregilo, SK Engineering and Construction, Galfar Engineering and Contracting, Porr, the Saudi Binladin Group, HBK Contracting, Samsung C&T and OHL have all been brought in to develop the network. While the metro has now been fully awarded there are still plans to build tram routes in West Bay and Lusail, a high-speed line and dedicated freight railways - all part of Qatar's US$40bn rail development plan.
|Road And Rail Supporting Growth|
|Transport Infrastructure Industry Value, QARbn (LHS) and Rail and Road Infrastructure Industry Real Growth, % Change y-o-y (RHS)|
We recently noted that Qatar has also awarded major highway projects. The new contracts, worth over QAR10.4bn (USD2.8bn), were for the New Orbital Highway and Truck Route, which aim to cut congestion in Doha by looping around the city, enabling heavy vehicles travelling from the New Doha Port to the Ras Laffan industrial zone to bypass urban areas ( see ' Orbital Highway Supports Forecasts, Eases Congestion', 3 April). Following this news, Qatar has begun work on its East West Corridor in south Doha, which will feature five lanes in each direction, and will connect the Orbital Highway to the Hamad International Airport. This news not only supports our road infrastructure forecasts, which average annual real growth over the 2014 to 2023 at 5.5%, but also is an example of Qatar successfully managing its infrastructure pipeline.
We have previously noted that shortages of skilled workers have held projects back and Qatar's institutions have struggled to manage one of the largest project pipelines in the region and certainly the busiest period in the country's construction history. Major players within the wider construction sector have highlighted that the inefficiency of the bureaucracy is exacerbating the materials and labour shortages, which has seen many flagship projects delayed. The new Hamad International Airport for example, which welcomed its first passengers in May, is years later than expected. However, the East West Corridor has been implemented according to its initial timetable - a sign that the industry is becoming more adept at dealing with the challenges it is facing.