By Colin Foreman www.meed.com 

While years behind Dubai, Abu Dhabi and Doha are at last taking public transport schemes seriously.

The past five years have clearly demonstrated that when Dubai builds something, its rivals quickly try to follow with their own schemes. Dubai was the first city to start building super-high-rise towers. Now, Doha, Jeddah, Riyadh, Kuwait and Abu Dhabi are all either building or planning to build their own tall towers.

Metro projects are the latest focus for planners. On 9 September, Dubai Metro opened, and in the months before and after the event, Abu Dhabi and Doha began to try to catch up by announcing their own plans for metros, trams, and light-rail networks.

In May, Abu Dhabi started tendering consultancy contracts for its planned metro and tram systems. In late August, Doha tendered a construction contract for a railway station at its new international airport, and in October, the UAE officially unveiled plans for its inter-emirates rail network – the Union Railway.

Doha has now gone one step further, with Qatari Diar Real Estate Investment Company revealing it will tender a contract to supply and build a light-rail network serving Lusail, a new town north of Doha, in December.

The project is just part of Qatar’s rail plans. The government is also planning a metro network for central Doha, and a high-speed line running from Mesaieed through Doha and Ras Laffan onto Bahrain across the Qatar-Bahrain causeway.

However, it is important to remember that Abu Dhabi and Doha’s plans are still embryonic. In Dubai, it took more than four years to build the first metro line.

But while Dubai’s rivals are years behind, their new-found focus on developing rail networks shows Abu Dhabi and Doha are at last taking public transport schemes as seriously as other utilities, such as water, sewage and electricity. And about time too.

Source: www.gulf-times.com 

 The UITP (International Association of Public Transport) Second Middle East and North Africa (Mena) Congress starts in Doha on October 25, a senior official has said.
Mowasalat Director of Business Development Ahmed al-Ansari said that at least 300 delegates representing various transport companies, regulatory authorities, vehicle manufacturers, government departments, local civic bodies and planning forums would participate in the three-day meeting.

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MEED reported that trying to devise realistic economic plans is fraught with difficulties at the best of times, let alone in the middle of a global economic downturn. But that is the task facing officials at Qatar’s Urban Planning & Development Authority and Japan’s Oriental Consultants which are due to finish work on the Qatar National Masterplan by the end of 2009.

The document, which will be published in January will set out a guide for the development of Qatar over the next 25 years and could be one of the most important documents in the country’s history. Such masterplans are nothing new in the Gulf. Abu Dhabi and Bahrain both have plans covering the next 21 years and governments across the region have been keen to put in place long term targets to guide their economic development. But the reality does not always match the ambition Dubai is reviewing its Strategic Plan 2015 in light of the global economic downturn.

Construction concerns

As much of the work on Qatar’s masterplan has been carried out during the current downturn, Doha should at least be realistic about the country’s economic prospects and the need for continued large scale government investment.

On the face of it, Qatar’s economy appears to be the strongest in the GCC, with the International Monetary Fund predicting growth of 18% in 2008 and 16.4% in 2010 in part due to the healthy revenues from the sale of liquefied natural gas. But there are worrying signs of a potential slowdown in private sector activity.

In early August, a report by the US’ Bank of America Securities Merrill Lynch warned that Qatar could face a significant oversupply of homes by 2012 as the workforce that has been building the country’s infrastructure in recent years begins to leave.

Mr Blair Hagkull MD for the Middle East and North Africa at US real estate services company Jones Lang LaSalle said that “The ‘build and they will come’ era is behind us. Doha is evolving into a much more mature market that is more focused on the traditional real estate fundamentals, rather than how quickly something can be built.”

He said that with private sector development slowing, the government is likely to play an even more crucial role in the country’s economy. Already, the majority of upcoming projects in Qatar are government backed and construction industry sources in Doha said that they expect a large number of major contract awards in the coming months.

Rail projects

Further infrastructure schemes are expected to be launched in the coming years, based on targets in the masterplan. They are likely to include a series of rail lines to be developed over the next 10 years. The government said that it plans to build a rail link following the east coast between Ras Laffan and Mesaieed a high speed line across the causeway to Bahrain, a freight line connecting to the planned GCC rail network, a metro network in Doha and a light rail network serving residential developments around the capital.

The billions of dollars worth of work that such schemes represent should ensure that Qatar remains an attractive market for inter national companies. But the recent downturn has also exposed some problems for companies working in Qatar. Malaysia’s UEM claims it has not been paid in full by the Public Works Authority after completing the 81 kilometer long Salwa Road project in 2008 and other contractors working on road projects complain of difficulties and delays in being paid.

One international contractor working in Doha said that “It is a difficult place to work. The supply chain is limited and you have to use a lot of local suppliers so there are a lot of hidden problems that you do not plan for at the tender stage.”

Perhaps the biggest problem the masterplan will need to address is ensuring that international companies and their staff want to come to the country in the future. A large number of real estate developments have been launched in recent years including Lusail and The Pearl Qatar and the market is already showing signs that supply and demand are approaching equilibrium.

Mr Hagkull said that “After many years of chronic shortages, supply is catching up with demand.”

He said that much of that demand comes from expatriates who are working on developing the country’s infrastructure. Unless Qatar creates new jobs for these people, many could leave, creating a problem of oversupply as the Bank of America Securities Merrill Lynch report warns. That in turn would have a knock on effect on other areas of the economy with consumer demand falling for other goods and services and could bring to an end the recent period of rapid economic growth Qatar has enjoyed.

Construction on the port and the railways will still be going on in 2012 which will help to mitigate the problem but the government’s masterplan will also need to lay out other strategies to spur the private sector into action.

(Sourced from MEED)

By Elie Milky and Hala Matar Choufany  www.4hoteliers.com

This article sets forth an insight into economic developments, tourism investments and the characteristics of the hotel market in Doha and although 2009 looked set to outperform 2008, itself a record year, Qatar began feeling the effects of the economic recession, specifically in the second quarter of 2009.

However, since the government maintained a sober level of caution throughout the most optimistic years, it is believed that the country will be able to withstand the slowdown better than most economies in the region and the world.

In his opening address to the summit of the Arab League held in Doha on 30 March 2009, HRH Hamad Bin Khalifah Al Thani, the Emir of Qatar, received the dignitaries saying:

“I welcome you to an Arab homeland that is striving to be an open forum for a free and unconditional dialogue which could be right or wrong, which is the responsibility of the participants, and this is characteristic of freedom.”

In addition to witnessing a common gesture of warm Arabian hospitality, the world looked on as this tiny monarchy in the Arabian Gulf was increasingly becoming a major player in regional and international affairs. Indeed, Qatar is striving to be an open forum for free and unconditional dialogue.

Thanks to the efforts of the ruling class, the country has been successful in hosting conferences dealing with regional political conflicts, the turbulent economy, as well as various cultural events.

These, complemented by Qatar’s extensive gas wealth, have led to a thriving corporate and meetings segment and a relatively mature hotel market. Hotels have been achieving the highest average rates in the region, thus arousing interest from investors and operators to invest in new tourism-related projects. Visitation numbers have been soaring and a new airport is under construction to deal with the increasing numbers. Additionally, despite the relatively non-existent leisure market, efforts are under way to attract this segment.

Therefore, this article sets forth an insight into economic developments, tourism investments and the characteristics of the hotel market in Doha. Although 2009 looked set to outperform 2008, itself a record year, Qatar began feeling the effects of the economic recession, specifically in the second quarter of 2009. However, since the government maintained a sober level of caution throughout the most optimistic years, it is believed that the country will be able to withstand the slowdown better than most economies in the region and the world.

Politics

Owing to Qatar’s good ties with the international community and modest relations with its neighbours, over the years the country gradually became a diplomatic beacon. This is particularly owing to the emir’s historic strides in making Doha a venue for economic and political dialogue. Recent examples include, among others, brokering peace between Lebanese factions, helping establish diplomatic ties between Syria and Lebanon, and hosting the Arab League summit in support of a ceasefire between Israel and Hamas.

Efforts to enhance the country’s global profile were also assisted by Qatar’s joining of the UN Security Council in 2006. Furthermore, the monarchy’s international relations continue to be shaped largely by its ties with the USA; the two nations have become close allies. After the 2003 invasion of Iraq, Qatar replaced Saudi Arabia as the logistical hub for US military activity in the Gulf.

Economics

Despite the birth of a new constitution in June 2005, Qatar’s main internal activities remain largely economic. The discovery of oil in the 1940’s shifted the country’s economic focus from fishing and pearling to primarily gas exploration.

Qatar is the largest exporter of gas in the world and is believed to have the world’s third largest gas reserves. There are currently projects to expand its facilities to maintain competition with world players.

Therefore, economic policy remains predominantly focused on the development of Qatar’s vast non-associated reserves of natural gas, although greater efforts are being made to attract foreign investment into the country’s non-energy sectors. Fiscal policy remains somewhat cautious, and it is expected that the fiscal account will record substantial surpluses over the next few years. As such, economic indicators for 2008 showed record growth. According to the Economist Intelligence Unit (EIU), real GDP grew by more than 13%, with one of the highest forecasts in the world for 2010 and 2011.

Developments and Initiatives

As in other cities in the region, such as Dubai and Abu Dhabi, developments in Doha have attracted the attention of the world, albeit on a smaller scale. In recent years, significant investment has been made in the city’s infrastructure, commerce and tourism.

The government has impressive plans to further improve the economic wealth of the country, and is putting much effort into diversifying the economy.

Table 1 (right) sets out the country’s three mega developments that are currently under way.

In addition to other developments that include, among others, Barwa City, Education City, Sports City, City Centre Expansion Project and the New Doha International Airport, the above mega developments comprise mixed-use components and other characteristics that are worth mentioning.

• The Pearl is an ambitious land-reclamation project, the three square kilometre island lies immediately to the east of West Bay, in an area known as West Bay Lagoon, approximately 20 km north of Doha’s central business district. Facilities will include villas and multi-family residential units, six luxury and boutique hotels, retail areas and restaurants, entertainment and recreational facilities, schools, mosques, community centres, parks and four marinas. There will be opportunities for foreigners to invest in or acquire freehold properties on the island;
• Lusail is a US$5.5 billion project that will create a new waterfront city close to the Pearl over an area of 32 km² and is intended to be the biggest domestic real estate development in the country. It is expected to provide accommodation for more than 200,000 people, a workforce of 160,000 and up to 60,000 visitors a year. It will include 3,000 lifestyle villas and 12,000 apartments, 22 hotels, two golf courses, 300,000 m² of shopping, six square kilometres of commercial space, and a dedicated family entertainment district that will provide attractions for residents and visitors alike. The development will also house Energy City, which will be the Gulf’s first centre for the hydrocarbon industry. Entertainment City will provide state-of-the-art facilities and pose as a stand-alone leisure demand generator;
• Heart of Doha is a major development aiming towards the rejuvenation of the centre of Doha’s historic district. Developed by Dohaland, a subsidiary of Qatar Foundation, the US$5.5 billion project will be built on a 35 hectares site. The architecture will be traditional and reminiscent of the past while modern technology will be widely available in an effort to ‘bridge the past with the future’. The project will include more than 226 buildings, 122,217 m² of parks and open spaces, the Qatar National Archives, a theatre, three hotels, schools, as well as a heritage district. Owing to the narrowness of the streets, a dedicated tramway connected to the Doha Metro is currently being considered.

Visitation and the Hotel Market

The tourism industry witnessed a record year in 2008, surpassing the one million mark. This increase in visitation numbers occurred constantly over the last ten years. Table 2 looks at passenger movements at Doha International Airport from 1999 to 2007.

In 2003, Doha International Airport and the Government of the State of Qatar announced a master plan for a new US$2 billion airport to be built to the east of the current airport to assist in positioning Qatar as a leading regional aviation hub. Construction on the airport began in 2004 and once completed in 2015, the airport will have two parallel runways and the capability to handle and process nearly 50 million passengers a year. The terminal will have 24 contact gates in the first phase and will accommodate up to six A380-800 ‘Super Jumbo’ aeroplanes when fully developed. Until the new airport is opened, the existing airport is being significantly upgraded to handle the increase in passenger growth.

Hotels in Doha performed exceptionally well in 2008. Despite a three percentage point decline in market occupancy to 68%, Doha led the rest of the region with an average daily rate of $340, an 11% increase over 2007. Hence, it achieved a RevPAR of $230, second only to Abu Dhabi.

Doha’s mature hotel market is comprised of some of the world’s major brands, many that have existed since the 1990’s and the turn of the millennium. Such hotel groups include the Four Seasons, Marriott, Starwood, InterContinental and Mövenpick. Their presence in the market benefited from Qatar’s various initiatives and have thus been able to accommodate various economic, political and cultural events over the years, creating a strong, high-paying corporate and meetings segment.

The government is currently taking initiatives to expand on its almost non-existent leisure market. Projects such as the Lusail and the Pearl are expected to attract leisure tourism once their recreational components become operational.
Table 3 is a list of confirmed hotel supply in Doha, with a graph that takes into account the opening of the W and Grand Hyatt in March 2009, as well as the expected opening of Oryx Rotana (400 rooms and Swiss Belhotel (185 rooms) later this year. We understand that there are a number of hotel projects that are still in the negotiation phase and are still believed to be confidential.

Therefore, we are confident that more projects will be announced by the end of the year. These will include international brands and their estimated opening dates will be from 2012 onwards.

Furthermore, Qatar National Hotels (QNH) announced in early May that it plans to spend $1 billion on international property acquisitions as well as the development of new hotels in Doha. This is in line with the company’s vision and positioning plans.

The company currently owns five luxury hotels in Qatar and is using cash as a means of benefiting from investment opportunities in these turbulent market conditions.

Outlook, Characteristics and Observations

How then, will Qatar maintain its momentum in the face of the recession, and what characteristics of the market stand out today? In addressing hotel operators, developers and investors, we seek to point out some characteristics and necessary observations.

• Analysts are forecasting a stable outlook for Qatar owing to the country’s strong economic fundamentals and upbeat state support. For instance, the most recent move is the government’s plans to buy over $4 billion worth of real estate assets from Qatari banks to stimulate the economy. And, as a precautionary measure, Qatar Airways has put into motion a three-month action plan that will introduce low-cost services to deal with the potential threat from the budget arm of the industry;
• The Pearl and Lusail developments alone are expected to bring in approximately 800 and 5,000 hotel rooms, respectively, once the developments are complete. The developments are expected to create a leisure market that, to this day, remains minimal;
• Hotel average rates for 2009 are expected stay at a par with 2008, with the possibility of a slight drop should occupancy continue to struggle. Companies have started moving their corporate accounts to midscale hotels in a cautious attempt to review their budgets, thus decreasing demand for the luxury hotel product. The further opening of the W and Grand Hyatt in March have brought in a greater supply of hotel rooms to the market;
• With the existing and proposed supply of midscale and luxury hotels in Doha, there is believed to be a rising need for a branded budget product. This will be necessary to cater for the future, mass leisure market as well as the lower budget corporate and meetings segment;
• Hotels in Doha today are believed to operate with a relatively low rooms expense percentage ranging between 9% and 12%. In addition, hotels’ food and beverage operations are run with a high profitability ratio, with some achieving more than 40%. These margins, believed to be one of the highest in the industry, are expected to witness a gradual decline owing to Qatar’s soaring inflation;
• Food and beverage facilities make up an essential part of hotel operations in Doha owing to the absence of sound restaurants and bars elsewhere, also creating a local market. Branded properties across the city have a substantial number of outlets, with some exceeding ten. This, along with high revenue from meetings and conventions, has led to food and beverage revenue in some properties constituting a staggering 50% of total hotel revenue;
• In addition, hotels in Doha (primarily luxury facilities) have shown the need for extensive meeting space and state-of-the-art spa operations. Hotels requiring entry into the market will see the need to include these facilities in their plans to be able to compete with the existing supply, as well as cater for significant related demand;
• The branded serviced apartments market in Doha is still at an infancy stage in comparison to regional markets such as Abu Dhabi, Dubai or even Riyadh. The first branded supply only entered the market with the opening of the W and the Grand Hyatt earlier this year. However, the existing independent supply tells us that demand is mostly present for one-bedroom and two-bedroom units, as opposed to larger apartments;
• Today, many hotel projects are expected to experience delays or to be put on hold owing to the economic slump. However, for investors looking to develop hotels in the market, we believe it is a good time to invest. Qatar’s economic promise makes it ideal for projects that break ground during the slowdown to be ready for business at the time of a foreseeable recovery;
• Over the last few years Qatar has made various attempts to control soaring inflation which reached 15% in 2008. It is, however, believed that the slowdown may in fact help keep this inflation rate in check. Recent estimates, also by the EIU, are now forecasting negative inflationary growth (-2.8%) for 2009 as opposed to an earlier estimate of 9%.

Conclusion

Qatar looks set to remain an investment hub and an active player in international relations. Hence, we believe Doha is ripe for investment today.

As mentioned earlier, hotel projects that break ground today may be able to benefit from an improved economy when their doors open for business. And with a promising leisure segment, demand looks set to grow despite the current slowdown. The Qatar Tourism and Exhibitions Authority estimates a total of $17 billion to be spent on tourism infrastructure over the next five years to support the increase in hotel supply, and thus increase the current leisure segment from 5% to up to 30% of total demand.

Furthermore, house prices, which saw a 30% decline according to some estimates, are expected to remain healthy owing to continued demand that remains global. Construction activity is expected to see a growth of double figures in 2009 as funds from gas revenues are reinvested into infrastructure. With the government buying real estate shares from the country’s financial sector, Qatar has shown its genuine intentions to tackle the downturn at home. Therefore, business sentiment remains positive and the EIU is still forecasting a growth of double figures in real GDP.

Today, you may wonder where Qatar stands as the economic slump takes its toll on the region. Even though some compare present day Doha to Dubai in the late 1990’s, two things set it apart – its gas wealth, and most notably, the monarchy’s level of caution. Developments in Qatar never reached the overly ambitious plans of Dubai. And therefore, despite the increasing promise of Qatar’s resources and related projects, authorities and economic players alike have taken a step back. In short, the term that best describes the underlying economic sentiment in Doha today can modestly be coined ‘cautious optimism’.

For feasibility studies, valuations, strategic positioning, operator search and further advice please contact the authors.

About our Team
HVS has a team of experts that conducts our operations in the Middle East and North Africa. The team benefits from international and local backgrounds, diverse academic and hotel-related experience, in-depth expertise in the hotel markets in the Middle East and a broad exposure to international hotel markets. Over the last three years, the team has advised on more than 150 projects in the region for hotel owners, developers, lenders, investors and operators. HVS has advised on more than US$25 billion worth of hotel real estate in the region.

About the Authors
Elie Milky is an Associate with the HVS Dubai office, specialising in hotel valuation and consultancy. He joined the London office of HVS in 2007 after completing an MBA from IMHI (ESSEC Business School), Paris, France, three years of experience in hotel operations in Lebanon and the UAE, and a BA in Hospitality Management from Notre Dame University, Lebanon.

Since then he has conducted a number of valuations, feasibility studies and consultancy assignments across Europe, Africa and the Middle East before relocating to Dubai early 2009.

Hala Matar Choufany is the Managing Director of HVS Dubai and is responsible for the firm’s valuation and consulting work in the Middle East and North Africa. She initially joined HVS London in 2005 and moved to HVS Shanghai in September 2006 where she helped grow the Shanghai office and business in the Asia region. She relocated to Dubai in September 2007 and looks after HVS’s interests in the Middle East. Before joining HVS, Hala had four years of operational and managerial hotel industry experience.

She lectured at Notre Dame University in Lebanon on International Travel and Tourism. Hala holds an MPhil from Leeds University, UK, an MBA from IMHI (Essec- Cornell) University, Paris, France and a BA in Hospitality Management from Notre Dame University, Lebanon. Hala has worked on several mid and large scale mixed-use developments and conducted numerous valuations, feasibility studies, operator search, return on investment and market studies in Europe, the Middle East and Asia.

For further information, please contact one of the authors.
Elie Milky – Associate, Dubai
Email: emilky@hvs.com
Direct Line: +961 70 440 256
Hala Matar Choufany – Managing Director, Dubai
Email: hchoufany@hvs.com
Direct Line: +971 50 4597930
© HVS 2009

www.hvs.com

MEED reported that Qatar is preparing to tender construction work on one of the 5 rail networks it plans to build over the next 10 years.

Qatar-Doha

The New Doha International Airport Steering Committee has invited contractors to pre qualify for a contract to build a train station at the USD 11 billion airport that is under construction close to Doha’s existing airport.

UK based Mace International is the project manager for the scheme which is known as the Passenger Rail Station Box. The project involves building a railway station terminal for an express airport rail line that will connect to rail and metro stations in downtown Doha and other rail networks. Sources familiar with the project said that the steering committee wants to finish the station in time for the opening of the first phase II of the airport in 2011.

Consultants said that they expect the Trade & Business Ministry will invite them to submit proposals for a national railway system in 2010. Qatari Diar Real Estate Investment Company in partnership with Germany’s Deutsche Bahn has already developed a conceptual design for a national railway system in Qatar.

The companies’ multi billion dollar conceptual design has 5 components. It includes an east coast rail link between Ras Laffan and Mesaieed, a high speed link from Doha to Bahrain across the Qatar Bahrain Causeway, a freight link connecting into the planned GCC rail network, a Doha metro network and a light rail network serving residential developments.

(Sourced from MEED)

The Lusail Real Estate Development Company has said that its iconic waterfront development, underway in Doha’s north, will be bigger than Beirut when completed and accommodate close to half a million people.
“The future city of Qatar”, as the chief executive officer Mohamed bin Ali al-Hedfa calls it, is also right “on schedule to meet the hopes and aspirations of the nation”.
The area of Beirut is 19.8sqkm while the Lusail development will be spread over 35sqkm. The first phase of the multi-billion dollar project is expected to be completed in 2011.
“The population of 455,000 in Lusail will rival that of Luxembourg City which has a population of 491,000. Additionally, Lusail’s waterfront of 28km will be seven times longer than that of Monaco which has a shoreline of only 4.1km,” the company said in its first issue of Lusail Newsletter.
Among Lusail’s population of 455,000 the development envisages, 200,000 will be residents living in its 25,000 residential units, 165,000 will work at different districts and 90,000 will be visitors to various entertainment and recreation facilities.
“Our vision and progress (for Lusail) have attracted attention all over the world. And so it should. After all, the future city of Lusail is where Qatar’s imagination comes to life,” al-Hedfa noted.
With its 17 mixed-use districts, the city will boast its own Light Rail Transit (LRT) network – “the most advanced in the Middle East”. LRT will operate on four lines around 32 passenger stations, and beyond Lusail to the New Doha International Airport via the proposed Qatar Railway system.
“The preliminary design of the project has already been completed.”
In addition to LRT, a Lusail highway and marina bridges, the city will have additional access points with the Al Khor Highway on the western boundaries and water taxis serving the districts on the eastern side.
Qatari Diar, the project owner and the master developer, appointed Qatari Diar Vinci Construction (QDVC) in February to excavate the tunnels for LRT.

www.gulf-times.com

DOHA: Mowasalat, Qatar’s public transport provider, plans to increase the number of points where taxis pick up customers in the city to 60. There are currently only 15 taxi stands in Doha.

Mowasalat officials during a press conference in Doha

The bus system has grown, with the number increasing from 20 buses in 2005 to 260 at the beginning of the year. “We are now covering 37 routes over the whole country,” said Ahmed Al Ansari, Business Development Director of Mowasalat.

Jassim Al Sulaiti, Chairman of Mowasalat, said that the company’s green policy is still at its evaluation stage. The 200 gas- and 5 electric-powered cars and buses, custom-made for Mowasalat, are being put through their paces before the company decides to invest further in them. Research is still needed to adapt the vehicles according to the harsh Qatari weather conditions. He also noted that whilst the company grows, customers need to remain patient.

Al Ansari added: “We are gradually replacing taxis in use for three years, and there will be a public auction of these during Ramadan, to maintain customer comfort and modernity of fleet.”

In a press conference yesterday, attended by several high-ranking Mowasalat officials, including Jassim Al Sulaiti, Chairman of Mowasalat, Ahmed Al Ansari, Business Development Director, and Ali Behzad, Administrative and Training Manager, the company announced its plans.

Mowasalat also announced that it will host an upcoming conference on public transport. The three-day, biannual conference, ‘Public Transport in the MENA Region: Turning Ideas into Reality’ is due to start on October 25 at Doha’s Grand Hyatt Hotel. The second International Association of Public Transport (UITP) Middle East and North Africa (MENA) Congress and Showcase will be a continuation of the first conference held in Dubai, and will host approximately 700 participants from across the region. It will focus on issues including present challenges facing public transport, policies and methods of organisation, and rail systems and metro links. Companies will also be involved to learn more about communication systems, traffic systems and the like.

“We have also invited experts from Europe, to bring international methods and more established examples of transport systems from which the MENA region can learn,” commented Al Ansari.

“The conference will highlight whatever developments and problems faced by the member countries, how to solve them, and for those who have had successful experiences to give presentations.”

www.thepeninsulaqatar.com

The transport sector is one of the Middle East and North Africa’s biggest investment magnets, as governments and their private partners start to turn the region’s often antiquated and under-developed maritime, rail, road and air infrastructure into world-class assets, writes Ian Lewis…

The ambitious nature of these plans is demonstrated in the ports segment, where more than $30 billion worth of projects are currently under way, aimed at capturing a slice of record freight traffic passing through the area. Among the biggest projects are the New Mesaieed Port and Ras Laffan port, both in Qatar; Saudi Arabia’s King Abdullah Economic City Seaport; Abu Dhabi’s Khalifa Port and Industrial Zone; Sirte Port in Libya; and the Tanger Med Port and Industrial Zone in Morocco.

Oman is ploughing considerable investment into its ports in an effort to attract some of the business that currently goes to places such as Dubai and Jeddah. The Duqm port development on the south-eastern coast is the Sultanate’s flagship new development, complementing a number of existing ports, including those at Sohar, Salalah and Muscat, which are all being upgraded.

The Duqm project consists of a new port, replete with two dry docks and a shipbuilding yard and is the core of a wider development, including a multibillion dollar property development, industrial zones, an oil export terminal and a new airport. Dredging and reclamation work, together with the construction of breakwater and jetties, is already under way - and there are plenty of further opportunities for international consortia on the horizon.

In mid-2008, Oman almost doubled its investment in Duqm to OMR700 million ($1.8 billion) from around OMR370 million in an effort to boost the new facility’s attractiveness to shipping lines. The extra finance will fund an increase in the port’s overall capacity and size, making it suitable for super tankers and other large carriers, as well as making it able to accommodate a larger shipbuilding yard in the future. Oman hopes that the lower premiums paid by shipping companies using Duqm, due to its position outside the Persian Gulf, will contribute to its attractiveness as a destination for repairs.

Meanwhile, at the other end of the Gulf, Kuwait has hopes not only of capturing port traffic from its rivals, but also putting itself in prime position to handle trade from a potentially dynamic hinterland. As the political situation in Iraq becomes more tranquil - and with the possibility of greater interaction with Iran in the future - a major port in Kuwait could play a key role in facilitating trade to and from the region. That is part of the thinking behind the construction of Bubiyan port, a new container terminal and deepwater port on Bubiyan, a 530 sq km island located close to the Iraqi port of Umm Qaser.

Work is already under way on the project, which is due for completion in 2010 or shortly after, at which point it should have a capacity of around 2.5 million containers a year. Kuwait is also upgrading the country’s existing main commercial ports, Shuwaikh and Shuaiba, both of which are slated to be privatised. However, doubts remain over the completion timetable for many of the region’s ports, as the economic downturn curtails global freight traffic and throws into question the rationale for building some of them.

Low-cost airlines seize opportunities
In the air sector, rapid growth in passenger numbers has helped create a number of new airlines and fuelled expansion of scores of airports around the Gulf, with over $45 billion worth of new airport projects under way across the region, including Dubai’s $10 billion Al Maktoum International Airport, due for completion in 2015, the new Doha International Airport in Qatar and the redevelopment of Abu Dhabi International Airport. The Middle East and North Africa region has been gaining an average of around 30 million air passengers a year in recent years, with traffic growth of 18.1 per cent in 2007, according to the International Air Transport Association (IATA). That rate of expansion is unlikely to be sustained during the present economic downturn, but the sector is likely to be buoyant in the longer term - and is one of the industries in the region that benefits from falling oil prices through cheaper aviation fuel.

The region’s fast-expanding low-cost airlines will be hoping that they can prosper at a time when potential customers’ belts are being tightened. Liberalisation of the region’s air sector has led to the creation of several new carriers, such as Kuwait’s Jazeera Airways, Saudi Arabia’s Nas Air and Sama, and Sharjah-based Air Arabia.

Their number has been swelled by the launch of Wataniya Airways, a Kuwait-based independent carrier, operating from early 2009. Wataniya will mainly serve the short-haul leisure and business markets initially, offering both business class and regular class seats. Seventy per cent of the airline’s shares were floated in a public offering in 2006.

Meanwhile, a number of state-owned airlines have been privatised or part-privatised over the last eight years, often with reinvigorating results. In January 2008, struggling Yemeni national carrier Yemenia entered into a joint venture with the Islamic Corporation for the Development of the Private Sector, part of the Islamic Development Bank group, to launch Felix Airways, with initial capital of $80 million. Felix took over the domestic operations of Yemenia as well as some regional routes, with a pledge to offer better services in terms of schedules, flight frequencies, pricing and improved operating efficiency.

Rail spending spree
The Gulf region’s rail potential has been rather neglected over recent decades, but has been getting a lot more attention recently, with tens of billions of dollars worth of projects under construction or in the pipeline.

Saudi Arabia has by far the most sophisticated and heavily used existing rail network in the Gulf region, already covering more than 1,000km. A further 1,800km north-south line is under construction, running from close to the Jordanian border to Ras al-Zour on the Gulf. Due to open in late 2010, the line will link bauxite and phosphate mines in the north with processing plants on the coast. New east-west passenger and freight lines covering around 500km each are also planned. Meanwhile, the Saudi Rail Organisation has also issued tenders for the first construction contract on the $6 billion Haramain high-speed rail link between Mecca and Medina, designed to facilitate travel between the two cities.

A number of cities around the Gulf are developing their own metro systems, of which Dubai’s is one of the best known and one of the most advanced in terms of construction. When it becomes fully operational, the Dubai Metro is expected to carry up to 1.2 million passengers a day, while live testing has started on the Middle East’s first monorail, which serves Palm Jumeirah, one of the city’s new artificial islands.

In August 2008, Abu Dhabi revealed plans to create its own integrated mass transit system, based around trams, underground metro lines and high-speed overground rail. Talks are also in progress to develop a rail network covering the whole of the UAE.

In Oman, feasibility studies are being carried out for a 200km rail link, initially connecting Sohar to Birka in north Muscat, with a later extension to Duqm planned. Qatar also has plans to develop a national rail network, working with Deutsche Bahn to draw up proposals. In North Africa, Algeria has been most active in the sector, with plans nearing fruition for a $1.5 billion, 1,200km east-west line and the new Algiers metro due to open in mid-2009. And in Jordan, bids have been invited for the contract to design and build a 26km light railway between the capital Amman and the country’s second largest city, Zarqa.

Finally, ambitious Gulf Cooperation Council plans to build a $14 billion, 1,500km coastal rail link stretching from Kuwait to Oman, with links to Iraq, Iran and beyond, are still in motion. A feasibility study was submitted by Canada’s Canarail, France’s Systra and Lebanese consultancy Khatib & Alami in September 2008 and was approved by the region’s transport ministers in October. That brings the project considerably closer to getting the green light from regional leaders.

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Across the GCC of late, states have been gearing up to match supply with demand in the energy sector. Long-term growth predictions, mega-projects and housing shortages have all contributed to the need for the region’s flagship cities to work together to overcome concerns raised by power supply.

Qatar is welcoming investment from around the world.

In Doha, it is no different. As skyscrapers continue to rise along the corniche and development continues on the city’s prominent master developments including The Pearl and Lusail, Qatar is set to to connect its grid to that of Saudi Arabia, Bahrain and Kuwait, with the UAE expected to join the network in 2011.

“The agreement is between transmission system operators, power procurement companies and the GCC Interconnection Authority (GCCIA) for the sole purpose of exchanging and trading electrical power,” said GCCIA chairman Yousef Janahi.

With the combined natural resources of Qatar, Saudi Arabia, Kuwait and, to a lesser extent, Bahrain, the connection of the respective national grids will go a long way to spurring confidence in businesses in the ability of GCC cities such as Doha to support large-scale development initiatives.

Among the most ambitious projects in Qatar is the Friendship Bridge. The world’s longest fixed-link marine crossing was last week given the green light, with work on the construction of the multi-billion-dollar causeway linking Qatar with Bahrain earmarked to start early next year.

Construction will be undertaken by Germany’s Hochtief and France’s Vinci, with Danish, Qatari and Greek companies also involved. The project will provide a commercial boost to the Qatari interior, improving connectivity and trade with its GCC neighbour. Although final specifications are not likely to be revealed until October, earlier estimates concerning the project cost came in at US $3 billion (QAR10.9 billion).

On the rails
Doha’s construction industry has remained buoyant, driven by the reinvestment of hydrocarbon dollars. The industry has in turn attracted interest on a global scale from firms looking to invest in projects or secure contracts, particularly those companies based in countries that have been hit by the slowdown.

Korean contracting giant Samsung Engineering has been eyeing the GCC’s fledgling rail sector for some time now.

“We want to participate in the railway projects in the GCC and the North Africa region,” Samsung business development manager for the Mena region, Muntae Suh said, naming the Doha Metro project among the projects in the firm’s sights.

Of all the GCC metro projects that are yet to break ground, the Doha metro is the most advanced. “The total investment will be huge,” Doha-based Barwa president of strategy and investment Dr Yousif Al Horr, who is familiar with the project, said. “Part of the grid will run underground which will resolve a lot of the traffic issues now faced in Qatar.”

There is nothing new about multinational giants seeking work outside their domestic markets, but there is also evidence of Doha’s ability to draw firms that have, until now, had no base outside of their home country.

Last week, power cable firm Ducab announced its plans to set up a plant in Qatar – its first outside of the UAE – by early 2010 at the latest. “We have a manufacturing licence [for Qatar],” Ducab managing director Andrew Shaw said. “It will be set up in the second phase.”

Ducab, which is jointly owned by the Dubai and Abu Dhabi governments in the UAE, has already set up a 100%-owned subsidiary, Ducab Qatar, which launched a distribution and logistics centre on July 15. Shaw said that Qatar’s location made it attractive as it was closer to raw materials suppliers, and added that Ducab planned to take a 10% – 15% share in the local market in the next few years.

Domestic investment
According to the government figures, the population of Doha stood at 420,000 people in April. Yet, despite a relatively small population, investment from domestic firms remains significant, with more strings
to Qatar’s economic bow than foreign
direct investment.

Last week, the Doha-based Gulf Warehousing Company (GWC) announced the launch of the 1 million m² Logistics Village Qatar, with work on the project set to begin next month.

The site will be developed in three phases, with the first phase costing $69 million, scheduled for completion in the third quarter of 2010. GWC has signed a letter of intent with four Qatari companies to construct the buildings and provide power infrastructure.

The four companies are Power Action Gulf, Lexus Engineering and Contracting, Al Alia Trading and Contracting, and Al Bader Construction and Steel Works.

The world continues to eye Doha as holding vast potential in the construction sector, with a growth trend that looks set to continue, backed by the economic safety net represented by 200 years worth of proven natural gas reserves, according to the Oxford Business Group report Qatar: 2009.

Though nowhere is immune from the financial crisis, and Qatar has been forced to review its growth predictions like all GCC states, it is pressing on with the vast majority of its projects. And its not only small scale, regional companies, but multinational firms, that are paying attention.

www.constructionweekonline.com by Jamie Stewart