commercialbank capital sector report: 1st edition 2012 · 2012-08-28 · qatar continues to be a...

Commercialbank Capital Sector Report: 1st Edition 2012

Commercialbank Capital | Construction Sector Report 2012

Commercialbank Capital Research 2 Page | 2

Foreword

Dear Investors,

Qatar continues to be a magnet for investment due to its impressive economic performance. On the back of a strong GDP growth of 19% in 2011, decelerating to a forecast 6% in 2012, Qatar’s GDP could reach USD 197 bn. Qatar also boasts the highest per capita income growth in the world. By 2016, it is expected to reach USD 112k per capita. This has led Qatar to witness a construction boom between 2006 and 2012 (ongoing construction related contracts have tripled in value).

Qatar’s successful bid to host the 2022 FIFA world Cup has led the government to plan for high levels of investment in infrastructure and real estate development. Approximately USD 225 bn is expected to be required between 2011 and 2016, of which already USD 125 bn of spending has been unveiled for construction and energy projects only. The spending directly related to the preparation of the 2022 World Cup will amount to an estimated USD 80 bn of investment, encompassing commercial and infrastructure projects.

Therefore the construction boom in Qatar is expected to continue, albeit with different priorities and involving new players.

This sector report highlights the changing pace of the Qatari economy and construction sector segments (in comparison with other GCC countries) and provides detailed information on the current projects and expected investments. For each industry segment, we are presenting a proprietary summary timeline of key projects. To take into account the challenges, especially the tender phase and ramp up of the projects, but also the opportunities for additional growth to be generated thanks to the improved infrastructure and expertise based in Qatar, we have designed several scenarios of investment in infrastructure and real estate. These scenarios are based on our proprietary model taking into account the expected timeline, phasing and costs of most known major construction projects. In the last section of the report, we provide summary profiles of certain local and international companies, which are actively participating in transforming Qatar.

2012 is for most players, a year of preparation to take on new projects, with new partners, new financings and new clients. Investors in Qatar have therefore numerous opportunities to tap into the growth ahead, which creates new employment opportunities and continues to help position Qatar as a new major economic force. Do not hesitate to call on CBQ for investment, strategic or financing advice, as inspired by Qatar, we believe everything is possible.

We hope you will find our initial coverage of the construction sector of interest, in addition to Commercialbank Capital’s future research publications.



1. Executive Summary

Qatar’s construction sector prospects are looking increasingly bright since winning the bid to stage the FIFA 2022 World Cup. Qatar is set to spend up to USD 150 bn on infrastructure projects over the next 5 to 6 years as it starts preparing for the World Cup. • Budget: The Qatari government has reportedly allocated a

whopping 40% of its budget between now and 2016 to infrastructure projects, including USD 11.1 bn for a new international airport, USD 5.5 bn for a deepwater seaport and USD 1 bn for a transport corridor for the capital, Doha. It will spend USD 20 bn on roads while stadium construction for the World Cup should cost just under USD 4 bn, with the first venue to be built by 2015. According to German legal and financial adviser Dr Nicola Ritter, USD 48 bn will be spent to build air conditioned stadia, USD 77 bn will be spent on facilities for soccer fans and players from all over the world and USD 33 bn will be allocated for developing Lusail City. Qatar has also allocated USD 50 bn to upgrade its transport infrastructure, including new rail and metro systems.

• Qatar on the fast track: The country has been one of the

fastest growing in the world over the past few years (real GDP grew at a CAGR of 23% between 2003 and 2010). Qatar was the most resilient of the GCC economies during the global recession thanks to the capacity expansion and government initiatives to stimulate the financial sector.

• Visionary Leadership: The Emir of Qatar has been

instrumental in transforming Qatar into the power house within the region. In addition, the Emir led government has maintained political stability within the country despite the unrest in Middle East. The government has also allowed 100% foreign ownership in certain sectors, which is likely to improve liquidity in the form of FDI. Both the political and economic developments in Qatar are contributing to achieve the Vision 2030.

• Diversifying strategy: The Government of Qatar has a well-

planned strategy that will lead to long term growth sustainability. The government initiated their strategy by focusing on inherit strength, which is increasing export capacity of LNG. As the production led growth peaks in 2012, the government focused on non-hydrocarbon sector to push for growth post 2012. The accumulation of wealth from hydrocarbon sector was re-invested to diversifying its revenue base. The wealth is re-invested through Qatar petroleum in hydrocarbon sector, while Qatar Investment Authority (QIA) in non-hydrocarbon sector. In the initial years of growth, the government re-invested wealth to acquire foreign assets. However, the government has started focusing on investing domestically to boost the non-hydrocarbon sector.

• Dual Government funding and PPP model: The government

spending has increased as well as the adoption of PPP (Public Private Partnership) model in Qatar, especially in the hydrocarbon sector. According to National Development Strategy (NDS), the expected investment by the private sector is around USD 130 bn. Cheap lending as well as government’s initiatives will boost the confidence of the private sector, which will benefit the construction sector, and the whole economy in the long term.

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mailto:[email protected]



Source: Commercialbank Capital Research

Lusail Mixed-Use Project Value: USD 33 bn Completion Date: 2018 Refer: Section 6.3

New Doha Port (Phase I) Project Value: USD 7 bn Completion Date: Q1-16 Refer: Section 5.4

New Doha Int’l Airport (NDIA) Project Value: USD 11.1 bn Completion Date: 2015 Refer: Section 5.3

Doha Festival City Project Value: USD 1.7 bn Completion Date: Q4-14 Refer: Section 7.1

Qatar National Museum Project Value: USD 434 mn Completion Date: 2014 Refer: Section 7.5

Pearl Qatar Project Value: USD 5 bn Completion Date: Q3-13 Refer: Section 6.1

Doha Cultural Village (KATARA) Project Value: USD 82 mn Refer: Section 7.3

Sidra Medical and Research Center Project Value: USD 7.9 bn Completion Date: Q4-12 Refer: Section 8.2

Pearl GTL Project Value: USD 6.6 bn Commencement in Q4-11 Refer: Section 9.1

Education City Project Value: USD 6.6 bn Completion Date: Q2-12 Refer: Section 8.1

Msheireb Project Value: USD 5.5 bn Completion Date: Q4-17 Refer: Section 6.2

Key Projects



Exhibit 1.1: Key Projects in Doha


SIDRA MEDICAL

Refer: Section 8

5. Lusail City Refer: Section 6.3

3. Museum of Islamic Art Refer: Section 7.5

4. Lagoona Mall Refer: Section 7.2

10. The Pearl Qatar Refer: Section 6.1

6. Msheireb Project Refer: Section 6.2

7. Qatar Foundation Refer: Section 8

8. Education City Refer: Section 8.1

9. Sidra Medical Refer: Section 8.2

2. Doha International Airports Refer: Section 5.3

3

4 5

2

1

6

10

9

8 7

1. Qatar National Convention Center



Exhibit 2: Segmentation of Construction Sector

Source: Commercialbank Capital Research * Residential and commercial buildings are not covered in this report, except for iconic projects.

1.1 Growth Drivers

Robust Macroeconomic environment Qatar has witnessed robust growth in GDP over the last few years, which is driven by significant increase in LNG export capacity. According to IMF, Qatar’s economy grew by 19% in 2011, up from 17% in 2010. In 2012, real GDP growth rate is projected to be 6%, with real hydrocarbon GDP slowing down to 3%, while non-hydrocarbon sector is expected to grow by 9%. Diversification at full stream The government launched National Development Strategy (NDS) to achieve the targets of Vision 2030. The strategy is to use the hydrocarbon sector revenues to build the non-hydrocarbon sector and a more sustainable economic base.

FIFA World Cup 2022– The Game Changer The successful bid to host the FIFA World Cup 2022 has been a big achievement for Qatar. The construction sector has witnessed numerous of new projects ever since. The government has allocated USD 20 bn towards the development of

the tourism sector. We believe that winning the bid for World Cup 2022 will drive the construction sector as government will ensure that projects are completed on time to host the world biggest sporting event.

Well regulated and capitalized banking sector Qatar banking sector is well regulated by the Central Bank and capitalized by the government of Qatar. Recently, the government of Qatar has completed the two year capitalization program. In August 2011, the central bank has lowered its interest rates to kick start lending to private sector. The sector has optimum capital ratios that will enable them to extend lending to the construction sector in general and private sector in particular.

Qatar eyes 2020 Olympics Around one year back, Qatar won the bid to host world’s largest sporting event, FIFA World Cup 2022. Qatar is on the path of creating history as the country has been accepted as an applicant city to host Olympics and Paralympics in 2020.

Exhibit 3: Key Projects Timeline

Construction

Energy and Utilities

Oil & Gas

Solar Enegy

Utilities

Transportation

Roads

Railways

Airport

Port

Buildings*

Retail

Hospitality

Social Infrastructure



Oil & Gas Energy Utilities Roads Railways Airport Port

Cities Hospitality Education Healthcare Stadiums Entertainment Retail Source: Commercialbank Capital Research

2011 2013 2015 2018 2022

Pearl GTL Project Value: USD 6.6 bn Commencement in Q4-11 Lagoona Mall Project Value: USD 348 mn Completion Date: 2011

Qatar National Railway System (Phase I) Project Value: USD 35 bn Completion Date: Q2-15 Qatar Entertainment City Project Value: USD 3 bn Completion Date: 2015 New Doha International Airport Project Value: USD 11.1 bn Completion Date: 2015 New Doha Port (Phase I) Project Value: USD 7 bn Completion Date: Q1-16

12 Stadiums Project Value: USD 4 bn Completion Date: 2020

Education City Project Value: USD 6.6 bn Completion Date: Q2-12 Sidra Medical Research Centre Project Value: USD 7.9 bn Completion Date: Q4-12 Pearl Qatar Project Value: USD 5 bn Completion Date: Q3-13

Urjuan Mixed-Use Development Project Value: USD 10 bn Completion Date: Q3-14 Water Recycling Plant Project Value: USD 5 bn Completion Date: Q2-14 Doha Festival City Project Value: USD 1.7 bn Completion Date: Q4-14 Qatar National Museum Project Value: USD 434 mn Completion Date: 2014 Doha Dukhan Road Project Value: USD 1 bn Completion Date: Q4-14

Barzan Gas Development Project Value: USD 9.4 bn Completion Date: Q3-16 Msheireb Project Value: USD 5.5 bn Completion Date: Q4-17 Lusail Mixed-Use Project Value: USD 33 bn Completion Date: 2018 Solar Power Complex Project Value: USD 1 bn Completion Date: Q3-18



• Aspire Academy for Sports Excellence founded in 2004 by HH Sheikh Jassim Bin Hamad Al Thani, to create a world class institution for educational sport that would develop athletes in Qatar, worldwide known for its state-of-the-art sports science and produce graduates who would become Qatar’s most admired civic leaders. It covers an area of approximately 290,000 sqm. Aspire has an enviable list of world-class sporting facilities including a 200m athletics track, an Olympic-sized swimming and a diving pool, a gymnastics hall, two multi-purpose sport halls, table tennis courts, fencing strips, squash courts, a bespoke goalkeeping training area and fitness rooms.

• It has astonishing 8 full size football pitches including an international standard artificial grass indoor pitch. The Academy also has 20 classrooms for subjects ranging from English language classes to Physics and Biology. The dormitory has 128 rooms and eight suites which can house up to 255 students.

• Currently there are approximately 200 student athletes in grades 7 through 12 who specialize

in football, athletics, squash, table tennis, sailing, judo, gymnastics, swimming, tennis, fencing, rowing, shooting and golf. It has a team of over 300 people including instructors, trainers and educators of different nationalities.

• The iconic Aspire Dome has a capacity to host ten different sporting events simultaneously in a climate-controlled arena making it the largest multi-purpose sports facility of its kind in the world. It has 13 sports venues and 7 performance enhancement laboratories under the same roof. It can seat a total of 15,000 spectators.

• Aspetar is the first specialized Orthopedic and

Sports Medicine Hospital in the Gulf region, situated within aspire zone. It provides the high-quality medical treatment for sports-related injuries in a state-of-the-art facility, staffed by some of the world’s leading sports medicine practitioners and researchers. In 2009 Aspetar was officially accredited by F-MARC as a FIFA Medical Centre of Excellence. Aspetar provides a full range of services from injury prevention to injury management and performance improvement.

Aspire: Venue for Asian Games in 2006



Qatar’s World Cup Stadiums 1. Lusail Iconic Stadium

Location: Al-Daayen Capacity: 86,250 Value: USD 662 mn Matches planned: Opening match, group matches, and round of 16, quarter-final, semi-final and final

3. Al-Khor Stadium

Location: Al-Khor Capacity: 45,330 Value: USD 251 mn Matches planned: Group matches and round of 16

5. Al-Rayyan Stadium

Location: Al-Rayyan Capacity: 44,740 Value: USD 135 mn Matches planned: Group matches

7. Education City Stadium

Location: Al-Rayyan Capacity: 45,350 Value: USD 287 mn Matches planned: Group matches and round of 16

9. Al-Gharafa Stadium

Location: Al-Rayyan Capacity: 44,740 Value: USD 135 mn Matches planned: Group matches

11. Khalifa International Stadium

Location: Al-Rayyan Capacity: 68,030 Value: USD 71 mn Matches planned: Group matches, round of 16, quarter-final and semi-final

2. Shamal Stadium

Location: Al-Shamal Capacity: 45,120 Value: USD 251 mn Matches planned: Group matches

4. Al-Wakrah Stadium

Location: Al-Wakrah Capacity: 45,120 Value: USD 286 mn Matches planned: Group matches and round of 16

6. Doha Port Stadium

Location: Doha Capacity: 44,950 Value: USD 202 mn Matches planned: Group matches, round of 16 and quarter-final

8. Qatar University Stadium

Location: Doha Capacity: 43,520 Value: USD 300 mn Matches planned: Group matches and round of 16

10. Sports City Stadium

Location: Al-Khor Capacity: 45,330 Value: USD 251 mn Matches planned: Group matches and round of 16

12. Umm Salal Stadium

Location: UmmSalal Capacity: 45,120 Value: USD 251 mn Matches planned: Group matches, round of 16 and quarter-final

3.

1. 12.

5. 6.

2.

4.

Source: MEED



3. Challenges and Market size

3.1 Challenges • The prospects of construction sector in Qatar are bright, which is underpinned by massive investment

by the government over the next decade. Despite the bright outlook, Qatar is likely to face certain challenges as it prepares for the FIFA World Cup 2022. The government will continue to remain under pressure to complete the projects on time to meet the deadlines and guidelines set by the FIFA authorities.

Global slowdown • Qatar is not completely immune to the global environment; therefore uncertainty around the global

economies will have limited impact on Qatar in general and construction sector in particular. The global slowdown will impact the private sector participation as credit environment becomes tighter and difficult in such scenarios. In addition, the hydrocarbon prices will decline, which has a direct impact on Qatar’s GDP, resulting in lower growth. We believe that the government of Qatar will continue to step in for support to ensure projects are completed on time in case the private sector participation deteriorates.

Shortage of skilled/unskilled labor • The shortage of both technical staff and labors will continue to one of the biggest challenges for the

sector. These projects require people who have “applied similar principles to creating efficient, cost effective, high tech systems in other countries like Germany, Ireland and Australia.” The companies operating in the construction sector have learned from their previous experience (Asian Games), however, the scale and magnitude of projects for the World Cup 2022 will be a whole new experience for the companies as well as for Qatar. Shortage of schools for children and a well-publicized clampdown on alcohol in Doha are some other problems that are currently being resolved.

Shortage of raw materials • The construction sector is likely to witness shortages in raw materials between 2013 and 2017 as the

period is expected to be the peak for the sector. The government will ensure that the shortages in raw materials do not lead to unexpected rise in prices. Both of these factors will lead to delays in execution of the projects. Therefore, the sector will have to bridge the gap during this period by mutual agreements with the companies in Saudi Arabia and UAE.

3.2 Construction Sector: Mapping market size under three scenarios

The indicators for the construction sector outlook looks solid as much of the investment is backed by government or semi-government entities. The news of hosting FIFA World Cup 2022 has further brightened the outlook of the sector. The rapid increase in population over the last few years has resulted in increasing demand for infrastructural development in Qatar. All these factors will collectively lead to ample opportunities for construction activity in Qatar. Within the construction sector, we remain buoyant on transportation, retail and hotel and tourism sectors.

Transportation sector is the biggest beneficiary of the massive investment by the government as it plays a vital role in infrastructural development of the country. The improvement in transportation network will also be essential as the country prepares for the FIFA World Cup 2022. The tourism authority of Qatar has done a commendable job over the last few years by organizing and participating in conferences and exhibitions. This has resulted in influx of tourists, which is boosting the hotel sector. The rapid increase in population as well as inflow of tourist will boost the retail sector. As a result, the country is witnessing massive investments in shopping malls to address the shortages in the retail space.

We have forecasted the Qatar construction sector market size until 2020 as we believe that majority if not all the projects will be completed by end of the projected period. We have assumed USD 225 bn investment as our base for total investment, which is provided by the NDS. Based on our assumptions, we have assumed additional investments in the construction sector as a percentage of the GDP. The additional investments have been assumed in two phases, first phase will be from 2013 to 2017, while the second phase is from 2018 to 2020.



Following is a brief summary of the methodology that was adopted to arrive at the market size:

1. Initially, the list of projects ongoing and planned was compiled from various relevant sources. However, we decided to take data from one source due to the inconsistency from various sources. This data was further classification as per the construction sector. The value of each project was divided in quarters based on the completion date to arrive at the actual value invested in a particular year until 2020.

2. We have assumed additional investments between 2013 and 2017 based on the announced investments of USD 225 bn by NDS.

3. Finally, we have assumed a percentage of the GDP that will be re-invested in the construction to further upgrade the infrastructure sector. The forecast for GDP is taken from IMF until 2016. This constant rate as percentage of GDP has been differentiated based on two phases, one from 2013 to 2017 and second from 2018 to 2020.

In order to arrive at the total market size, we have added the contributions from three approaches as described above. This methodology was adopted to build three scenarios in our analysis to arrive at a market size. In each scenario, contribution from first two points remains the same while contribution from third point varies for three different scenarios:

Exhibit 5: Spending Patterns based on different scenarios – Forecast (USD bn)

Source: NDS and Commercialbank Capital Research

Best CaseIn this case, we have assumed higher percentage of GDP thatwill be invested over and above the planned investment by thegovernment. Based on this assumption, we arrive at a marketsize of USD 315 bn.

Base CaseIn this case, we have assumed a lower percentage of GDP thatwill be invested over and above the planned investment by thegovernment. Based on this assumption, we arrive at a marketsize of USD 270 bn.

Worst Case

In this case, we have made two assumptions. First, we haveassumed that there will no additional investment and secondlywe have assumed that around 15% of the planned projects willbe cancelled going forward. Based on this assumption, wearrive at a market size of USD 191 bn.

170

249 270

34

138

185 191

188

284 315

-

50

100

150

200

250

300

350

2012 2015 2018 2020

Base Case Worst Case Best Case

NDS: USD 225 bn



AIRPORT

New Doha International Airport (NDIA) will be able to handle 24 mn passengers per year and will have 42 contact gates, six of which will be dedicated to the Airbus A380 superjumbo. When construction started in 2004, the new airport was scheduled to open in 2008.

It is now planned for an opening in December 2012. The new terminal is being built by the Sky Oryx consortium of Japan’s Taisei Corporation and Turkey’s TAV. The terminal extension is being built by a joint venture of Belgium’s Six Construct and the local Midmac Contracting.

PORT

New Doha Port is to be built at Mesaieed, south of Doha and will replace the existing Doha Port downtown on the city’s Corniche. The new port will support industrial development to the south of Doha. Completion of the first phase is expected in 2014.

Beijing based China Harbour won contract to execute the onshore excavation works. Firms have been prequalified for the contract to dredge the port’s approach channel.

STADIUMS

As of now, Qatar has committed to spending USD 65 bn to build infrastructure to host the 2022 World Cup. As part of the bid process, Qatar committed to providing 12 stadiums, each with a minimum capacity of 45,000. The direct spending on building stadiums will be 4% of the total planned investment. It will renovate three stadiums and will construct nine new stadiums.

Stadiums will be equipped with cooling systems using clean renewable energy resources to achieve the first completely carbon-neutral World Cup.

RAIL

Doha Metro is the first section of Qatar’s USD 35 bn rail plan to be developed and will be a crucial part of Doha’s infrastructure when complete. The metro will consist of four lines running more than 300 km across the city.

The first phase involves building the Red line, which will run from Doha city to new Doha International airport. In 2009, Germany’s Deutsche Bahn was appointed to develop Qatar’s national railway network. It is currently prequalifying consultants for the preliminary metro designs.

Major Projects

Source: MEED



4. Construction Sector • Qatar has two main focuses in the next

decade; one is staging the largest sporting event and second is implementing its National Vision 2030, which aims to diversify away from a reliance on hydrocarbons.

• Qatar’s ambitions and investment plans are different compared to other GCC countries. Qatar won the right to host the 2022 World Cup, which has imposed a time frame for completing the projects. The infrastructure that the country will built over the next decade will also result in achieving the national development plan.

• Preparing for the World Cup 2022 will drive spending on sports and transport infrastructure, while the National Vision 2030 will focus towards the social infrastructure, such as education, healthcare and cultural projects.

• Qatar’s construction sector witnessed unprecedented growth between 2005 and 2008, growing at a CAGR of 46%. Sector productivity increased from QAR 8.7 bn in 2005 to QAR 27.5 bn in 2008. Following this robust growth, the construction market contracted in 2009 and 2010 on the back of the global crisis. According to a study by Oxford Economics and Global Construction Perspectives, the Qatari construction market is expected to grow by an average of 12.5% a year over the next decade, compared with growth in European countries averaging just 1.7% to 2020

• The sector has not witnessed any major cancellations or projects on hold unlike its regional peers such as Dubai, Bahrain and Kuwait. The total value of projects put on hold or cancelled stood at USD 460.3 bn at the end of October 2011. In Qatar, the projects put on hold were around 4% of the total market compared to 59% and 24% in UAE and Kuwait respectively. The value of such projects in Qatar and Saudi Arabia were insignificant compared to the total size of the market.

• With Qatar slated to host a ‘zero carbon’

World Cup in 2022, Qatar Green Building Council (QGBC) has set up a group to foster green infrastructure as a national resource. Qatar is utilizing two: Leadership in Energy and Environmental Design (LEED) and the Qatar Sustainability Assessment System

(QSAS). A number of projects are targeting LEED Gold or Platinum status. Dr. Alex Amato, Chairman of the Research and Innovation Committee at QGBC commented, "In line with the environment pillar in Qatar's National Development Strategy 2011-2016, this interest group complements national and regional efforts to utilize our current and future green infrastructure. This initiative demonstrates the value of green infrastructure investment and reiterates the benefits and need for sustainable investment in this field. This group also wants to encourage the appreciation of Qatar's natural systems and their role in the landscape architecture profession."

Exhibit 6: Construction sector as a % of Non-Hydrocarbon GDP in Qatar

Source: Central Bank

Exhibit 7: GCC - Projects planned or underway (2008 – 2011)

Source: MEED, Note: Oct end for each year

15.9 27.2 25.5 24.1 17.6

11.4%

14.4%13.0%

10.8%9.1%

5%

7%

9%

11%

13%

15%

17%

19%

21%

0.0

5.0

10.0

15.0

20.0

25.0

30.0

2007 2008 2009 2010 9M-11

QAR

bn

Building and Construction As % of Non-hydrocarbon GDP

0

250

500

750

1,000

1,250

Bahrain Kuwait Oman Qatar Saudi Arabia

UAE

USD

bn

2008 2009 2010 2011



• The total number of projects that were planned or underway in the GCC stood at USD 1,784.7 bn at the end of October 2011. Saudi Arabia has emerged as the largest market for planned or underway projects in the GCC while UAE became the second largest market because of cancelled or on-hold projects.

• Qatar has been in the limelight for various

reasons from acquiring international assets to hosting the biggest sporting event in the world. The total number of planned and underway projects in Qatar stood at USD 214 bn at end of Oct-11. The value of projects has grown at a CAGR of 40% during 2005 and 2011. The growth in projects value during the period is the second best in the GCC, as Kuwait witnessed a growth of around 43% despite all the cancellations/on hold projects.

• The value of the projects under execution stands at USD 59.8 bn. Transportation sector accounts for around 30% of the projects under execution. In transportation, airport and roads have been the main contributors as they are witnessing substantial revamp or new addition in facilities.

• As of Oct-11, the total value of projects under execution in the energy sector is USD 11.2 bn or 19% of all projects under execution in Qatar. This indicates that the world’s leading supplier of hydrocarbon sector is capitalizing on its core sector to meet the rising global demand for oil and gas sector. The commercial and residential construction projects accounted for 21% of the total projects under execution.

• Sporting events in Qatar has also been one of the main drivers for the construction sector. The 15th Asian Games were held in 2006 and the preparation for the games resulted in great deal of construction activity including building of a Sports City, which contains stadium and other sports facilities. In Jan-11, the country hosted the Asian Football Confederation’s Cup for the second time. The biggest and the game changer for Qatar is winning bid to host the World Cup 2022.

• Transportation and building projects account for more than 50% of the projects under execution. These sectors are essential for the infrastructure development of the country. Transportation sector is focusing on modernizing its existing network, while building sector is transforming the country by building some iconic projects over the next

decade. The country is building start of art projects that will transform the country.

Exhibit 8: GCC - Projects planned or underway till Oct-11 (USD bn)

Source: MEED

Exhibit 9: Projects planned or underway in Qatar

Source: MEED

Exhibit 10: Projects under execution (Oct-11)

Source: MEED

55.5 167.9

111.6

214.0

630.3

605.4

Bahrain

Kuwait

Oman

Qatar

Saudi Arabia

UAE

28.2

116.4145.3

202.8 204.3

254.9

214.0

0

50

100

150

200

250

300

Oct-05 Oct-06 Oct-07 Oct-08 Oct-09 Oct-10 Oct-11

USD

bn

30.7%

18.7%

12.6%

2.7%

1.7%

21.2%

9.6%

0.0%

2.7%

Transportation

Energy

Utilities

Tourism

Retail

Building

Social

Stadiums

Others



• As shown in Exhibit 11, the total spending in the construction stood at USD 47.7 bn, accounting for 39% of the total spending. In the construction sector, 48.3% was allocated towards residential and commercial sector, while 10.7% in industrial and 12.1% in ports.

Exhibit 11: Sector wise spending

Source: Commercialbank Capital Research • Exhibit 12 focused on expected spending over the next four years. The capital spending is expected to

grow by around 48% between 2011 and 2014. Majority of the growth is expected in 2013 and 2014, where most of the projects are expected to kick start.

Exhibit 12: Expected increase in capital spending


Exhibit 13: Qatar's Top 10 Contractors 2011

Company Awards (USD mn) Origin JGC Corporation 1,700 Japan Saudi Binladin 1,150 Saudi Arabia Consolidated Contractors Company 965 Athens Based Hyundai Heavy Industries 889 South Korea China Harbour Engineering 880 China QDVC (Qatari Diar/Vinci Construction) 535 Local/France Qcon 510 Local Hyundai Engineering & Construction 434 South Korea Qatar Building Company 419 Local Al-Bader Construction & Steel Works 400 Local Total 7,882

Source: MEED Projects

0.0

2.0

4.0

6.0

8.0

10.0

2009 2010 2011 2012 2013 2014Power & Water Petrochemical Oil& Gas Production Construction Infrastructure

Capital Spending is expected to increase by 48% between 2011and 2014



5. Transportation• Transportation sector has been at forefront of

the public spending plans in the GCC region in general and Qatar in particular. The sector is pacing apace with the development and expected growth in the country. In addition, the modernization of the transportation sector in Qatar is essential for successful hosting of the world’s biggest event. The governments

have significant focus on developing the road network especially through main highways to ease the congestion. We believe that the improvement of roads network will continue to be an ongoing investment for the government as the growth momentum continues in the region.

Exhibit 14: Landmark Projects in Transportation Sector

Projects Cost (USD bn) Client Status

Qatar National Railway System 35.0 Qatar Railways Company (QRail) Planned

New Doha International airport (NDIA) - (Phase I) 11.1 NDIA Steering Committee Completion due in 2012


• The total revised investment in the GCC transportation sector is USD 298 bn compared to the original budget of USD 281 bn. The total investment in the rail project is USD 95 bn in the region. The GCC countries are focusing on upgrading and developing the rail network within the country and also intend to connect the region. The governments are also making significant investments in upgrading their airports to meet the rising demand of both passengers as well as freight services. Total planned investment in airports is USD 41.4 bn in the GCC.

• During the last three years, Saudi Arabia has

awarded around USD 28.3 bn worth of projects, UAE awarded around USD 11 bn worth of projects and USD 6.1 bn in Qatar. Given the size of projects awarded or in the pipeline, many regional and international contractors are expanding operations in Qatar and Saudi Arabia. The regional contractors are mostly from Kuwait and UAE as the activity within the respective countries have remained subdued.

• We believe that Qatar and Saudi Arabia will continue to remain the most dominant markets within the GCC region. Both the countries have announced significant investment plans, especially the rail project. The Qatari market looks more promising as the government will accelerate the execution of the planned projects to ensure timely completion as it prepares for FIFA World Cup 2022.

.

Exhibit 15: Value of projects announced in transportation sector (USD bn)


Exhibit 16: Value of projects awarded in transportation sector


15.732.6

25.3

54.8

81.6

88.0

Bahrain

Kuwait

Oman

Qatar

Saudi Arabia

UAE

0.1

2.1

1.3 0.5

9.1

4.1

0.3

4.1 3.7

1.8

10.1

2.5

0.2 1.0

1.8

3.8

9.1

4.4

0

2

3

5

6

8

9

11


UAE

US

D b

n

2009 2010 2011



5.1 Roads • The total planned or projects underway in the

GCC countries is around USD 128 bn. UAE leads the market with USD 46 bn worth of projects planned or underway. Saudi Arabia is the second largest market with USD 38 bn worth of projects either planned or underway, while USD 18 bn in Qatar. Collectively, Kuwait, Oman and Bahrain have USD 27 bn worth of projects planned or underway. We believe that execution of these projects will be important in reducing the over congestion in the GCC.

• In the GCC, Qatar was the most active roads

market in 2011. Ashghal awarded USD 2.3 bn worth of contracts during the year 2011. The biggest of these was the USD 1.0 bn construction package awarded to the joint venture of Saudi Binladin Group and the local Qatari Diar for work on the Dukhan highway. The other big contract that was awarded was the two road contracts in January, worth an estimated USD 0.52 bn, to a joint venture of Consolidated Contractors Company and the Teyseer Contracting company for the 12th package of the Doha Expressway.

• The investment in Qatar’s roads sector is set to continue, with Ashghal planning to build 136 km of new roads by 2014, providing plenty of opportunities to local and international contractors and material suppliers. The major upgrades in the roads infrastructure were undertaken even before the country won the

bid to host the FIFA World Cup 2022. Strong economic growth in the past few years have led to rapid increase in population, thus resulting in significant congestion in the capital city of Qatar, Doha.

• The country has allocated USD 20 bn in the next five years to upgrade its road network, out of which USD 17.9 bn is planned or underway. Development of roads network is also essential for the overall infrastructure development of the country. The preparation for the World Cup 2022 will also speed up the process of the construction of roads to ensure decrease in traffic congestion, increase regional accessibility and minimize the environment impact of its transportation network.

Exhibit 17: Planned/Underway projects in Roads (USD bn)

Source: MEED

Exhibit 18: Roads Project Awarded in 2011 (USD mn)

Projects Contract Value

Completion Date EPC Contractors

Doha Dukhan Highway: Central Section 275.0 Q1-14 CCC and Teyseer Contracting

Peripheral Roads to Barwa City 152.0 Q2-13 Bin Omran

Doha Expressway: Phase XII: F Ring Road 233.0 Q1-14 CCC and Teyseer Contracting

Doha Dukhan: Al-Mail Roundabout to BaniHajer Roundabout

1,000.0 Q4-14 Qatari Diar and Binladin Group

Nakhilat Shipyard: Phase 4A 45.0 Q3-12 Eversendai Corp.

Doha Expressway: Package 6 85.0 Q4-13 Sinohydro Corporation

Doha Dukhan: Eastern Section 150.0 Q4-14 Qatari Diar and Binladin Group

Source: MEED

• Qatar is expected to witness USD 7.8 bn

worth of projects to be announced during the next two years. Qatar is expected to finish its roads network by the end of 2016, which is well ahead of the world cup 2022. According to our estimates, the total size of road and

bridges market in Qatar will be USD 26.5 bn at the end of 2020.We believe that new projects will be announced as the rising population as well as the tendency to own cars in the region will continue to result in further upgrades in the roads infrastructure.

2.1 11.8

12.7

17.9

37.8

45.7

Bahrain

Kuwait

Oman

Qatar

Saudi Arabia

UAE



• The government’s USD 20 bn plan also includes investments in improving its sewage networks. USD 362 mn worth of projects has been awarded so far in 2011 in improving sewage networks around the city. The Doha North Sewerage Treatment and Associated Works project is a USD 2.2 bn four-part expansion. The sewerage network at the Doha North Project is important as it is likely to witness increase in flows. The Doha North will witness projects such as Lusail, the Pearl and Gharaffa, West Bay area, as well as alleviate some of the pressure placed on the

existing Doha West Sewerage Treatment Works (STW).

• Three major road projects which are underway further substantives the five year plan to uplift the road network of the country. The Doha Expressway, currently under construction is valued at USD 2 bn, the Dukhan Highway also under construction has been valued at USD 275 mn and the largest proposed project, the Lusail Highway which is currently being tendered has been valued at an impressive USD 687 mn.

Timeline: Road Projects

2012 2013 2014 2015 2017

Nakilat Shipyard: Phase 4A Project Value: USD 45 mn Completion Date: Q3-12

Peripheral Roads to Barwa City Project Value: USD 152 mn Completion Date: Q2-13 Doha Expressway: Package 6 Project Value: USD 85 mn Completion Date: Q4-13

Doha Dukhan Highway: Central Section Project Value: USD 275 mn Completion Date: Q1-14 Doha Expressway: Phase XII: F Ring Road Project Value: USD 233 mn Completion Date: Q1-14 Doha Dukhan: Al-Mail to Bani Hajer Project Value: USD 1 bn Completion Date: Q4-14 Doha Dukhan: Eastern Section Project Value: USD 150 mn Completion Date: Q4-14



• Ashghal has awarded USD 120 mn project to HBK Contracting. The project comprises of mechanical and electrical refurbishment work with related drainage works, civil and

structural works at the existing pumping stations PS3/1, PS8/1, PS8/6, Series 8 Trunk Sewer, PS15, PS23, PS31 and PS44.

The Public Works Authority (ASHGHAL): The leader in Roads and Sewage developments has undertaken QAR 100 bn worth infrastructure projects in five years.

Source: Ashghal website

Roads

The master plan programme called for a four phase programme to be implemented by Ashghal. This was to have included:

Phase I (2008-11)

• Upgrading the Al-Rayyan road from the BaniHajar roundabout to SoufWaqf

• The F-ring arterial road • The east-west corridor and New Doha

International Airport road • The F3 Salwa road freeway, stage I • The F5 central freeway, stage I (Lusail

expressway) • The F1 freeway to Al-Shamal

Phase II (2012-16)

• The F6 Doha Bay Freeway • The F2 Khalifa Street/Majlis al-Tawoon • The E8 Al-Khor expressway (Lusail North

to Lusail South) • The F21 Al-Waab freeway • The Salwa road freeway, stage III • The F5 central Freeway, stage III • The Al-Saad arterial road • The F61 Al-Wahda freeway • The F2 Dukhan freeway (Al-Shamal road

to orbital freeway) • The F6 east-west corridor (from the Orbital

freeway to New Doha port) • The F4 Orbital freeway/E9 Lusail

tangential • The F5 Central freeway, stage II • The E12 Western industrial expressway

Phase III (2017-21)

• The E2 D-ring extension to New Doha International airport

• The A12 E-ring extension to the airport • The E10 Al-Wukair expressway • The E10Al-Waab expressway, stage II

Phase IV (2021-26)

• Phase 4 consists of a pumping station for Treated Sewer Effluent ( TSE3)

http://www.thepeninsulaqatar.com/qatar/175607-ashghal-to-undertake-qr100bn-worth-infrastructure-projects-in-five-years.html



5.2 Railways

• The GCC region has a planned investment of

USD 96 bn in the rail sector. The rail networks have garnered a significant share of 32% of the total transportation sector. Qatar is the largest market for the railways sector in the GCC with a total investment of USD 35 bn. The total investment in the rail sector in Qatar accounted for 53% of the total planned investment in transportation sector.

Exhibit 19: Planned projects in railways

Source: MEED

7.9 14.0 2.5 29.0 20.3 22.2

50%

43%

10%

53%

25% 25%

0%

10%

20%

30%

40%

50%

60%

0

5

10

15

20

25

30

35


UAE

USD

bn

Value of Projects % of Transportation sector



Exhibit 20: Ongoing or Planning Railway Projects in GCC

Projects Value Expected Completion Date Coverage

GCC Railway Network USD 30.0 bn 2017 GCC nations

Qatar National Railway System USD 35.0 bn 2015 North-South within Qatar

UAE National Railway Project USD 10.9 bn 2015 Connects All Emirates in the UAE

Dubai Metro USD 10.6 bn 2015 Dubai

Bahrain Rail Masterplan USD 7.9 bn 2025 Bahrain

Abu Dhabi Metro USD 7.0 bn 2020 Key Cities in Abu Dhabi

Kuwait City Rapid Transit USD 7.0 bn 2016 Kuwait City

Saudi Land Bridge USD 7.0 bn 2014 From Jeddah to Riyadh in KSA

Haramain High-Speed Railway USD 7.0 bn 2014 From Mecca to Medina in KSA Source: Frost and Sullivan, Commercialbank Capital Research

• Qatar is the largest market for railways sector in the GCC with a planned investment of USD 35 bn. The objective of massive investment plan is to ensure that it can accommodate thousands of tourists that are going to move within the city during the tournament. The public transport which is currently operated by

Mowasalat in the form of taxis and buses will not be adequate to host the FIFA World Cup 2022. In addition, increasing the taxis and buses will put additional pressure on new roads and create congestion; therefore rail network within the country would be the most viable option for Qatar.

Exhibit 21: Details of Qatar rail project

Projects Award Date

Value (USD mn)

NDIA - Doha International Airport: Passenger Rail Station Box Q1 2010 120

QRDC - Qatar Integrated Rail Project Q2 2012 20,675

QRDC - Qatar Integrated Rail Project: Automated People Mover in West Bay Q2 2012 2,200

QRDC - Qatar Integrated Rail Project: Doha Metro: Green and Yellow Line Q2 2012 2,000

QRDC - Qatar Integrated Rail Project: Doha Metro: Lusail Light Rail Network Q3 2012 1,158

QRDC - Qatar Integrated Rail Project: Doha Metro: Blue Line Q2 2012 1,000

QRDC - Qatar Integrated Rail Project: Doha Metro: Red Line Q2 2012 1,000

QDREIC - New Doha Airport to New Doha Port Railway Q4 2014 200 Source: MEED Projects

• Recently, the organization that was

responsible for developing the rail network has been restructured with the objective of expediting the process. A Railways Steering Committee has been established, Chaired by the Prime Minister; will be responsible for coordination of the entire project.

• QRail will now look after the rail network project, which was earlier been assigned to Qatar Railways Development Co (QRDC), a 51:49 joint venture between Qatari Diar and DB International (formed in 2009).QRail has started inviting expressions of interest from

local and international companies to bid for design and construction contracts for Doha Metro project.

• Recently, QRail has signed a USD 535.4 mn

contract with Qatari Diar Vinci Construction (QDVC) for the new phase of works on the Lusail Light Rail Transit system. The contract covers civil engineering works in seven underground stations, the construction of a viaduct over the motorway between Doha and the northern part of the country and preliminary works on an LRT depot and maintenance workshop.



Doha Metro map Timeline: Railways

2011 2013 2016 2017 2026

Qatar plans to build a rail network, which is part of Qatar’s plan to spend USD 35 bn on rail infrastructure. Doha Metro, a 350 km rail network will have four lines, Red Coastal line, Golden Historic line, Green Education line and Blue City line.

Red line: is the first line to be developed and will operate from the NDIA to the West Bay area in central Doha.

Gold line: will operate from east-west route linking NDIA and the airport city with the industrial areas in the west of Doha.

Green line: will be from the industrial areas in the south through central Doha to Education City.

Blue line: will follow the coast road, running from NDIA to West Bay and on to The Pearl and Lusail.

Testing and commissioning of freight railway to start by 2016

Consultants prequalify for metro. PMC bids invited for West Bay people-mover PMC bids invited for Lusail LRT Aecom-Parsons wins PMC for Lusail LRT Civil works tender due for West Bay. Construction due to start on Red Coast PMC award due for West Bay

GCC Railway Network Project Value: USD 30 bn Completion Date: 2017 Testing and commissioning of Red Coast Line to start

Civil works award due for West Bay by September 2012

Entire rail programme will be completed



5.3 New Doha International Airport • The aviation sector in the GCC has undergone

major transformation during the last decade. Passenger traffic in the GCC has grown at a CAGR of around 10% between 2002 and 2010, significantly higher compared to global traffic.

• According to the International Air Transport Association (IATA), Middle East is one of the fastest growing markets in the world as it expects around 9% yearly growth till 2014. The most recent forecast by Boeing indicates that it expects orders of 2,520 planes from the Middle East carriers by 2030.The total value of projects planned or underway in the GCC is USD 42 bn.

• In the GCC, Qatar has an aggressive expansion plan in the aviation sector to become one of the aviation hubs in the region. The country is also preparing itself to maintain the pace with steady increase in passenger traffic to and from Doha. In addition, the rising fleet size of Qatar Airways was also leading to increase in transit passenger, which was putting additional pressure on airport authorities.

• The current airport of Qatar is facing increasing congestion, which will be replaced by the new airport with much larger cargo and passenger facilities, thereby providing an important transportation hub for the people and materials.

Exhibit 22: Projects awarded (USD bn)

Source: MEED • The government plans to invest USD 11.1 bn

for NDIA which includes two runways and a 140,000 sqm airport terminal. Currently, the airport is handling 14.9 mn passengers a year. At the completion of first phase in March 2012, the airport will be able to handle 24 mn passengers and 750,000 tons of cargo a year.

• At the completion of the second phase in 2015, the capacity will double to 50 mn passengers per year. The NDIA is also developing its air cargo terminal with an initial capacity of handling 1.4 mn with the completion of phase one. This figure will reach to 2 mn tons (mt) at the end of second phase, making it one of the largest cargo terminals in the world. In line with these developments, Qatar Airways is also planning to develop its air cargo business.

Exhibit 23: Airport Contracts Awarded (2004 – 2010)

Projects Value Project status

Award date ( USD mn)

NDIA – Infrastructure Packages 3,550 Execution 2007 NDIA – Passenger Terminal Complex 1,000 Execution 2007 NDIA – Airfield Paving, Tunnel and Detention Ponds Works 932 Execution 2005 NDIA – Concourse C 778 Execution 2009 NDIA – Aircraft Maintenance Hangar 670 Execution 2006 NDIA – Reclamation and Dredging 425 Execution 2005 Total 7,355


4.9

2.7

7.1

7.3

11.2

8.2Bahrain

Kuwait

Oman

Qatar

Saudi Arabia

UAE



• The government of Qatar began upgrading the

NDIA even before the winning the bid for hosting FIFA World Cup 2022. The country was witnessing increase in number of tourists thanks to the initiatives taken by the tourism authority of Qatar. Qatar is preparing for the

expected rise in demand as Qatar Airways further enhances its fleet size to move up the international ranking. This will help the airline in increasing its current flying destinations, making Qatar a hub for major connections across the globe.

Timeline: Airport Projects

Qatar Airways • Qatar Airways is a group of companies with

the diverse interests from core passenger and cargo transportation and airport to alcohol distribution, sports and hospitality. The group comprises of Qatar Airlines, Qatar Duty Free, Qatar Airways Cargo, the Qatar Distribution Company (the only licensed retail distributor of alcohol in Qatar) and Doha International Airport. Since the re-launch of Qatar Airways in 1997, the company has been able grow at 30% per year. During this period, the fleet has

increased from 4 planes to 97 planes in 2011. This figure is expected to reach 110 by the end of 2013. The company has entered into a multi-billion dollar deal with Airbus to supply 80 aircrafts.

• The company is one of the best and the fastest growing airlines in the region. It has won the award for the Best Airline in Middle East and Africa at 2011 Business Traveler Asia Pacific Awards for the second year in a row. In December 2011, the CEO of Qatar Airways has been unanimously nominated to

2012 2014 2015 2016 2018

New Doha International Airport (Phase I) Total Project Value: USD 11.1 bn Completion Date: 2012 Passenger Capacity: 24 mn Cargo Capacity: 750,000 tn

New Doha International Airport (Phase II) Total Project Value: USD 11.1 bn Completion Date: 2015 Passenger Capacity: 50 mn Cargo Capacity: 2 mn tn

New Doha Int’l Airport



serve on the board of governors of the International Air Transport Association, which represents over 90 % of the world's air transport. This further substantiates Qatar Airways image in the industry and its commitment towards being one of the best airlines in the region. The company is rapidly expanding its destinations as well as flight frequency. In 2011, it has expanded and/or started new flights to various destinations. The company is expected to add 20 new destinations by the end of 2013.

• In March 2011, the company announced a

strategic partnership with Qatar Telecom (Qtel) for the migration of its primary IT infrastructure to the Qtel data centre. In September 2011, the company bought a 35% stake at the Luxembourg-based cargo carrier Cargolux, which is in with the company’s objective to develop its air freight business.

• Qatar Space City is a plan of government of Qatar to establish a USD 3.3 bn Space City in the Al-Khor area, which will cover an area of 40,000 sqm. The project will include establishment of a university in cooperation with US National Aeronautics and Space Administration (NASA) along with a science museum and other tourism attractions. The planned project is expected to be implemented in several phases under the supervision of an official body that would be appointed with General Authority of Civil Aviation. The concept of the space city project is based on the American Space Museum.

5.4 New Doha Port • The GCC ports sector is mostly dominated by

the oil and gas sector as most of the production is exported to emerging markets. However, this is set to change in the coming years as the region continues to make significant investments to diversify its economic base.

• The new proposed port in Qatar is likely to transform the country into the new trading hub of the region, which is in line with the country Vision 2030. The country can aspire for such goals as it has the required funding thanks to

rising hydrocarbon of the years, which has resulted in accumulated surpluses. The main objective of the new port is also to replace the existing port, which is struggling to keep up with the growing demand with its limited land.

• Currently, the country has three main ports: Port of Doha (Qatar’s main commercial seaport), Port of Ras Laffan (the world's largest LNG exporting facility), and Port of Mesaieed (Qatar's main oil export terminal and the main point of entry for aggregates and other building materials). In order to meet the heightened traffic of goods and supplies generated by the country's economic boom and rising population, the government of Qatar plans to expand and develop its port infrastructure.

• Qatar’s ports are dominated by the LNG

export. However, this phenomenon is likely to change over the next few years as the country makes significant investments to diversify its economy away from hydrocarbon sector. The current planned investments in the sea port sector is to address the additional capacity of LNG, but the future expansion plans is to address the expected rise in demand from the massive development program undertaken by the government.

Exhibit 24: Planned projects in sea ports ($ bn)

Source: MEED

0.8 2.7

2.8

2.1

8.6

15.4

Bahrain

Kuwait

Oman

Qatar

Saudi Arabia

UAE



An artist impression of USD 5.5 bn deepwater seaport near Qatar's industrial city of Mesaieed

Exhibit 25: Port Capacity

Port Name Capacity Year of Completion

New Doha Port 6 mn teu 2016

Port of Ras Laffan 6.3 mn m3* NA

Port of Mesaieed 2 mn teu 2014 Source: Commercialbank Capital Research, Note:*Cubic meter

• In April 2010, Qatar received bids from around

9 consortiums for the major contract of the New Doha Port. In March 2011, the steering committee signed first contract with the China Harbor Engineering Company (CHEC) with a price of QAR 3.2 bn, which is a four and half

year deal. The second contract received bids, however, which is likely to be awarded soon. We believe that Qatar will have to expedite the process of bidding and awarding and then execution in order to keep up the pace with its regional peers.

Timeline: Port Projects

2013 2016 2020 2025 2030

New Doha Port (Phase III) Total Project Value: USD 7 bn Start Date: 2030 Capacity: NA

New Doha Port (Phase I) Total Project Value: USD 7 bn Completion Date: 2016 Capacity: 6 mn TEU (20-foot equivalent units)

New Doha Port (Phase II) Total Project Value: USD 7 bn Start Date: 2020 Capacity: NA



6. ICONIC PROJECTS

6.1 The Pearl-Qatar

• The Pearl Qatar is a Riviera style manmade island developed in an exclusive environment in Doha. It is one of the largest real estate developments in the GCC which covers 400 hectares (4 mn sqm) of reclaimed land. It is also Qatar’s first international luxury residential development that offers international investors freehold title ownership. It is located 20 kms from Doha's International airport and 350 meters offshore of Doha’s prestigious West Bay District. The first

investors took up residency in 2009 and the entire project is expected to be completed by 2013.

• The Pearl will house about 40,000 residents and includes luxury apartments, high rise towers, town homes, penthouses and Mediterranean villas, an international yachting hub with three marinas and 700 boats, three 5 star hotels, 2 mn sqf of international retail, restaurants and entertainment as well as a family destination with schools and community facilities.

• United Development Company (UDC) is the

project developer, who is overseeing the project's entire infrastructure and construction of municipal buildings. Dar Al-Handasah (Shair and Partners) is a project manager.

• The whole idea of the Pearl Qatar is to attract as many people as possible from Qatar and the region as well as other parts of the world. It will have high end shops and fine dining restaurants from countries such as Spain, Italy and the United States. The Pearl-Qatar, with it 40 km of reclaimed coastline and 20 km of pristine beaches, is definitely a one of main tourist attractions of Qatar.

• There are three retail areas which have their own themes. One of them is the Porto Arabia

which covers 200,000 sqm, which consists of 385 retail shops including fashion, jewellery and fine dining. The Medina Centrale with an area of 600,000 sqm is set to provide cinemas and supermarkets among others while the Qanat Quartier will be the cultural destination with its impressive design allowing people to enjoy parks and art galleries.

• Nikki Beach Resort & Spa is a Miami based

resort chain set to open in July 2012. It will be a boutique beachfront resort with 47 luxury villas and spa suites located at Porto Arabia. It is designed by the award winning Singapore based ECO ID Architects with interior design by Gatserelia Design.

The Pearl, Qatar



6.2 Msheireb

• Msheireb is an iconic project which will display innovative development and rediscover the local heritage and culture. The project is divided into six main character zone named as Diwan Quarter, Heritage Quarter, Retail Quarter, Kahraba Quarter (residence and mix use), Nakheel Quarter (HQ gateway). The project will have 226 buildings to provide home to 27,637 residents. It will have parks and open spaces spread over approximately 122,217 sqm. The project will have three types of hotel, Lifestyle hotel, Luxury hotel and Business hotel and a theatre auditorium with a

capacity of 500 to 700 seating capacity. One of other distinctive feature of the project is that it is expected to have underground metro stations to provide the link to other parts of country.

• The project will be completed in five phases and the first phase is due for completion by 2012. The first phase will consist of a multi-use Cultural Forum, central luxury hotel and serviced apartments, offices, a shopping street, townhouses, a primary school and a mosque. The Phase 2, 3 and 4 will consist of retail malls, hotels, office apartments and shops.

Exhibit 26: Details of Msheireb Development

Projects Budget Value (USD mn)

Project Status

Msheireb Properties - Mandarin Oriental Hotel 80 EPC Bid

Msheireb Development: Infrastructure Works: Phase I 142 Execution

Msheireb: District Cooling Plants 50 Execution

Msheireb: Phase 1a 428 Execution

Msheireb: Phase 1b 500 Execution

Msheireb: Phase 2, 3 and 4 4,072 Design

Source: MEED

Msheireb



6.3 Lusail City

• Lusail City is a modern yet traditional and environmentally friendly city. The estimated cost of the development is USD 33 bn, which will be executed in phases over the next 10 years.

• Lusail City will be located on the east

coast of Qatar, approximately 15 km north of the city center of Doha. Lusail City will have residential, commercial and two marinas. It will also have a full array of community needs such as schools, mosque, medical facilities, sports, entertainment, cultural facilities and shopping centers.

• The city will have 25,000 residential units

which will accommodate approximately 200,000 residents. An estimated 170,000 are anticipated to work at the different districts and expected to attract further 80,000 visitors to the city. Freehold ownership of Lusail City properties is available to all Qatari and GCC nationals, while foreigners can acquire property on a

99-year lease basis. The infrastructure of Lusail city is divided into two phase which was further subdivided into construction zones, known as construction package (CP).

• There are 16 major CP which are under different stages of development. The entire infrastructure at this stage is planned to be completed by the end of 2013. Similarly, the entire Lusail City will be connected to an extensive natural gas pipeline network.

Exhibit 27: Lusail City construction projects

Projects Total value Status Client

Transport Al-Khor Highway NA Design Public Works Authority (Ashghal)

Lusail Expressway – Phase one USD 350 mn EPC bid Ashghal

Lusail Expressway – Phase two USD 350 mn Design Ashghal

Lusail light-railway transit (LRT) USD 1.8 bn PMC awarded Qatar Railways Development Company (QRDC)

Lusail LRT rolling stock contract USD 1.8 bn EPC bid QRDC

Real Estate

Al-Sidra Golf Residential Development USD 3.5 bn Design Arcapita, Barwa Real Estate Company

Lusail mixed-used development USD 800 mn On Hold Diyar al-Kuwait Real Estate Company

Lusail Entertainment City USD 1.5 bn On hold ADIH, Majid al-Futtaim Group

Sports

Lusail Iconic Stadium USD 662 mn Design Qatar Olympic Committee


Lusail City



6.4 Seef Lusail

• Seef Lusail, a project under development by Seef Lusail Real Estate Development Company “SEEF”, has appointed DP Architects as master planners for the project. The developer, SEEF, is a joint venture between Masraf Al Rayan and Qatari Diar that will take on the full development of Seef Lusail. Issa Mohammed Al Kaladari, CEO of Lusail City was appointed as Chairman of SEEF. Khalid Ahmad Fakhroo, Executive Director of Engineering and Real Estate at Masraf Al Rayan, has been appointed as the CEO of SEEF.

• Seef Lusail is a 600,000 sqm multi-use development located at the waterfront of Lusail, a distinctive 21st century iconic city which celebrates the special cultural and geographical heritage of Qatar and the Gulf Region

• DP Architects is a leading architectural

practice in Asia with over 1200 staff and 12

offices worldwide. It has been operating in the Gulf region since 2005 and their key projects in the region include The Dubai Mall, the Address at Dubai Marina, Doha Festival City, Dilmunia Health City in Bahrain and The Eighth Gate in Damascus. The firm was founded with a deep concern for the built environment and the need to create architecture of excellence that enriches the human experience and spirit.

• Seef Lusail will feature an interactive 2.3 km

waterfront promenade that will include multiple world class attractions that will cater to various age groups and families. The developer, “SEEF” conducted a number of studies on waterfront destinations worldwide in an effort to create an innovative design with a strong emphasis on creating themes throughout Seef Lusail that reflect and compliment Qatar’s traditions and values. Seef Lusail will further add to Qatar’s appeal as an international destination that rivals major global destinations.

• The design will take into consideration the

climate in Qatar, in order to have a lively and active waterfront all year long.

• The hotels in Seef Lusail will cater to the family, business and luxury leisure segments.

One of the hotels will be a fully integrated resort and spa providing guests with a unique leisure experience. Discussions and negotiations are underway with global hotels brands that will bring new concepts and ideas to Qatar.

Seef Lusail



7. Retail & Leisure • GCC retail sector has undergone a shift in

paradigm over the last decade on the back of robust macroeconomic environment. The region has become one of the most attractive destinations for retailers across the globe. The changing consumer behavior and lifestyle, increasing influence of western culture, rising disposable income has led to phenomenal growth in the retail sector. As a result, the retail sector in the GCC is contributing to the overall growth in the non-hydrocarbon sector.

• Shopping malls and organized retail stores have gained prominence in the region as it is regarded as one stop entertainment for residents and tourists. Therefore, the total projects planned or underway for shopping malls in the region is USD 11.1 bn. We believe that Qatar have the potential to attract a bigger share as they prepare for the World Cup 2022 and the government thrust towards becoming a touristic hub in the region.

• Cup 2022 and the government thrust towards becoming a touristic hub in the region.

Exhibit 28: Gross Leasable Area (GLA) in 2010 (sqm 000’s)

Source: Retail International

Doha Festival City

• The emergence of trade, restaurant and hotels

sector as the fourth largest contributor to GDP in 2010 reflects the strong and growing performance of Qatar’s retail industry in the recent years. The contribution to the GDP has increased from 4.4% in 2006 to reach 5.5% in 2010. The retail sector growth in Qatar has mirrored the economic growth in Qatar. Rapid economic growth has led to one of the highest GDP per capita in the world.

• The retail sector in Qatar has evolved over the last few years on the back of rapid growth in population. The sector has benefitted from the rising purchasing power of its residents in the recent years. This has led to a shift from unorganized to organized shopping, resulting in shopping malls and complexes. Shopping malls have become an important part of the society as it is the best source of entertainment for the residents and tourists in the country.

4,045

630

4,234

521639 311 UAE

Qatar

Saudi Arabia

Kuwait

Bahrain

Oman



Exhibit 29: Retail future supply 2012 – 2015

Project GLA (sqm)

Completion Date Project Value Developer

Gulf Mall 80,000 2012 USD 100 mn Business Trading Company

Ezdan Mall 40,000 2012 USD 50 mn Ezdan Real Estate Company

Doha Festival City 433,847 2012-2014 USD 1.65 bn Bawabat al-Shamal Real Estate

Northgate Mall 100,000 2013 USD 327 mn Equinox

Mirqab Mall 36,000 2013 USD 200 mn H.E. Sheikh Hamad Bin Jassim Al Jaboor Al Thani

Marina Mall 57,605 2014 USD 275 mn Qatar Foundation

Barwa Commercial Avenue Mall 56,600 2012 USD 1,100 mn Barwa Real Estate Company

Barwa Al Doha 271,000 2014 USD 824 mn Barwa Al Doha (Developer) Source: DTZ Research and MEED Projects • Although, shopping malls and commercial

centers have entered the market during the last couple of years, the retail space remained scarce in the country. This has resulted in speculative demand, which has prompted sub-letting at enormously high prices. The prices of sub-letting can vary between QAR 100 to QAR 150 per sqm depending on the location. Surprisingly this phenomenon has become highly common in Doha.

• Qatar’s total retail stock was around 630,000 sqm (GLA) at the end of 2010, an increase of around 30% compared to 2009. Based on the planned developments, Qatar will add 626,000 sqm (GLA) of new organized retail space by the end of 2012, thus doubling the existing retail capacity. The completion of 433,847 sqm (GLA) of Doha Festival City complex, which is being developed by Al Futtaim will be completed by 2014. The Barwa Commercial Avenue is under construction, which will yield 1 mn sqm of built up area. The first phase of the project will yield around 0.5 mn sqm of GLA. The first phase is around 60% completed and the rest to be completed by the end of 2012.

• The total planned and projects underway in

shopping mall are USD 3.1 bn. There are around 10 new malls being planned in Qatar. The total number of projects awarded during the year 2011 is USD 523 mn. Around USD 2 bn worth of projects is to be awarded in the year 2012 and 2013.

7.1 Doha Festival City (DFC) • DFC will be the largest mall in Qatar with a

mixed use of shopping, entertainment and leisure. The project is owned and developed by Bawabat Al Shamal Real Estate Company

(BASREC). BASREC shareholders include Al-Futtaim Real Estate Services, Qatar Islamic Bank (QIB) and private Qatari companies. DFC will be built on a 433,847 sqm plot with a GLA of around 260,000 sqm, which is located around 15 km north of downtown Doha on Al Shamal Road. DFC will consist of mall and entertainment complex, hospitality and offices and automotive showrooms. The retail section will have four distinct interior zones, namely Water Concourse, Garden Promenade, Rainforest Boardwalk and Fashion Galleria. DFC will be the home to IKEA, Toys R Us, Marks & Spencer and Inter-sport. The first phase of the project, which will include the retail section, is likely to be completed by the fourth quarter of 2012. The remaining sections of the DFC are expected to be completed by the end of fourth quarter of 2014.

7.2 Lagoona Mall • Lagoona Mall is a 127,000 sqm two level

lifestyle shopping centre with 53,000 sqm of retail shopping, built at an estimated cost of QAR 1.4 bn. Lagoona is developed by Dar Investment & Development and is leased and managed by Darwish Holding for an initial period of 30 years. The main contractor was Al Seal Contracting & Trading Co and Hill International (project Management) MZ & Partners (Design and Supervision) are the consultant. One of Lagoona's unique features is a 20,000 sqm European piazza, featuring 5,000 sqm of fine dining which will be home to 20 restaurants with outdoor patios. The shopping center comprises 170 retail stores. Similarly, it also provides parking for over 2,000 vehicles. The mall is the home to luxurious multi brand store, Fifty One East. The store covers an area of 13,000 sqm which is the biggest in the Middle East region.



KATARA - Cultural Village

7.3 Katara • Katara is the Cultural Village of Qatar, where

cutting edge activities of all fields show the cultural diversity of the world in one single traditionally Qatari place. It is the largest and the most multidimensional cultural project of Qatar. It covers an area of 1 mn sqm and is located between Doha's West Bay and the pearl. The approximate cost of the project is USD 82 mn.

• Katara hosts international, regional and local festivals, workshops, performances and exhibitions at its prestigious venues such as theatres, libraries, art galleries, museums, an opera house, and a multi-purpose halland Roman-style amphi theatre which is the largest in the Middle East. It also has traditional cafes/restaurants, marinas, handicrafts souq, mosques and playing field for children. Katara has held various performances since its opening in October 2010 which includes Qatar Philharmonic Orchestra, Doha Tribeca Film Festival, Photography Exhibitions (i.e. Our Time, Doharama) and Cultural Performance during AFC Asian Cup Jan 2011.

7.4 Cinemas • Recently, Q media announced a deal to

acquire 60% stake in Qatar Cinema and Film

Distribution Company for nearly QAR 2 bn. Q media and Qatar Cinema and Film Distribution Company plans to invest more than QAR 1 bn in the next three years to open more than 50 state-of-the-art multiplex facilities. Exhibit 30: Cinemas in the Region

Source: Various

• In the GCC, Qatar has the maximum number of cinemas. The total number of cinemas in Qatar stood at 38 compared to around 30 in Dubai and Abu Dhabi.

• Aspire Zone Foundation (AZF) opened the first women cinema in Qatar capital, Doha. All the films for this cinema are provided by Qatar Cinema and Film Distribution Company. Qatar has also launched Doha Film Institute (DFI) to build a strong film industry in Qatar along with strong links to the international film

17

13

14

38

Abu Dhabi

Dubai

Kuwait

Qatar



community. World Cinema Foundation has signed a three-year cultural partnership with DFI to restore and preserve international films of cultural significance.

• Doha has hosted international film festivals - Tribeca Film Festival Doha and Al Jazeera Documentary Film Festival in the past. Qatar

is moving in the right direction to become the main attraction and hosting big events in the coming years. We remain optimistic on the prospects of the entertainment and believe that it will gradually emerge as one of the top entertainment hubs in the GCC.

Timeline: Retail projects

2011 2012 2013 2014 2015

Lagoona Mall Project Value: USD 348 mn Completion Date: 2011 GLA: 127,000 sqm

Marina Mall Project Value: USD 275 mn Completion Date: 2014 GLA: 57,605 sqm Barwa Al Doha Mall Project Value: USD 824 mn Completion Date: 2014 GLA: 271,000 sqm Doha Festival City Project Value: USD 1.7 bn Completion Date: Q4-14 GLA: 260,000 sqm

Gulf Mall Project Value: USD 100 mn Completion Date: 2012 GLA: 80,000 sqm Ezdan Mall Project Value: USD 50 mn Completion Date: 2012 GLA: 40,000 sqm Barwa Commercial Avenue Mall Project Value: USD 1,100 mn Completion Date: Q2-12 NLA: 56,600 sqm

Northgate Mall Project Value: USD 327 mn Completion Date: 2013 GLA: 100,000 sqm Mirqab Mall Project Value: USD 200 mn Completion Date: 2013 GLA: 36,000 sqm



7.5 Hotels & Tourism • Qatar Tourism Authority (QTA) plays an

important role in promoting Qatar as an evolving tourist destination. The company organizes and supervises the development of the tourism industry in Qatar. According to World Travel and Tourism Council (WTTC), Qatar is one of the fastest growing tourism sectors in the world. The contribution of travel and tourism sector to GDP is expected to rise 6.4% per annum by 2021 from QAR 3.8 bn or 0.7% of total GDP in 2011. These assumptions are on the back of massive planned investments in the sector and in line with the government’s thrust to become a touristic destination.

• QTA have done a commendable job in organizing and participating in conferences and exhibitions over the years, which has transformed Qatar into a business destination within the region. The increase in the number of business travelers due to the conferences and exhibitions is improving the hotel occupancy rates in Qatar. In terms of revenues, 4 star hotel revenues increased to QAR 182.4 mn in third quarter of 2011 to QAR 101.9 mn during the same period of previous year. In terms of 5 star hotels, the revenue increased to QAR 385.6 mn in third quarter of 2011 compared to QAR 304.6 mn of the previous year.

St. Regis Hotel, Doha

• St. Regis Hotels & Resorts is making a landmark entry into the Middle East with The St. Regis Doha. The hotel is part of Al Gassar Resort and is expected to open on 28 February 2012. The hotel is strategically located near the Katara Cultural Village and Doha Exhibition Centre. It will comprise of 336 guest rooms and suites, a cornucopia of signature restaurants, a world-class Remede

Spa, and a 1,850 sqm Grand Ballroom with a capacity of accommodating 1,200 guests.

• According to the latest figures from QTA, the tourism sector in Qatar is witnessing a steady growth. The report indicated that the occupancy rates have increased by around 4% in the third quarter compared to the same period of the previous year. The revenues from 4 and 5 star hotels witnessed an increase during the period, indicating strong domestic and regional interest in the sector. This increase was due to the 24% increase in visitors from the GCC region, especially Saudi Arabia as it accounts for around 60% of the total tourist within the region.

• According to hotelier Middle East, Qatar has 17 five star and 13 four-star hotels at the end of January 2011. In total, Qatar had around 66 hotels. According to QTA, the total number of hotels is expected to reach 240 by end of 2022. This is a substantial increase in the number of hotels in the next ten years. According to QTA, about 90% of future supply will provide four and five star accommodation.

• The total planned and underway projects are USD 2.4 bn. As of now, USD 1.6 bn worth of projects has been awarded. Currently, there are 10,000 hotel rooms and additional 5,500 will be come on stream by the end of this year. By the end of 2013, the total hotel rooms will reach 30,000. Around 5,000 new rooms will come on stream each year through 2022.

Exhibit 31: Qatar growth in hotels (forecast till 2022)

Source: Qatar Tourism Authority (QTA)

• Qatar Museums Authority (QMA) has awarded a contract worth USD 434 mn to a South Korean construction firm Hyundai Engineering & Construction to build the National Museum of Qatar designed by the French architect Jean Nouvel over an area of 46,000 sqm in

51 58 66

240

0

50

100

150

200

250

2008 2009 2010 2022F

No

of H

otel

s



Doha. The construction of the museum is expected to be completed by 2014. Qatar's

• National Museum will be an add-on to the Museum of Islamic Art in Doha designed by IM

Pei, which opened in December 2008, as well as the Arab Museum of Modern Art in Doha, which opened last December.

New National Museum of Qatar • The QMA has also announced to open a

“Museum of Islamic Art” (MIA) park built upon an area of around 280,000 sqm with no entrance fees for visitors. The park is designed by Pei Partnership Architects of New York. In addition, they will also provide various

facilities like music evenings, paddle boats, film screenings, sports events and art workshops. The plans for building a new Museum of Photography designed by Santiago Calatrava are in progress.

Timeline: Hospitality Projects

2011 2012 2013 2014 2015

Qatar National Museum Project Value: USD 434 mn Completion Date: Q2-14 Capacity: 220 seats Mandarin Oriental Hotel Project Value: USD 80 mn Completion Date: Q1-14 Capacity: 160 rooms Planet Hollywood Hotel Entertainment City Project Value: USD 0.1 bn Completion Date: Q4-14 Capacity: 300 rooms Four Seasons Hotels and Resorts Project Value: USD150 mn Completion Date: Q2-14 Capacity: 350 rooms

New Doha Hilton Hotel Project Value: USD 60 mn Completion Date: Q1-12 Capacity: 320 rooms Crowne Plaza Doha: The Business Park Project Value: USD 165 mn Completion Date: Q1-12 Capacity: 265 rooms St. Regis Hotel and Residential Tower Project Value: USD 415 mn Completion Date: Q1-12 Capacity: 320 rooms Doha Regent Hotel Project Value: USD 100 mn Completion Date: Q3-12



8. Social Infrastructure • The social infrastructure development

becomes important in the midst of economic development. In addition, it is important in attracting expatriates to work and live in Qatar. These are indirect ways of creating demand, which will support the country’s National Vision 2030 of reaching their target population by the end of 2030. Investments in social

infrastructure such as hospitals and education is on the rise as providing adequate education for the growing young population is the backbone of economic diversification. Both the healthcare and education is part of the government’s human development programme.

8.1 Education

Education City

• The education sector has undergone major

transformation over the last two decades. The country has made major investments in improving the quality of its education system. Qatar leads the GCC in terms of education reforms as it ranks among the top five nations globally in terms of quality of primary education. The government established the regulatory body, Supreme Education Council (SEC). The SEC comprises of three institutes, namely Education Institute to develop curriculum and professional training for teachers and staff, Evaluation Institute to assess and monitor the performance of schools and the Higher Education Institute to help outstanding students.

• According to the recent study by Qatar’s permanent Population Committee, the number of students is rising by around 4.5% annually. The strong growth in student enrolment led to reform of Qatar’s primary and secondary schools. Currently, there are 165 independent schools serving around 80,000 students under the new system provided by the SEC. We believe that there are opportunities for the primary and secondary schools due to the rising demand, however, the main challenge would be the exorbitant prices of land. This would be lead to higher pricing structure for new schools, which might be unfavorable when compared to other existing schools.



Exhibit 32: Universities in Qatar

University / College Country of Origin

Qatar University Qatar Virginia Commonwealth University USA

Northwestern University USA

Weill Cornell Medical College USA Georgetown University USA

Texas A&M University USA Carnegie Mellon University USA HEC Paris Europe University College London Europe Stenden University Netherlands University of Calgary Canada

College of the North Atlantic Canada Source: Commercialbank Capital Research

• One of the most significant changes in the

education sector was the establishment of Education City by Qatar Foundation. Due to the modernization and world class facilities, it has attracted both universities and students around the region. Six American universities have opened their branches in Education City.

• Apart from these international universities, Qatar University continues to remain the main attraction for the Qatari students. The university also underwent series of reform during 2003 and 2007. The university offers 60 degrees from seven different colleges. In addition, the main driver for Qatari people to enroll in the public university is to secure high paying public sector jobs.

• Hamad bin Khalifa University is an initiative of Qatar Foundation for Education, Science and Community Development (QF) in honor of His Highness the Emir, Sheikh Hamad Bin Khalifa Al-Thani. This new multi-disciplinary university will combine the learning, teaching and research being carried out at the branch campuses of the universities and other academic centers at the Education City.

• The total projects planned or underway in Qatar is USD 6.6 bn. Total projects awarded during the year 2011 reached USD 1.2 bn, while it is expected that USD 620 mn worth of projects will be awarded during the fourth quarter of 2011. We believe that the total investment is likely to surpass the USD 6 bn as the development in Qatar will induce more primary and secondary schools and western universities to meet the rising demand in Qatar. Going forward, the government will

continue its investment program to further improve its education system, which is important for the overall development of the country. The government intends to bring in modern educational curriculum, which will benefit the development of local population. This is in line with the government’s Vision 2030.

8.2 Healthcare • The government thrust towards improving its

healthcare system, makes in one of the largest spenders in the GCC region. The rapid increase in population during the last five years has resulted in serious shortages for healthcare system in Qatar. Qatar has a total of 9 hospitals and 22 primary healthcare centers. On an average, the Qatari government allocated around 10% of the total annual budget toward healthcare and related activities. In the country’s 2011/12 budget, the government has allocated QAR 8.8 bn (USD 2.4 bn) to the healthcare sector, which is around QAR 300 mn higher compared to the previous year.

• One of the key elements of human development of Qatar National Vision 2030 is health of the population. Qatar has come up with its National Health Strategy (NHS) 2011-16, in order to align with the Qatar’s National Vision 2030 and its ambition of becoming a regional centre for medical research. The strategy has 35 projects in plan over the next six years which will improve the overall healthcare services and fulfill the needs of world class healthcare system.



Timeline: Healthcare Projects

• Qatar spends around USD 137 mn per annum to send patients outside the country for treatment as it lacks quality healthcare. In order to address this issue, the government is planning to spend USD 8 bn on hospital construction projects by the end of 2016. The country’s public works ministry approved plans to build eight new hospitals by 2016. The new hospitals will add 5,000 beds to the current capacity. One of the main challenges is attracting skilled professionals to achieve quality healthcare system in the country.

• The government has taken several initiatives in improving the quality and services of the healthcare system in Qatar. The government has formed partnerships with foreign universities, institutions and colleges like University of Calagry Qatar and the Weill Cornell Medical College. The institutions have their campus in Qatar providing healthcare/medical education and nursing training programmes. One of the most ambitious projects in the healthcare sector is the USD 2.5 bn Sidra Medical and Research Centre, USD 1.5 bn Hamad Medical City, and USD 500 mn Al Wakhra Hospital.

• Sidra Village: Mazaya Qatar Real Estate

Development Company has awarded a $130m contract to China’s Sinohydro to deliver the Sidra Village project in 20 months. Sidra Village comprises 1,165 residential units, including 658 one-bedroom and 507 two-bedroom apartments.

• Sidra Medical and Research Centre is

one of several initiatives taken by HH Sheikha

Mozah bint Nasser Al-Missned. The aim is to become the leading centre for the development of medical science in the Middle East. The three essential missions behind the initiative are patient care, medical education and biomedical research. Sidra Medical and Research Center will be located in Education City. It is owned and funded via a USD 7.9 bn endowment from Qatar Foundation.

• Sidra Medical and Research Centre will provide employment to around 5,000 people including doctors, nurses, technical staff, biomedical researchers, administrators and support staff. The centre will also have parking facility for approximately 2,000 vehicles and a residence for 350 nurses.

• The medical center will work closely with Weill Cornell Medical College in Qatar and Hamad Medical Corporation in regard to all three missions, raising the standard of health care throughout the country and providing valuable opportunities for training the medical students and clinician. It will also include research in the field of pregnancy health, infertility, genetic abnormalities, the health needs of children, and diseases specific to women. It will be the first hospital in Qatar to have a fully integrated clinical information system as well as the first academic medical center in the region based on the North American model.

• Total building area (sqf): Approx. 2,520,000

(hospital and clinic); Approx. 3,600,000 (including structured parking). Phase I consists of 380 beds, not including labor and delivery rooms, and 53 high-risk/ICU obstetric

2011 2012 2013 2014 2015

Hamad Medical City Project Value: USD 1.1 bn Completion Date: Q2-13 Capacity: 1,340 Beds

Sidra Medical City (Phase I) Project Value: USD 7.9 bn Completion Date: Q4-12 Capacity: 380 Beds

Al Wakrah Hospital Project Value: USD 0.5 bn Completion Date: Q1-11 Capacity: 280 beds



beds. Phase II is planned to expand hospital capacity to approximately 550 beds and double the sizes of the Outpatient Clinic and research facilities.

• Qatar Foundation's Capital Projects Department is overseeing all elements of the design and construction of Sidra Medical and Research Center.

• Led by Engineer Saad Al Muhanadi, QF Vice President for Capital Projects, a world class team has been assembled that includes the following entities:

• Qatar Petroleum serves as the Client Representative on behalf of Qatar Foundation.

• KEO International is the Program /Construction Manager, serving as the link between Qatar Foundation, Qatar Petroleum, the Executive Architect, and all other parties.

• Pelli Clarke Pelli, a US architectural firm, is the Design Architect and creator of the actual design of Sidra.

• Kurt Salmon Associates is conducting the medical planning and space programming.

• A $ 2.3 billion construction contract has been awarded to an international consortium including OHL and Contrack.

New Sidra Medical and Research Centre

Site map: Sidra Medical and Research Center

http://www.qp.com.qa/

http://www.keoic.com/

http://www.pcparch.com/

http://www.kurtsalmon.com/



9. Energy and Utilities

9.1 Energy • The gradual recovery in the global economies

during the start of 2011 has resulted in steady flow of investments in the hydrocarbons sector in GCC region. This recovery reassured the region to increase in its production capacity to meet the growing demand. Energy sector plays an important role in the GCC region as it is main source of revenue.

• The original planned investment in oil and gas sector within the GCC was around USD 420 bn till 2020. However, the revised planned budget was 4% lower compared to the original planned investments. The revised planned investment in the GCC is around USD 401 bn (refer exhibit 33). The drop in value is due to Kuwait, which has revised its budget downwards by around 30%. Saudi Arabia, on the other hand, has increased its planned investment by around 10% to USD 134.6 bn.

• The change in revised investment plans can be attributed to the petrochemical sector, where the Saudi Arabia is considering massive investments over the next decade. Qatar accounts for only 10% of the total planned investments in the oil and gas sector in the GCC.

• In the GCC, the amount of contracts awarded is about USD 156.4 bn, which is around 40% of the revised planned investment in the oil and gas sector (refer to Exhibit 34). UAE and Saudi Arabia are by far the largest markets for the oil and gas in the region. UAE has awarded USD 70.2 bn worth of projects, while Saudi Arabia has awarded USD 58.2 bn.

• Saudi Arabia, the world’s largest producer of oil, has announced massive investments during the next five years as it wants to capitalize on the rising oil prices. UAE, on the other hand, believes that focusing and investing in the oil and gas sector would be the most appropriate to boost the overall economy, especially after the sharp correction in the real estate sector on the back of global recession.

Exhibit 33: Value of planned investments in Oil and Gas projects (USD bn)


Exhibit 34: Contracts awarded in Oil and Gas projects


Exhibit 35: Natural gas reserves (Tncf)

Source: Oil and Gas journal 2011

8.9 24.9 37.164.1

131.7 134.6

Bahrain Oman Qatar Kuwait UAE Saudi Arabia

0.6 12.73.4

11.2

58.3

70.2

Bahrain

Kuwait

Oman

Qatar

Saudi Arabia

UAE

273

275

896

1,046

1,681

U.S.

Saudi Arabia

Qatar

Iran

Russia



• Hydrocarbon sector is the main contributor to the robust growth witnessed during the last few years. Qatar is the third-largest in the world behind Russia and Iran in terms of gas reserves. It is the world’s largest global supplier of LNG and will become the world’s largest exporter of GTL. The government will continue investing further to enhance its capacity to meet the rising demand in the gas sector, however, the investment will be much lower compared to the ones seen earlier.

• Since 2006, Qatar has invested around USD 40 bn in the oil and gas sector. In Exhibit 36, majority of this was invested during the year 2006 and 2007 in order to achieve the desired capacity as mentioned above. In the year 2011, total amount of projects awarded in the energy sector was USD 2.9 bn, which is around 25% of the total projects awarded during the year.

• Qatar started operation of mega train-7 (capacity 7.8 mtpa) in July 2009 and had brought another five plants on-stream (46.8 mtpa) till Feb 2011. Qatar transportation company has 52 LNG vessel out of which 9 conventional vessels (145,000 – 154,000 m3), 31Q-Flex vessels (210,000 – 216,000 m3), 14 Q-max Vessels (263,000 – 266,000 m3). In 2011, Qatar achieved its target capacity of 77 mtpa for LNG.

• The government’s investment in the energy sector is through Qatar Petroleum (QP), which is the only state owned petroleum company in Qatar. The company operates all oil and gas activities primarily including exploration, production, refining, transport, and storage. It is also involved in sale of crude oil, NGL, LNG, GTL, refined products, petrochemicals and fertilizers. QP accounts for about 50% of the country's total crude oil output. Qatar petroleum has allocated USD 30.7 bn (2010-2014) for project in crude oil, natural gas, GTL and petrochemicals. However, the budget has been declining in gas sector as the expansion is nearing its completion.

• Gas-to-liquids (GTL) projects have received significant attention in Qatar over the last several years. The government had originally

set a target of developing 400,000 bpd (64,000 m3/d) of GTL capacity by 2012.

• The biggest GTL project in Qatar is Pearl

GTL. In February 2007, the same week that Exxon Mobil decided to cancel its GTL plans, Shell held a ground breaking ceremony for its Pearl GTL project. The Pearl plant is 51% owned by Qatar Petroleum, though Shell will act as the operator of the project with a 49% stake.

• ORYX GTL is a synthetic fuel plant based in

Ras Laffan Industrial City, Qatar, which is a JV between by Qatar Petroleum (51%) and Sasol (49%). The capacity of Oryx GTL is 34,000 bpd of oil.

Exhibit 36: Projects awarded in Qatar

Source: Oil and Gas Directory Middle East-2011 * till Date

• The facility is expected to use 1.6 bn cubic feet or 45 mn cubic meters per day (m3/d) of natural gas feedstock to produce 3.1mbd (499,000 cmd) of GTL products as well as 120,000 bpd (19,000 cmd) of associated condensate and LPG. Initially, the estimated cost of the project was USD 4 bn, which increased to between USD 12 and USD 18 bn. The Pearl GTL is the first integrated GTL operation in the world, which will have upstream natural gas production integrated with the onshore conversion plant. By 2012, Qatar is likely to have 177,000 barrels per day (28,100 cmd) of GTL capacity from Oryx GTL and Pearl GTL.

11.0

21.5

0.8 1.3 2.3 2.9

0

5

10

15

20

25

2006 2007 2008 2009 2010 2011*

USD

bn



Timeline: Energy Projects

Timeline: Oil and Gas Projects

2013 2014 2015 2016 2018

2013 2015 2016 2017 2021

Ras Laffan Polysilicon Plant Project Value: USD 1.0 bn Completion Date: Q2-13

KAHRAMAA - Facility D IWPP Project Value: USD 2.0 bn Completion Date: Q4-15 Capacity: 2,000 MW

KAHRAMAA - Solar Power Complex Project Value: USD 1.0 bn Completion Date: Q3-18

QEWC / KAHRAMAA – Ras Laffan IWPP Expansion Project Value: USD 3.0 bn Completion Date: Q3-14 Capacity: 4,200 MW

Ras Laffan Olefins Complex Project Value: USD 6.4 bn Completion Date: Q2-16

Barzan Gas Development - Onshore (Phase I) Project Value: USD 1.7 bn Completion Date: Q4-13

Barzan Gas Development Project Value: USD 10 bn Completion Date: Q4-21

Barzan Gas Development - Onshore (Phase II) Project Value: USD 2 bn Completion Date: Q4-17 Oryx - Gas to Liquids Plant (GTL) Phase II Project Value: USD 1.5 bn Completion Date: Q4-17 Shell - Petrochemical Complex Project Value: USD 2.0 bn Completion Date: Q4-17 Govt of Qatar/Govt of Kuwait - Petrochemical Complex Project Value: USD 2.0 bn Completion Date: Q4-17

Qatargas - Jetty Boil Off Gas Recovery Project Value: USD 1.0 bn Completion Date: Q1-15

QP - Al Shaheen Refinery (On Hold) Project Value: USD 11 bn Completion Date: Q4-14



9.2 Solar Energy • Winning the bid for FIFA world cup 2022 has

given further fillip to the solar energy sector in Qatar. In addition to the existing investment in the sector, more investments will take place in the near term as the country prepares itself for the World Cup 2022. The ideas and concepts conceived from solar power are likely to ensure cooling and power control within the stadiums, which is very essential for the successful hosting of the event. As a result, Qatar is expected to invest around USD 1 bn on alternative energy. As of now, the country has awarded projects worth USD 0.7 bn.

Prototype: Qatar Solar Power Stadium

• Qatar plans to build 9 new solar powered

open-air stadiums designed by German Architects Albert Speer and Partner GmbH (AS&P), and renovate 3 existing stadiums. Electricity to cool these stadiums will be generated with photovoltaic panels (PV) and solar thermal collectors installed on the stadiums’ roofs and sides. Cool air will be pumped at spectators’ ankles, backs, and necks, and if permissible, the retractable roof can provide additional shade. Similarly, scientists and engineers at Qatar University have also developed a solar powered gas-filled cloud that will shade spectators and athletes from the roaring sun. In addition, the USD 0.5 mn artificial clouds that can be

positioned over any of the stadiums in Qatar and can be maneuvered with a remote control from the ground to keep the passing sun off the field.

• Qatar Science and Technology will develop a plant at Ras Laffan Industrial City, which will be one of the first operational polysilicon plants in the region. The plant will produce well over 3,500 tons per annum and has been designed with future expansion in mind.

• The solar energy will play an important role in

successfully hosting the World Cup 2022 as the world will focus on Qatar’s to see if it has been able to deliver the cooling standards promised during the bidding stage.

9.3 Utilities • The region is undergoing transformational

changes in utility sector due to rapid growth in population, commercial and industrial growth in the region. The governments of the GCC countries with the exception of Kuwait have embarked on a plan to restructure and privatize the sector.

• One of the other major developments in the power sector was the establishment of Power Grid Authority known as the GCC Interconnection Authority. The authority will be responsible for overlooking and monitoring of the GCC Power grid. The grid's existing members are Saudi Arabia, the UAE, Kuwait, Bahrain and Qatar (for Phase 1) with Oman joining the alliance for Phase 2. Saudi Arabia can give and receive 1,200 MW, while the UAE 900 MW and Qatar 750 MW to and/or from the grid. Members are expected to maintain a minimum reserve ratio level and negotiations for power trading (which is to commence next year) have already begun. It is estimated that the grid would save USD 5 bn in energy costs for member countries. All six countries have joined in the second phase of the USD 1.4 bn project which was formally initiated in April 2011.

Exhibit 37: GCC Desalination Capacity (000 m3/d)

Country 2006 2011 2016

Saudi Arabia 7,410 12,564 17,654 UAE 5,730 9,030 12,330 Qatar 1,197 1,676 2,481 Bahrain 519 1,183 1,977 Kuwait 2,081 3,466 4,617 Oman 377 1,140 2,059

Source: MEED



• The total revised value of investment in the power and water sector is USD 221.5 bn in the GCC compared to USD 216.5 bn planned initially. According to Exhibit 38, the total value of planned investment in Saudi Arabia is USD 96.9 bn, largest market within the GCC. UAE is second largest market with a total investment of USD 57.8 bn. Qatar has a total planned investment of USD 16.8 bn.

• The total planned investment in the water sector is USD 42.9 bn. Saudi Arabia is the largest market with planned investment of USD 16.9 bn. The country has awarded around USD 8.3 bn worth of projects, while the remaining is likely to be awarded in the coming years. UAE has planned investment of USD 8.4 bn, while USD 5.2 bn worth of projects has been awarded. Qatar is the third largest market in the GCC with planned investment of USD 6.9 bn.

• In 2011 so far, the total value of projects awarded in utility was USD 18.3 bn in the GCC (refer to Exhibit 39). Out of this, USD 10.8 bn worth of projects was awarded in Saudi Arabia, accounting for around 59% of the total value. Kuwait awarded USD 2.7 bn worth of projects, while USD 2.1 bn in the UAE.

• In the GCC, Qatar is well placed in terms of meeting the rising demand in the near future. The government is investing in the power sector but in phases to ensure that the there is no excess capacity. Qatar as well as the other GCC nations faces the problem of high consumption of electricity compared to the global averages. One of the main factors could be the subsidies provided by the government of Qatar on the cost of power and water in the country. Electricity and water is free of cost to the nationals, which accounts for around 13% of total population.

• Qatar is among the top countries in GCC in promoting Public Private Partnerships (PPPs) in energy and utilities sector. The drive to increase private-sector involvement in the country stepped up in 2000, with the formation of Qatar General Electricity and Water Corporation (QEWC). In Qatar, the power sector plants are owned and operated by QEWC. The company is also responsible for meeting the consumption needs of Qatar. The power-generation segment of QEWC’s business is privatized. However, it sells its products through long-term power and water purchase Agreements (PWPAs) to Kahramaa, which is fully owned by the Qatari government. Kahramaa is the Qatari utilities

regulator responsible for transmission and distribution of electricity and water, development of policies and procedures for the management and supervision of the water and electricity sectors in Qatar.

Exhibit 38: Planned investment in power and water


Exhibit 39: Projects awarded in 2011 (USD bn)

Source: MEED Projects • Qatar is planning to privatize the transmission

and distribution segment, which would increase the transparency and efficiency within the sector. In the past 20 years, QEWC has continued to expand its production capacity through fully and jointly owned plants. In 3Q 11, the company reached electricity generation capacity of 5,578 MW and water-desalination capacity of 265 million imperial gallons per day (MIGD), representing more than 60% and 70% of Qatar’s total power and water production capacities, respectively.

7

27

14 18

97

55

7

29

14 17

97

58

0

20

40

60

80

100


UAEU

SD b

n

Sum of Original Budget Sum of Revised Budget

0.42.7

1.9

0.5

10.8

2.1Bahrain

Kuwait

Oman

Qatar

Saudi Arabia

UAE



• In 2011, Qatar commissioned the USD 3.9 bn Ras Girtas power plant, which is expected to be one of the major power generation plants in the country located in Ras Laffan Industrial City. The plant is expected to produce 2,730 MW of electricity and 286,404 m3/d of desalinated water. Qatar holds 60% of the plant which is divided between QEWC (45%) and Qatar Petroleum (15%) and rest 40% is being held by Ras Qatar Energy Company. It is a 25 year contract between Ras Qatar and QEWC, according to which Ras Qatar will supply its production to QEWC which in turn will use it to supply to the local network or externally in the context of the GCC Electricity Link-up System.

• The total planned investment in power sector is around USD 9.0 bn. Total value of projects awarded was USD 3.7 bn since 2008, out of which USD 3.1 bn was awarded in 2008 and 2009. In 2011, three projects were awarded with a total value of USD 422 mn. The value of projects awarded accounted for around 6% of the total value of projects awarded in Qatar. There were a total of 19 projects awarded in the power sector compared to 338 projects in Qatar.

• The total investment in the power sector during 2010 and 2011 (so far) has remained subdued especially as the major capacity is expected to come online in 2011. Power sector investments will continue to remain subdued as Qatar is well placed in terms of meeting the demand requirements. The expected investment in power sector is around USD 5 bn in the next decade. As a result, the excess capacity is likely to sold to other members of the GCC through Kahramaa, especially Sharjah and Kuwait as they are experiencing shortages. This process may be facilitated by the completion of the GCC Interconnection Power Grid. Qatar has already completed the first phase of this project with the remaining two phases set to conclude this year.

• In Qatar, more than 75% of the water requirement is dependent on the supply of desalinated water. The average per capita consumption is estimated at 310 liters per person per day. Construction activity (preparation for World cup 2022) and the agricultural sector accounted for more than 70% of water demand in Qatar. Qatar has minimal groundwater reserves with an average rainfall of about 75 millimeters a year. Therefore, it is more than 99% reliant on desalination to meet its domestic demand. The desalination capacity in the region is

expected to increase by 24% from current levels to reach 325 MIGD by the end of 2012.

Exhibit 40: Value of investment in power sector


Exhibit 41: Investment in Qatar water sector


• The Kahramaa has invested in water storage construction activity, undertaking a USD 2.75 bn reservoir project capable of holding seven days' worth of fresh water as a backup for desalinated water supply. The 1.9 bn gallon facility will include a network of reservoirs connected by a 183 km, 2.5 m-wide pipeline linking the Ras Laffan desalination facility in the country’s north and the Ras Abu Fonts plant in the south. Treated wastewater contribution to the water supply is expected to rise from 0.05 bn cubic meters per year in 2011 to 0.065 bn cubic meters per year by 2015. Ensuring that more and more water in the country is re-used, the government of Qatar has formed a joint venture with Singapore’s Darco Water Technologies to build a USD 5 bn wastewater recycling plant for serving the small towns and villages of Qatar. The Public Works Authority (PWA) is

1.7

1.4

0.2

0.4

0.0

0.3

0.6

0.9

1.2

1.5

1.8

2008 2009 2010 2011

USD

bn

1.5

0.1

1.2

0.6

0.4

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

2007 2008 2009 2010 2011

USD

bn



responsible for the waste water and drainage projects in the country.

• The total planned investment in water sector is around USD 6.9 bn, which has been revised upwards from USD 5.2 bn. Total value of projects awarded was USD 3.8 bn since 2008. In 2011, three projects were awarded with a total value of USD 362 mn. The expected investment in water sector is around USD 3 bn in the next decade.

• Kahramaa has allocated USD 4.3 bn for two

main pilot projects. The first, a water production technology independent of power expected to be operational by 2012, will add 0.05 mn m3/d capacity to the system. The second is for a reservoir with 8,000 meter cube holding capacity to service the West Bay and Airport area in Doha.

Timeline: Utilities Projects

2012 2013 2014 2015 2016

Qatar Transmission Phase VIII Project Value: USD 2.8 bn Completion Date: Q3-12 Qatar Transmission Phase IX Project Value: USD 2.0 bn Completion Date: Q1-12 Qatar Transmission Phase IX: Substation Package Project Value: USD 0.8 bn Completion Date: Q4-12 Doha North Wastewater Treatment Plant Project Value: USD 1.5 bn Completion Date: Q1-12 Doha and Rayyan Sewerage Project Value: USD 0.5 bn Completion Date: Q2-12

KAHRAMAA - Facility D IWPP Project Value: USD 2.0 bn Completion Date: Q4-15 Capacity: 60 mmgpd KAHRAMAA - Water Security Mega Reservoirs Project Value: USD 2.0 bn Completion Date: Q4-15

QEWC / KAHRAMAA - RasLaffan IWPP Expansion Project Value: USD 3.0 bn Completion Date: Q3-14 Capacity: 235 mmgpd



10. Building Materials

10.1 Cement • The cement industry has undergone

significant expansion during the last few years on the back of massive investments in the construction sector. The cement sector is the biggest beneficiary of the construction spending in general and real estate sector in particular. The demand for cement in GCC countries has given an entry option to new players in the region. In 2005, the region produced 48 mt of cement which further increased to 85 mt in 2010.

• The two major cement producers in the region are Saudi Arabia and UAE. The UAE registered a CAGR growth of 16.6% from 11 mt in 2006 to 20.3 mt in 2010 (refer to Exhibit 43), which is the highest in the region. The country’s strong growth in production was driven by massive investment in construction during 2003 to 2008. Since then the country has witnessed the highest number of projects on hold or cancelled due to the overall liquidity crisis, which was led by the global recession. Saudi Arabia is the largest producer of cement in the GCC.

• During 2006 and 2010, cement production

grew at a CAGR of 17.0% to 50.8 mt (refer to Exhibit 43). This healthy growth in production was on the back of massive public spending in the construction sector, especially the real estate sector.

• Qatar is the third largest cement market in the

GCC in terms of both consumption and production capacity. Historically, the cement production in Qatar was below the consumption and the excess demand was accommodated by importing from Saudi Arabia. Qatar National Cement Company (43% owned by Government of Qatar) was the only cement company in Qatar up until 2010, which enjoyed the monopoly in the market. But since 2010, two new companies entered the cement market due to capitalize on the construction activity, namely Al Khalij and Al Jaber Cement Industries.

• The production of cement has increased over the years as the companies gear up for the ongoing construction activity. Currently, the companies are planning to further expand their production to prepare for the massive investment in construction sector. Majority of

the construction will come from infrastructure and real estate sector, where cement sector is the direct beneficiary.

• Qatar’s contribution to GCC production has increased from 4.9% in 2007 to 6.2% in 2010. We believe that this is likely to increase further as the companies gear to meet the rising demand in the next five years. Qatar’s current production capacity stands at 6.2 mt.

Exhibit 42: World Cement Production

Source: USGS

Exhibit 43: Cement production in the GCC

Source: USGS

• Qatar National Cement Company (QNCC) is the largest cement producer with a production capacity of 4.4 mt and a market share of around 70%. QNCC also announced that it is going to increase it cement capacity by 0.93 mtpa to 5.36 mtpa in the coming years. Al Khalij and Al Jaber have a market share of 24% and 5% respectively in the domestic market.

2,6102,810 2,850

3,0403,300

1.8% 1.8%1.9%

2.2%

2.6%

1.0%

1.4%

1.8%

2.2%

2.6%

3.0%

0

500

1,000

1,500

2,000

2,500

3,000

3,500

2006 2007 2008 2009 2010

MT

World Production GCC Production as % of World

0.8 2.0 4.0

40.0

16.0

4.2 1.0 2.5

5.1

50.8

20.3

5.3

-

9.0

18.0

27.0

36.0

45.0

54.0

Bahrain Kuwait Oman Saudi Arabia

UAE Qatar

MT

2009 2010



• Cement prices have been volatile in the GCC, especially in the UAE. However, the cement price in Qatar has been cement as it is controlled by the government. Going forward, we do not expect any volatility in the cement price and believe that it will continue to remain stable at current levels.

• The current production capacity of cement in Qatar is enough to absorb the demand. Going forward, we believe that cement consumption will grow at a CAGR of around 12% from 2011 to 2015 (refer to Exhibit 45). In our view, majority of the projects that are under construction or planned will be completed by the end of 2015.

• Based on that assumption, we have

forecasted the cement consumption in Qatar. We believe that the consumption will be at its peak in the years 2013 and 2014. Qatari cement companies are unlikely to match this demand, which means that the excess demand will be imported from Saudi Arabia and UAE. The outlook on cement sector in Qatar is positive on the massive investment in the construction sector backed by strong macroeconomic fundamentals.

Exhibit 44: Qatar Cement Production

Source: USGS

Exhibit 45: Qatar Cement Consumption Forecast

Source: Commercialbank Capital Research, ConstructionWeek

2.53.5

4.25.3

6.2

0.0

0.8

1.6

2.4

3.2

4.0

4.8

5.6

6.4

2007 2008 2009 2010 Current

MT

5.5 5.5

15.314.2

12.2

0.0

4.0

8.0

12.0

16.0

2011 2012 2013 2014 2015

MT



10.2 Steel • The global steel industry has witnessed a

boom and bust in last few years. In last five years, world steel production grew at a CAGR of 2.1%, while the GCC grew by 9% in 2010. The contribution of GCC to the world has remained same for the last four years (refer to Exhibit 46), indicating that the region’s capacity expansion is line with global standards.

• In the GCC, there are 18 steel companies, engaged in production of raw steel and finished steel products. Steel consumption throughout the GCC region has increased significantly underpinned by massive investment in the construction sector.

• Saudi Arabia is the largest market in not only GCC but the MENA region. Saudi Arabia’s Hadeed is the world’s 40th largest producer of steel with a production of around 5.0 mt.GCC countries will continue to remain a major consumer of steel products, which constitute 60.0% of the estimated demand as these countries continue to invest in its infrastructure and petrochemical sector to sustain economic growth.

• In the GCC, Qatar is witnessing the fastest growth in steel production during the last four years. The steel production capacity in Qatar grew at a CAGR of 15%, while it grew by 5.9% in the GCC (UAE, Saudi Arabia and UAE as shown in Exhibit 48). Qatar is increasing its production capacity to meet the rising demand underpinned by the planned investments in the next decade.

• Qatar Steel, which is a wholly owned

subsidiary of Industries Qatar (70% owned by Government of Qatar), has emerged as one of the biggest players in MENA region with an annual production capacity of 2 mt per year. It is the second largest steel producer in the GCC, after Saudi Arabia Hadeed.

• Qatar Steel plans to enter new markets such

as Egypt, Yemen and the Far East (Korea, China, and Indonesia). The company has decided to expand its steel making capacity by 1.1 mt per annum through a plant adjacent to its existing plant in Mesaieed. The plant is expected to start operations from first quarter of 2013.

Exhibit 46: GCC Steel Production (‘000 MT)


Exhibit 47: GCC steel production (‘000 MT)

Source: World Steel Association

Exhibit 48: Steel Production in Qatar (‘000 MT)


1,2471,347 1,329

1,232

1,417

1,136

0.4% 0.4% 0.5% 0.5% 0.5% 0.5%

0.0%

0.2%

0.4%

0.6%

0.8%

1.0%

0

300

600

900

1,200

1,500

2006 2007 2008 2009 2010 Sep-11

World GCC as % of World

1,448

4,690

90

1,970

5,015

90

1,503

3,959

900

2,000

4,000

6,000

Qatar Saudi Arabia UAE

2009 2010 Sep-11

1,147

1,406 1,448

1,970

1,503

19.5%

22.8% 23.2%

27.8% 27.1%

10%

15%

20%

25%

30%

35%

0

400

800

1,200

1,600

2,000

2007 2008 2009 2010 Sep-11Qatar Qatar % of GCC



10.3 Aluminum • GCC aluminum sector has become a major

non-oil industry sector and contributor to the economic growth. Currently, the GCC produces 7% of the world’s global production of aluminum (refer to Exhibit 50). The addition of new smelters and expansions in the pipeline, the region’s production could reach 9 mn metric tons or 13% of global supply by the year 2020. Currently, the GCC building and construction industry consumes up to 400,000 tons of aluminum annually, making it one of

the biggest markets for aluminum products in the region.

• The total production of aluminum is likely to increase by 8.4% annually till 2014, which will take the total production to 4.2 mt. The demand for aluminum products in the construction sector is expected to increase at a CAGR of 9%, which means that GCC will continue to import to meet the excess demand on the back of massive investment plans in the construction sector.

Exhibit 49: GCC Aluminum smelters

Country Company Current Capacity (mt) Future Capacity (mt) Completion Year

Bahrain Alba 0.87 1.4 2014

Qatar Qatalum 0.58 1.2 -

Saudi Arabia Maaden (Phase I) - 0.7 2013

Saudi Arabia Maaden (Phase II) 0.74 2.4 2016

UAE Emal 0.75 1.5 2014 Source: Gulf Aluminum Council

• Qatar accounts for around 15% of the total

production in the GCC. Qatar is expected to grow at a CAGR of 12% between 2010 and 2014, faster in the GCC region. We remain optimistic on Qatar Aluminum sector and believe that it will continue to witness strong demand on the back of massive investment plans in Qatar as it prepares for the World Cup 2022.

• Qatar Aluminum (Qatalum) is a 50-50 joint venture between Qatar Petroleum and the Norwegian company Hydro Aluminum. The plant has a production capacity of 585,000 mt per year. Qatalum’s complex facilities include a carbon plant, port and storage facilities, as well as a captive power plant. The company is planning to increase the production capacity and export to all countries as company does not have a specific quota.

• Dubai Aluminum Company Limited (DUBAL) is

one of the largest industrial companies in the UAE, located in Jebel Ali. The company was established by Investment Corporation of Dubai in the year 1975. DUBAL is currently ranked as the 7th largest global producer in the industry with a current production capacity of 980,000 tons per annum by the end of 2010.

Exhibit 50: Aluminum Production in GCC (‘000 MT)


• Emirate Aluminum (EMAL) is a 50-50 JV between DUBAL and Mubadala Development Company. EMAL is a green-field smelter development at Al Taweelah, Abu Dhabi. Commissioning of EMAL Phase 1 began in December 2009 and was completed by December 2010. The company’s current production capacity is 750,000 tons per year. The company has USD 4.5 bn expansion plans, which will almost double its capacity to 1.3 mt per year.

33,86438,044 39,584

36,85640,752

5.1%4.6% 4.7%

6.0%6.9%

0.0%1.0%2.0%3.0%4.0%5.0%6.0%7.0%8.0%

0

9,000

18,000

27,000

36,000

45,000

2006 2007 2008 2009 2010

World Production GCC % of WorldGCC



11. Methodology and Assumptions Methodology

• Step 1: Economic indicators was sourced from Qatar Statistics Authority and IMF (Forecast) • Step2: Initially, the list of projects ongoing and planned was compiled from various relevant

sources. We decided to take data from one source due to the inconsistency from various sources. • Step 3: Project data was further analyzed and categorized as follows:

o The data was re-classified based on the sectors that are being discussed and analyzed in this report. The residential project data was also re-classified in to residential, commercial, hotel and tourism based on description of each project under this category

o We have analyzed the start and end date for each project and calculated the remaining days left on each project. The number of days was divided by 90 to arrive at the remaining quarters left on each project

o The project value was appropriated based on project life. The allocation was done on per quarter basis. For example, if a USD 200 mn project started in Q3-09 and is set for completion in Q3-11, USD 25 mn is allocated per quarter. 2009 project value would be USD 25 mn, 2010 USD 100 mn and allocation for 2011 will be USD 75 mn

• Step 4: We have taken the existing projects in the above format. We have added future investments to the existing projects based on the USD 225 bn announced by NDS.

• Step 5: Based on this assumption, we have created three scenarios, which are Base, Worst and Best case scenarios.

• Step 6: In each scenario, we have assumed a % of GDP based two growth stages. The forecasted GDP is taken from IMF until 2016, thereafter a 5% growth in GDP is assumed till 2020. The first growth stage would be from 2013 to 2017, while the second growth stage would be 2018 to 2020

Total Construction size = planned/underway projects + planned by NDS + additional investments as a % of GDP

Scenario Assumption In order to arrive at the total market size, we have added the contributions from three approaches as described above. This methodology was adopted to build three scenarios in our analysis to arrive at a market size. In each scenario, the base of USD 225 bn remains the same while following assumptions are made for each scenario:

• Base case: The optimum Scenario o No projects cancellation or on hold is assumed during the projection period o We have assumed additional investments as a % of GDP in two growth stages. One is

between 2013 and 2017 and other is 2018 and 2020 • Worse case: Slowdown to impact the overall projects planned

o We have assumed a 15% drop in planned investments by the government due to the adverse effect of global slowdown

o No additional investments as a % of GDP • Best case: Optimistic based on new sporting events

o No projects cancellation or on hold is assumed during the projection period o We have assumed additional investments as a % of GDP in two growth stages. One is

between 2013 and 2017 and other is 2018 and 2020

Data Limitations • Data discrepancies were witnessed for various projects. Therefore, we have taken the data from

what we perceived as the most reliable source, which has been referred as the source throughout the report

• Since GDP estimates by IMF were available till 2016, we have taken a conservative growth rate of 5% per year until 2020.



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commercialbank capital sector report: 1st edition 2012 · 2012-08-28 · qatar continues to be a...

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