Commercialbank Capital Sector Report: 1st Edition 2012 Commercialbank Capital | Construction Sector Report 2012

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.

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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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Key Projects

Pearl GTL Project Value: USD 6.6 bn Commencement in Q4-11 Lusail Mixed-Use Refer: Section 9.1 Project Value: USD 33 bn Completion Date: 2018 Refer: Section 6.3 Doha Festival City Project Value: USD 1.7 bn Completion Date: Q4-14 Refer: Section 7.1

Pearl Qatar Project Value: USD 5 bn Completion Date: Q3-13 Refer: Section 6.1 Sidra Medical and Research Center Project Value: USD 7.9 bn Completion Date: Q4-12 Doha Cultural Village Refer: Section 8.2 (KATARA) Project Value: USD 82 mn Refer: Section 7.3

Qatar National Museum Education City Project Value: USD 434 mn Project Value: USD 6.6 bn Completion Date: 2014 Completion Date: Q2-12 Refer: Section 7.5 Refer: Section 8.1

Msheireb New Doha Int’l Airport (NDIA) Project Value: USD 5.5 bn New Doha Port (Phase I) Project Value: USD 11.1 bn Completion Date: Q4-17 Project Value: USD 7 bn Completion Date: 2015 Refer: Section 6.2 Completion Date: Q1-16 Refer: Section 5.3

Refer: Section 5.4

Source: Commercialbank Capital Research

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Exhibit 1.1: Key Projects in Doha

1

7 8 SIDRA MEDICAL 9

4 5 6 3 10

2

4. Lagoona Mall 5. Lusail City 1. Qatar National 2. Doha International 3. Museum of Convention Center Airports Islamic Art Refer: Section 7.2 Refer: Section 6.3 Refer: Section 8 Refer: Section 5.3 Refer: Section 7.5

6. Msheireb Project 7. Qatar Foundation 8. Education City 9. Sidra Medical 10. The Pearl Qatar Refer: Section 6.2 Refer: Section 8 Refer: Section 8.1 Refer: Section 8.2 Refer: Section 6.1

Source: Commercialbank Capital Research

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Exhibit 2: Segmentation of Construction Sector

Construction

Energy and Transportation Buildings* Utilities

Oil & Gas Roads Retail

Solar Enegy Railways Hospitality

Social Utilities Airport Infrastructure

Port

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

1.1 Growth Drivers the tourism sector. We believe that winning the bid Robust Macroeconomic environment for World Cup 2022 will drive the construction sector as government will ensure that projects are Qatar has witnessed robust growth in GDP over completed on time to host the world biggest the last few years, which is driven by significant sporting event. increase in LNG export capacity. According to IMF, Qatar’s economy grew by 19% in 2011, up Well regulated and capitalized banking from 17% in 2010. In 2012, real GDP growth rate sector is projected to be 6%, with real hydrocarbon GDP slowing down to 3%, while non-hydrocarbon Qatar banking sector is well regulated by the sector is expected to grow by 9%. Central Bank and capitalized by the government of Qatar. Recently, the government of Qatar has Diversification at full stream completed the two year capitalization program. In August 2011, the central bank has lowered its The government launched National Development interest rates to kick start lending to private sector. Strategy (NDS) to achieve the targets of Vision The sector has optimum capital ratios that will 2030. The strategy is to use the hydrocarbon enable them to extend lending to the construction sector revenues to build the non-hydrocarbon sector in general and private sector in particular. sector and a more sustainable economic base. Qatar eyes 2020 Olympics FIFA World Cup 2022– The Game Changer Around one year back, Qatar won the bid to host The successful bid to host the FIFA World Cup world’s largest sporting event, FIFA World Cup 2022 has been a big achievement for Qatar. The 2022. Qatar is on the path of creating history as construction sector has witnessed numerous of the country has been accepted as an applicant city new projects ever since. The government has to host Olympics and Paralympics in 2020. allocated USD 20 bn towards the development of Exhibit 3: Key Projects Timeline

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Barzan Gas Development Project Value: USD 9.4 bn Completion Date: Q3-16 Education City

Project Value: USD 6.6 bn Msheireb Completion Date: Q2-12 Project Value: USD 5.5 bn

Completion Date: Q4-17 Sidra Medical Research

Centre Lusail Mixed-Use Project Value: USD 7.9 bn Project Value: USD 33 bn Completion Date: Q4-12 Completion Date: 2018

Pearl Qatar Solar Power Complex Project Value: USD 5 bn Project Value: USD 1 bn Completion Date: Q3-13 Completion Date: Q3-18

2011 2013 2015 2018 2022

Pearl GTL Urjuan Mixed-Use Qatar National Railway 12 Stadiums Project Value: USD 6.6 bn Development System (Phase I) Project Value: USD 4 bn Project Value: USD 10 bn Project Value: USD 35 bn Commencement in Q4-11 Completion Date: 2020 Completion Date: Q3-14 Completion Date: Q2-15 Lagoona Mall Project Value: USD 348 mn Water Recycling Plant Qatar Entertainment City Completion Date: 2011 Project Value: USD 5 bn Project Value: USD 3 bn Completion Date: Q2-14 Completion Date: 2015

Doha Festival City New Doha International Project Value: USD 1.7 bn Airport Completion Date: Q4-14 Project Value: USD 11.1 bn Completion Date: 2015 Qatar National Museum Project Value: USD 434 mn New Doha Port (Phase I) Completion Date: 2014 Project Value: USD 7 bn Completion Date: Q1-16 Doha Dukhan Road Project Value: USD 1 bn

Completion Date: Q4-14

Oil & Gas Energy Utilities Roads Railways Airport Port

Cities Hospitality Education Healthcare Stadiums Entertainment Retail

Source: Commercialbank Capital Research

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Aspire: Venue for Asian Games in 2006

• Aspire Academy for Sports Excellence in football, athletics, squash, table tennis, founded in 2004 by HH Sheikh Jassim Bin sailing, judo, gymnastics, swimming, tennis, Hamad Al Thani, to create a world class fencing, rowing, shooting and golf. It has a institution for educational sport that would team of over 300 people including instructors, develop athletes in Qatar, worldwide known trainers and educators of different for its state-of-the-art sports science and nationalities. produce graduates who would become • The iconic Aspire Dome has a capacity to host Qatar’s most admired civic leaders. It covers ten different sporting events simultaneously in an area of approximately 290,000 sqm. Aspire a climate-controlled arena making it the has an enviable list of world-class sporting largest multi-purpose sports facility of its kind facilities including a 200m athletics track, an in the world. It has 13 sports venues and 7 Olympic-sized swimming and a diving pool, a performance enhancement laboratories under gymnastics hall, two multi-purpose sport halls, the same roof. It can seat a total of 15,000 table tennis courts, fencing strips, squash spectators. courts, a bespoke goalkeeping training area and fitness rooms. • Aspetar is the first specialized Orthopedic and Sports Medicine Hospital in the Gulf region, • It has astonishing 8 full size football pitches situated within aspire zone. It provides the including an international standard artificial high-quality medical treatment for sports- grass indoor pitch. The Academy also has 20 related injuries in a state-of-the-art facility, classrooms for subjects ranging from English staffed by some of the world’s leading sports language classes to Physics and Biology. The medicine practitioners and researchers. In dormitory has 128 rooms and eight suites 2009 Aspetar was officially accredited by F- which can house up to 255 students. MARC as a FIFA Medical Centre of Excellence. Aspetar provides a full range of • Currently there are approximately 200 student services from injury prevention to injury athletes in grades 7 through 12 who specialize management and performance improvement.

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Qatar’s World Cup Stadiums

1. Lusail Iconic Stadium 2. Shamal Stadium Location: Al-Daayen Location: Al-Shamal 2. Capacity: 86,250 Capacity: 45,120 Value: USD 662 mn Value: USD 251 mn Matches planned: Opening Matches planned: match, group matches, and Group matches round of 16, quarter-final, semi-final and final

3. Al-Khor Stadium 4. Al-Wakrah Stadium Location: Al-Khor Location: Al-Wakrah Capacity: 45,330 Capacity: 45,120 Value: USD 251 mn Value: USD 286 mn Matches planned: Group Matches planned: Group matches and round of 16 matches and round of 16

3. 5. Al-Rayyan Stadium 6. Doha Port Stadium

Location: Al-Rayyan Location: Doha Capacity: 44,740 Capacity: 44,950 Value: USD 135 mn Value: USD 202 mn Matches planned: Group Matches planned: Group matches matches, round of 16 and quarter-final 12. 1.

7. Education City Stadium 8. Qatar University Stadium Location: Al-Rayyan Location: Doha Capacity: 45,350 Capacity: 43,520 6. Value: USD 287 mn Value: USD 300 mn Matches planned: Group Matches planned: Group 5. matches and round of 16 matches and round of 16

4. 9. Al-Gharafa Stadium 10. Sports City Stadium

Location: Al-Rayyan Location: Al-Khor Capacity: 44,740 Capacity: 45,330 Value: USD 135 mn Value: USD 251 mn Matches planned: Group Matches planned: Group matches matches and round of 16

11. Khalifa International Stadium 12. Umm Salal Stadium Location: Al-Rayyan Location: UmmSalal Capacity: 68,030 Capacity: 45,120 Value: USD 71 mn Value: USD 251 mn Matches planned: Group Matches planned: Group matches, round of 16, matches, round of 16 and quarter-final and semi-final quarter-final

Source: MEED

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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.

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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:

In this case, we have assumed higher percentage of GDP that will be invested over and above the planned investment by the Best Case government. Based on this assumption, we arrive at a market size of USD 315 bn.

In this case, we have assumed a lower percentage of GDP that will be invested over and above the planned investment by the Base Case government. Based on this assumption, we arrive at a market size of USD 270 bn.

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

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

350 315 300 284 249 270 250 NDS: USD 225 bn 188 185 200 191 170 150 138 100

50 34 - 2012 2015 2018 2020

Base Case Worst Case Best Case

Source: NDS and Commercialbank Capital Research

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Major Projects

AIRPORT

New Doha International Airport (NDIA) will be It is now planned for an opening in December able to handle 24 mn passengers per year and 2012. The new terminal is being built by the Sky will have 42 contact gates, six of which will be Oryx consortium of Japan’s Taisei Corporation dedicated to the Airbus A380 superjumbo. and Turkey’s TAV. The terminal extension is When construction started in 2004, the new being built by a joint venture of Belgium’s Six airport was scheduled to open in 2008. Construct and the local Midmac Contracting.

PORT

New Doha Port is to be built at Mesaieed, south Beijing based China Harbour won contract to of Doha and will replace the existing Doha Port execute the onshore excavation works. Firms downtown on the city’s Corniche. have been prequalified for the contract to dredge the port’s approach channel. The new port will support industrial development to the south of Doha. Completion of the first phase is expected in 2014.

STADIUMS As of now, Qatar has committed to spending Stadiums will be equipped with cooling systems USD 65 bn to build infrastructure to host the using clean renewable energy resources to 2022 World Cup. As part of the bid process, achieve the first completely carbon-neutral Qatar committed to providing 12 stadiums, each World Cup. 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.

RAIL

Doha Metro is the first section of Qatar’s USD The first phase involves building the Red line, 35 bn rail plan to be developed and will be a which will run from Doha city to new Doha crucial part of Doha’s infrastructure when International airport. In 2009, Germany’s complete. Deutsche Bahn was appointed to develop Qatar’s national railway network. It is currently The metro will consist of four lines running more prequalifying consultants for the preliminary than 300 km across the city. metro designs.

Source: MEED

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4. Construction Sector

• Qatar has two main focuses in the next (QSAS). A number of projects are targeting decade; one is staging the largest sporting LEED Gold or Platinum status. Dr. Alex event and second is implementing its National Amato, Chairman of the Research and Vision 2030, which aims to diversify away Innovation Committee at QGBC commented, from a reliance on hydrocarbons. "In line with the environment pillar in Qatar's National Development Strategy 2011-2016, • Qatar’s ambitions and investment plans are this interest group complements national and different compared to other GCC countries. regional efforts to utilize our current and future Qatar won the right to host the 2022 World green infrastructure. This initiative Cup, which has imposed a time frame for demonstrates the value of green infrastructure completing the projects. The infrastructure that investment and reiterates the benefits and the country will built over the next decade will need for sustainable investment in this field. also result in achieving the national This group also wants to encourage the development plan. appreciation of Qatar's natural systems and their role in the landscape architecture • Preparing for the World Cup 2022 will drive profession." spending on sports and transport infrastructure, while the National Vision 2030 Exhibit 6: Construction sector as a % of Non- will focus towards the social infrastructure, Hydrocarbon GDP in Qatar such as education, healthcare and cultural projects. 30.0 21%

19% • Qatar’s construction sector witnessed 25.0 unprecedented growth between 2005 and 17% 20.0 14.4% 2008, growing at a CAGR of 46%. Sector 15% productivity increased from QAR 8.7 bn in 13.0% 15.0 11.4% 13% 2005 to QAR 27.5 bn in 2008. Following this 10.8% robust growth, the construction market QARbn 9.1% 11% contracted in 2009 and 2010 on the back of 10.0 9% the global crisis. According to a study by 5.0 Oxford Economics and Global Construction 7% 15.9 27.2 25.5 24.1 17.6 Perspectives, the Qatari construction market 0.0 5% is expected to grow by an average of 12.5% a 2007 2008 2009 2010 9M-11 year over the next decade, compared with Building and Construction As % of Non-hydrocarbon GDP growth in European countries averaging just 1.7% to 2020 Source: Central Bank

Exhibit 7: GCC - Projects planned or underway • The sector has not witnessed any major cancellations or projects on hold unlike its (2008 – 2011) regional peers such as Dubai, Bahrain and 1,250 Kuwait. The total value of projects put on hold or cancelled stood at USD 460.3 bn at the end 1,000 of October 2011. In Qatar, the projects put on hold were around 4% of the total market 750 compared to 59% and 24% in UAE and Kuwait respectively. The value of such USD bn 500 projects in Qatar and Saudi Arabia were insignificant compared to the total size of the market. 250

0 • With Qatar slated to host a ‘zero carbon’ Bahrain Kuwait Oman Qatar Saudi UAE World Cup in 2022, Qatar Green Building Arabia Council (QGBC) has set up a group to foster 2008 2009 2010 2011 green infrastructure as a national resource. Qatar is utilizing two: Leadership in Energy Source: MEED, Note: Oct end for each year and Environmental Design (LEED) and the Qatar Sustainability Assessment System

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• The total number of projects that were decade. The country is building start of art planned or underway in the GCC stood at projects that will transform the country. USD 1,784.7 bn at the end of October 2011. Exhibit 8: GCC - Projects planned or underway Saudi Arabia has emerged as the largest market for planned or underway projects in the till Oct-11 (USD bn) GCC while UAE became the second largest market because of cancelled or on-hold projects. 55.5 Bahrain 167.9 Kuwait • Qatar has been in the limelight for various 111.6 reasons from acquiring international assets to 605.4 hosting the biggest sporting event in the world. Oman The total number of planned and underway 214.0 projects in Qatar stood at USD 214 bn at end Qatar of Oct-11. The value of projects has grown at a CAGR of 40% during 2005 and 2011. The Saudi Arabia growth in projects value during the period is the second best in the GCC, as Kuwait 630.3 UAE witnessed a growth of around 43% despite all the cancellations/on hold projects.

• The value of the projects under execution Source: MEED stands at USD 59.8 bn. Transportation sector Exhibit 9: Projects planned or underway in accounts for around 30% of the projects under Qatar execution. In transportation, airport and roads have been the main contributors as they are 300 witnessing substantial revamp or new addition 254.9 in facilities. 250 214.0 202.8 204.3 • As of Oct-11, the total value of projects under 200 execution in the energy sector is USD 11.2 bn 145.3 or 19% of all projects under execution in 150 116.4

Qatar. This indicates that the world’s leading USD bn supplier of hydrocarbon sector is capitalizing 100 on its core sector to meet the rising global demand for oil and gas sector. The 50 28.2 commercial and residential construction projects accounted for 21% of the total 0 projects under execution. Oct-05 Oct-06 Oct-07 Oct-08 Oct-09 Oct-10 Oct-11

• Sporting events in Qatar has also been one of Source: MEED the main drivers for the construction sector. Exhibit 10: Projects under execution (Oct-11) The 15th Asian Games were held in 2006 and the preparation for the games resulted in great Others 2.7% deal of construction activity including building of a Sports City, which contains stadium and Stadiums 0.0% other sports facilities. In Jan-11, the country hosted the Asian Football Confederation’s Social 9.6% Cup for the second time. The biggest and the Building 21.2% game changer for Qatar is winning bid to host the World Cup 2022. Retail 1.7% Tourism 2.7% • Transportation and building projects account for more than 50% of the projects under Utilities 12.6% execution. These sectors are essential for the Energy 18.7% infrastructure development of the country. Transportation sector is focusing on Transportation 30.7% modernizing its existing network, while building sector is transforming the country by Source: MEED building some iconic projects over the next

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• 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

10.0 Capital Spending is expected to increase by 48% between 2011and 2014 8.0

6.0

4.0

2.0

0.0 2009 2010 2011 2012 2013 2014 Power & Water Petrochemical Oil& Gas Production Construction Infrastructure

Source: Commercialbank Capital Research

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

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5. Transportation

• Transportation sector has been at forefront of have significant focus on developing the road the public spending plans in the GCC region in network especially through main highways to general and Qatar in particular. The sector is ease the congestion. We believe that the pacing apace with the development and improvement of roads network will continue to expected growth in the country. In addition, be an ongoing investment for the government the modernization of the transportation sector as the growth momentum continues in the in Qatar is essential for successful hosting of region. the world’s biggest event. The governments

Exhibit 14: Landmark Projects in Transportation Sector Cost Projects Client Status (USD bn) Qatar Railways Company Qatar National Railway System 35.0 Planned (QRail)

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

Exhibit 15: Value of projects announced in • The total revised investment in the GCC transportation sector is USD 298 bn compared transportation sector (USD bn) 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 15.7 Bahrain on upgrading and developing the rail network 32.6 within the country and also intend to connect 88.0 Kuwait the region. The governments are also making significant investments in upgrading their 25.3 Oman airports to meet the rising demand of both passengers as well as freight services. Total Qatar planned investment in airports is USD 41.4 bn 54.8 Saudi Arabia in the GCC. 81.6 UAE • 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. Source: MEED Projects Given the size of projects awarded or in the Exhibit 16: Value of projects awarded in pipeline, many regional and international contractors are expanding operations in Qatar transportation sector and Saudi Arabia. The regional contractors 11 10.1 are mostly from Kuwait and UAE as the 9.1 9.1 activity within the respective countries have 9 remained subdued. 8

• We believe that Qatar and Saudi Arabia will 6 4.4 continue to remain the most dominant markets 5 4.1 3.8 4.1

USD bn 3.7 within the GCC region. Both the countries 3 2.5 have announced significant investment plans, 2.1 1.8 1.8 especially the rail project. The Qatari market 2 1.0 1.3 0.5 looks more promising as the government will 0.1 0.3 0.2 accelerate the execution of the planned 0 projects to ensure timely completion as it Bahrain Kuwait Oman Qatar Saudi UAE Arabia prepares for FIFA World Cup 2022. 2009 2010 2011

. Source: MEED Projects

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5.1 Roads bid to host the FIFA World Cup 2022. Strong economic growth in the past few years have • The total planned or projects underway in the led to rapid increase in population, thus GCC countries is around USD 128 bn. UAE resulting in significant congestion in the capital leads the market with USD 46 bn worth of city of Qatar, Doha. projects planned or underway. Saudi Arabia is • The country has allocated USD 20 bn in the the second largest market with USD 38 bn next five years to upgrade its road network, worth of projects either planned or underway, out of which USD 17.9 bn is planned or while USD 18 bn in Qatar. Collectively, underway. Development of roads network is Kuwait, Oman and Bahrain have USD 27 bn also essential for the overall infrastructure worth of projects planned or underway. We development of the country. The preparation believe that execution of these projects will be for the World Cup 2022 will also speed up the important in reducing the over congestion in process of the construction of roads to ensure the GCC. decrease in traffic congestion, increase regional accessibility and minimize the • In the GCC, Qatar was the most active roads environment impact of its transportation market in 2011. Ashghal awarded USD 2.3 bn network. worth of contracts during the year 2011. The biggest of these was the USD 1.0 bn Exhibit 17: Planned/Underway projects in construction package awarded to the joint Roads (USD bn) venture of Saudi Binladin Group and the local Qatari Diar for work on the Dukhan highway. The other big contract that was awarded was 2.1 Bahrain the two road contracts in January, worth an 11.8 estimated USD 0.52 bn, to a joint venture of Kuwait 12.7 Consolidated Contractors Company and the 45.7 Teyseer Contracting company for the 12th Oman package of the Doha Expressway. Qatar • The investment in Qatar’s roads sector is set 17.9 to continue, with Ashghal planning to build 136 Saudi Arabia km of new roads by 2014, providing plenty of UAE opportunities to local and international 37.8 contractors and material suppliers. The major upgrades in the roads infrastructure were undertaken even before the country won the Source: MEED Exhibit 18: Roads Project Awarded in 2011 (USD mn)

Contract Completion Projects EPC Contractors Value Date

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

Peripheral Roads to Barwa City Q2-13 Bin Omran 152.0

Doha Expressway: Phase XII: F Ring Road Q1-14 CCC and Teyseer Contracting 233.0 Doha Dukhan: Al-Mail Roundabout to Q4-14 Qatari Diar and Binladin Group BaniHajer Roundabout 1,000.0

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

Doha Expressway: Package 6 Q4-13 Sinohydro Corporation 85.0

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

• Qatar is expected to witness USD 7.8 bn bridges market in Qatar will be USD 26.5 bn at worth of projects to be announced during the the end of 2020.We believe that new projects next two years. Qatar is expected to finish its will be announced as the rising population as roads network by the end of 2016, which is well as the tendency to own cars in the region well ahead of the world cup 2022. According will continue to result in further upgrades in to our estimates, the total size of road and the roads infrastructure.

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• The government’s USD 20 bn plan also existing Doha West Sewerage Treatment includes investments in improving its sewage Works (STW). networks. USD 362 mn worth of projects has been awarded so far in 2011 in improving • Three major road projects which are underway sewage networks around the city. The Doha further substantives the five year plan to uplift North Sewerage Treatment and Associated the road network of the country. The Doha Works project is a USD 2.2 bn four-part Expressway, currently under construction is expansion. The sewerage network at the valued at USD 2 bn, the Dukhan Highway also Doha North Project is important as it is likely under construction has been valued at USD to witness increase in flows. The Doha North 275 mn and the largest proposed project, the will witness projects such as Lusail, the Pearl Lusail Highway which is currently being and Gharaffa, West Bay area, as well as tendered has been valued at an impressive alleviate some of the pressure placed on the USD 687 mn.

Timeline: Road Projects

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

2012 2013 2014 2015 2017

Doha Dukhan Highway: Nakilat Shipyard: Phase 4A Central Section Project Value: USD 45 mn Project Value: USD 275 mn Completion Date: Q3-12 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

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• Ashghal has awarded USD 120 mn project to structural works at the existing pumping HBK Contracting. The project comprises of stations PS3/1, PS8/1, PS8/6, Series 8 Trunk mechanical and electrical refurbishment work Sewer, PS15, PS23, PS31 and PS44. with related drainage works, civil and

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

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)

Source: Ashghal website

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5.2 Railways

• The GCC region has a planned investment of Exhibit 19: Planned projects in railways USD 96 bn in the rail sector. The rail networks have garnered a significant share of 32% of 35 60% 53% the total transportation sector. Qatar is the 50% largest market for the railways sector in the 30 50% GCC with a total investment of USD 35 bn. 43% 25 The total investment in the rail sector in Qatar 40% accounted for 53% of the total planned 20 investment in transportation sector. 25% 25% 30% 15 USD bn 10% 20% 10

5 10% 7.9 14.0 29.0 20.3 22.2 2.5 0 0% Bahrain Kuwait Oman Qatar Saudi UAE Arabia Value of Projects % of Transportation sector

Source: MEED

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Exhibit 20: Ongoing or Planning Railway Projects in GCC

Expected Projects Value Coverage Completion Date 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 Mowasalat in the form of taxis and buses will • Qatar is the largest market for railways sector not be adequate to host the FIFA World Cup in the GCC with a planned investment of USD 2022. In addition, increasing the taxis and 35 bn. The objective of massive investment buses will put additional pressure on new plan is to ensure that it can accommodate roads and create congestion; therefore rail thousands of tourists that are going to move network within the country would be the most within the city during the tournament. The viable option for Qatar. public transport which is currently operated by

Exhibit 21: Details of Qatar rail project Award Value (USD Projects Date 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 local and international companies to bid for responsible for developing the rail network has design and construction contracts for Doha been restructured with the objective of Metro project. expediting the process. A Railways Steering Committee has been established, Chaired by • Recently, QRail has signed a USD 535.4 mn the Prime Minister; will be responsible for contract with Qatari Diar Vinci Construction coordination of the entire project. (QDVC) for the new phase of works on the Lusail Light Rail Transit system. The contract • QRail will now look after the rail network covers civil engineering works in seven project, which was earlier been assigned to underground stations, the construction of a Qatar Railways Development Co (QRDC), a viaduct over the motorway between Doha and 51:49 joint venture between Qatari Diar and the northern part of the country and DB International (formed in 2009).QRail has preliminary works on an LRT depot and started inviting expressions of interest from maintenance workshop.

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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.

Doha Metro map

Timeline: Railways GCC Railway Network Project Value: USD 30 bn Completion Date: 2017

Civil works award due for Testing and commissioning

West Bay by September of Red Coast Line to start 2012

2011 2013 2016 2017 2026

Consultants prequalify for Testing and commissioning Entire rail programme will metro. PMC bids invited for of freight railway to start by be completed West Bay people-mover 2016

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

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Exhibit 22: Projects awarded (USD bn) 5.3 New Doha International Airport • The aviation sector in the GCC has undergone major transformation during the last decade. Bahrain 4.9 Passenger traffic in the GCC has grown at a 8.2 CAGR of around 10% between 2002 and 2.7 Kuwait 2010, significantly higher compared to global traffic. Oman

• According to the International Air Transport 7.1 Qatar Association (IATA), Middle East is one of the 11.2 fastest growing markets in the world as it Saudi Arabia expects around 9% yearly growth till 2014. 7.3 UAE 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. Source: MEED

• • In the GCC, Qatar has an aggressive The government plans to invest USD 11.1 bn expansion plan in the aviation sector to for NDIA which includes two runways and a become one of the aviation hubs in the region. 140,000 sqm airport terminal. Currently, the The country is also preparing itself to maintain airport is handling 14.9 mn passengers a year. the pace with steady increase in passenger At the completion of first phase in March 2012, traffic to and from Doha. In addition, the rising the airport will be able to handle 24 mn fleet size of Qatar Airways was also leading to passengers and 750,000 tons of cargo a year. increase in transit passenger, which was putting additional pressure on airport • At the completion of the second phase in authorities. 2015, the capacity will double to 50 mn passengers per year. The NDIA is also developing its air cargo terminal with an initial • The current airport of Qatar is facing capacity of handling 1.4 mn with the increasing congestion, which will be replaced completion of phase one. This figure will reach by the new airport with much larger cargo and to 2 mn tons (mt) at the end of second phase, passenger facilities, thereby providing an making it one of the largest cargo terminals in important transportation hub for the people the world. In line with these developments, and materials. Qatar Airways is also planning to develop its

air cargo business.

Exhibit 23: Airport Contracts Awarded (2004 – 2010)

Value Projects Project Award ( USD mn) status date 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 Source: MEED Projects

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New Doha Int’l Airport

• The government of Qatar began upgrading the expected rise in demand as Qatar Airways NDIA even before the winning the bid for further enhances its fleet size to move up the hosting FIFA World Cup 2022. The country international ranking. This will help the airline was witnessing increase in number of tourists in increasing its current flying destinations, thanks to the initiatives taken by the tourism making Qatar a hub for major connections authority of Qatar. Qatar is preparing for the across the globe.

Timeline: Airport Projects

2012 2014 2015 2016 2018

New Doha International Airport New Doha International Airport (Phase I) (Phase II) Total Project Value: USD 11.1 bn Total Project Value: USD 11.1 bn Completion Date: 2012 Completion Date: 2015 Passenger Capacity: 24 mn Passenger Capacity: 50 mn Cargo Capacity: 750,000 tn Cargo Capacity: 2 mn tn

increased from 4 planes to 97 planes in 2011. Qatar Airways This figure is expected to reach 110 by the • Qatar Airways is a group of companies with end of 2013. The company has entered into a the diverse interests from core passenger and multi-billion dollar deal with Airbus to supply cargo transportation and airport to alcohol 80 aircrafts. distribution, sports and hospitality. The group comprises of Qatar Airlines, Qatar Duty Free, • The company is one of the best and the Qatar Airways Cargo, the Qatar Distribution fastest growing airlines in the region. It has Company (the only licensed retail distributor of won the award for the Best Airline in Middle alcohol in Qatar) and Doha International East and Africa at 2011 Business Traveler Airport. Since the re-launch of Qatar Airways Asia Pacific Awards for the second year in a in 1997, the company has been able grow at row. In December 2011, the CEO of Qatar 30% per year. During this period, the fleet has Airways has been unanimously nominated to Commercialbank Capital Research 27 Page | 27 Commercialbank Capital | Construction Sector Report 2012

serve on the board of governors of the rising hydrocarbon of the years, which has International Air Transport Association, which resulted in accumulated surpluses. The main represents over 90 % of the world's air objective of the new port is also to replace the transport. This further substantiates Qatar existing port, which is struggling to keep up Airways image in the industry and its with the growing demand with its limited land. commitment towards being one of the best airlines in the region. The company is rapidly • Currently, the country has three main ports: expanding its destinations as well as flight Port of Doha (Qatar’s main commercial frequency. In 2011, it has expanded and/or seaport), Port of Ras Laffan (the world's started new flights to various destinations. The largest LNG exporting facility), and Port of company is expected to add 20 new Mesaieed (Qatar's main oil export terminal destinations by the end of 2013. and the main point of entry for aggregates and other building materials). In order to meet the • In March 2011, the company announced a heightened traffic of goods and supplies strategic partnership with Qatar Telecom generated by the country's economic boom (Qtel) for the migration of its primary IT and rising population, the government of Qatar infrastructure to the Qtel data centre. In plans to expand and develop its port September 2011, the company bought a 35% infrastructure. stake at the Luxembourg-based cargo carrier Cargolux, which is in with the company’s • Qatar’s ports are dominated by the LNG objective to develop its air freight business. export. However, this phenomenon is likely to change over the next few years as the country • Qatar Space City is a plan of government of makes significant investments to diversify its Qatar to establish a USD 3.3 bn Space City in economy away from hydrocarbon sector. The the Al-Khor area, which will cover an area of current planned investments in the sea port 40,000 sqm. The project will include sector is to address the additional capacity of establishment of a university in cooperation LNG, but the future expansion plans is to with US National Aeronautics and Space address the expected rise in demand from the Administration (NASA) along with a science massive development program undertaken by museum and other tourism attractions. The the government. planned project is expected to be Exhibit 24: Planned projects in sea ports ($ bn) 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 0.8 Bahrain is based on the American Space Museum. 2.7 2.8 Kuwait 5.4 New Doha Port Oman 2.1 • The GCC ports sector is mostly dominated by 15.4 the oil and gas sector as most of the Qatar production is exported to emerging markets. However, this is set to change in the coming Saudi Arabia years as the region continues to make 8.6 significant investments to diversify its UAE economic base.

• The new proposed port in Qatar is likely to transform the country into the new trading hub Source: MEED 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

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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 year deal. The second contract received bids, 9 consortiums for the major contract of the however, which is likely to be awarded soon. New Doha Port. In March 2011, the steering We believe that Qatar will have to expedite the committee signed first contract with the China process of bidding and awarding and then Harbor Engineering Company (CHEC) with a execution in order to keep up the pace with its price of QAR 3.2 bn, which is a four and half regional peers.

Timeline: Port Projects

New Doha Port (Phase II) Total Project Value: USD 7 bn

Start Date: 2020 Capacity: NA

2013 2016 2020 2025 2030

New Doha Port (Phase I) New Doha Port (Phase III) Total Project Value: USD 7 bn Total Project Value: USD 7 bn Completion Date: 2016 Start Date: 2030 Capacity: 6 mn TEU (20-foot Capacity: NA equivalent units)

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6. ICONIC PROJECTS

investors took up residency in 2009 and the 6.1 The Pearl-Qatar entire project is expected to be completed by 2013. • The Pearl Qatar is a Riviera style manmade island developed in an exclusive environment • The Pearl will house about 40,000 residents in Doha. It is one of the largest real estate and includes luxury apartments, high rise developments in the GCC which covers 400 towers, town homes, penthouses and hectares (4 mn sqm) of reclaimed land. It is Mediterranean villas, an international yachting also Qatar’s first international luxury hub with three marinas and 700 boats, three 5 residential development that offers star hotels, 2 mn sqf of international retail, international investors freehold title ownership. restaurants and entertainment as well as a It is located 20 kms from Doha's International family destination with schools and community airport and 350 meters offshore of Doha’s facilities. prestigious West Bay District. The first

The Pearl, Qatar

• United Development Company (UDC) is the which covers 200,000 sqm, which consists of project developer, who is overseeing the 385 retail shops including fashion, jewellery project's entire infrastructure and construction and fine dining. The Medina Centrale with an of municipal buildings. Dar Al-Handasah area of 600,000 sqm is set to provide cinemas (Shair and Partners) is a project manager. and supermarkets among others while the Qanat Quartier will be the cultural destination • The whole idea of the Pearl Qatar is to attract with its impressive design allowing people to as many people as possible from Qatar and enjoy parks and art galleries. the region as well as other parts of the world. It will have high end shops and fine dining • Nikki Beach Resort & Spa is a Miami based restaurants from countries such as Spain, Italy resort chain set to open in July 2012. It will be and the United States. The Pearl-Qatar, with it a boutique beachfront resort with 47 luxury 40 km of reclaimed coastline and 20 km of villas and spa suites located at Porto Arabia. It pristine beaches, is definitely a one of main is designed by the award winning Singapore tourist attractions of Qatar. based ECO ID Architects with interior design by Gatserelia Design. • There are three retail areas which have their own themes. One of them is the Porto Arabia

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capacity of 500 to 700 seating capacity. One 6.2 Msheireb of other distinctive feature of the project is that it is expected to have underground metro • Msheireb is an iconic project which will display stations to provide the link to other parts of innovative development and rediscover the country. local heritage and culture. The project is divided into six main character zone named as • The project will be completed in five phases Diwan Quarter, Heritage Quarter, Retail and the first phase is due for completion by Quarter, Kahraba Quarter (residence and mix 2012. The first phase will consist of a multi- use), Nakheel Quarter (HQ gateway). The use Cultural Forum, central luxury hotel and project will have 226 buildings to provide serviced apartments, offices, a shopping home to 27,637 residents. It will have parks street, townhouses, a primary school and a and open spaces spread over approximately mosque. The Phase 2, 3 and 4 will consist of 122,217 sqm. The project will have three retail malls, hotels, office apartments and types of hotel, Lifestyle hotel, Luxury hotel and shops. Business hotel and a theatre auditorium with a

Msheireb

Exhibit 26: Details of Msheireb Development

Budget Value Project Projects (USD mn) 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

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99-year lease basis. The infrastructure of 6.3 Lusail City Lusail city is divided into two phase which was further subdivided into construction • Lusail City is a modern yet traditional and zones, known as construction package environmentally friendly city. The (CP). estimated cost of the development is USD 33 bn, which will be executed in phases • There are 16 major CP which are under over the next 10 years. different stages of development. The entire infrastructure at this stage is • Lusail City will be located on the east planned to be completed by the end of coast of Qatar, approximately 15 km north 2013. Similarly, the entire Lusail City will of the city center of Doha. Lusail City will be connected to an extensive natural gas have residential, commercial and two pipeline network. 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

Lusail City

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

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

Lusail LRT rolling stock contract USD 1.8 bn EPC bid QRDC

Real Estate

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

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

Source: MEED Projects

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6.4 Seef Lusail offices worldwide. It has been operating in the Gulf region since 2005 and their key projects • Seef Lusail, a project under development by in the region include The Dubai Mall, the Seef Lusail Real Estate Development Address at Dubai Marina, Doha Festival City, Company “SEEF”, has appointed DP Dilmunia Health City in Bahrain and The Architects as master planners for the project. Eighth Gate in Damascus. The firm was The developer, SEEF, is a joint venture founded with a deep concern for the built between Masraf Al Rayan and Qatari Diar that environment and the need to create will take on the full development of Seef architecture of excellence that enriches the Lusail. Issa Mohammed Al Kaladari, CEO of human experience and spirit. Lusail City was appointed as Chairman of SEEF. Khalid Ahmad Fakhroo, Executive • Seef Lusail will feature an interactive 2.3 km Director of Engineering and Real Estate at waterfront promenade that will include multiple Masraf Al Rayan, has been appointed as the world class attractions that will cater to various CEO of SEEF. age groups and families. The developer, “SEEF” conducted a number of studies on • Seef Lusail is a 600,000 sqm multi-use waterfront destinations worldwide in an effort development located at the waterfront of to create an innovative design with a strong Lusail, a distinctive 21st century iconic city emphasis on creating themes throughout Seef which celebrates the special cultural and Lusail that reflect and compliment Qatar’s geographical heritage of Qatar and the Gulf traditions and values. Seef Lusail will further Region add to Qatar’s appeal as an international destination that rivals major global • DP Architects is a leading architectural destinations. practice in Asia with over 1200 staff and 12

Seef Lusail • The design will take into consideration the One of the hotels will be a fully integrated climate in Qatar, in order to have a lively and resort and spa providing guests with a unique active waterfront all year long. leisure experience. Discussions and negotiations are underway with global hotels • The hotels in Seef Lusail will cater to the brands that will bring new concepts and ideas family, business and luxury leisure segments. to Qatar.

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7. Retail & Leisure

• GCC retail sector has undergone a shift in • Cup 2022 and the government thrust towards paradigm over the last decade on the back of becoming a touristic hub in the region. robust macroeconomic environment. The Exhibit 28: Gross Leasable Area (GLA) in 2010 region has become one of the most attractive destinations for retailers across the globe. The (sqm 000’s) changing consumer behavior and lifestyle, increasing influence of western culture, rising disposable income has led to phenomenal 311 UAE growth in the retail sector. As a result, the 639 521 retail sector in the GCC is contributing to the Qatar overall growth in the non-hydrocarbon sector. 4,045 Saudi Arabia • Shopping malls and organized retail stores Kuwait have gained prominence in the region as it is regarded as one stop entertainment for Bahrain residents and tourists. Therefore, the total 4,234 Oman projects planned or underway for shopping 630 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. Source: Retail International

Doha Festival City • The retail sector in Qatar has evolved over the • The emergence of trade, restaurant and hotels last few years on the back of rapid growth in sector as the fourth largest contributor to GDP population. The sector has benefitted from the in 2010 reflects the strong and growing rising purchasing power of its residents in the performance of Qatar’s retail industry in the recent years. This has led to a shift from recent years. The contribution to the GDP has unorganized to organized shopping, resulting increased from 4.4% in 2006 to reach 5.5% in in shopping malls and complexes. Shopping 2010. The retail sector growth in Qatar has malls have become an important part of the mirrored the economic growth in Qatar. Rapid society as it is the best source of economic growth has led to one of the highest entertainment for the residents and tourists in GDP per capita in the world. the country.

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Exhibit 29: Retail future supply 2012 – 2015 GLA Completion Project Project Value Developer (sqm) Date 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 H.E. Sheikh Hamad Bin Jassim Al Mirqab Mall 36,000 2013 USD 200 mn 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 (BASREC). BASREC shareholders include Al- centers have entered the market during the Futtaim Real Estate Services, Qatar Islamic last couple of years, the retail space remained Bank (QIB) and private Qatari companies. scarce in the country. This has resulted in DFC will be built on a 433,847 sqm plot with a speculative demand, which has prompted sub- GLA of around 260,000 sqm, which is located letting at enormously high prices. The prices around 15 km north of downtown Doha on Al of sub-letting can vary between QAR 100 to Shamal Road. DFC will consist of mall and QAR 150 per sqm depending on the location. entertainment complex, hospitality and offices Surprisingly this phenomenon has become and automotive showrooms. The retail section highly common in Doha. will have four distinct interior zones, namely Water Concourse, Garden Promenade, • Qatar’s total retail stock was around 630,000 Rainforest Boardwalk and Fashion Galleria. sqm (GLA) at the end of 2010, an increase of DFC will be the home to IKEA, Toys R Us, around 30% compared to 2009. Based on the Marks & Spencer and Inter-sport. The first planned developments, Qatar will add 626,000 phase of the project, which will include the sqm (GLA) of new organized retail space by retail section, is likely to be completed by the the end of 2012, thus doubling the existing fourth quarter of 2012. The remaining sections retail capacity. The completion of 433,847 of the DFC are expected to be completed by sqm (GLA) of Doha Festival City complex, the end of fourth quarter of 2014. which is being developed by Al Futtaim will be completed by 2014. The Barwa Commercial 7.2 Lagoona Mall Avenue is under construction, which will yield • 1 mn sqm of built up area. The first phase of Lagoona Mall is a 127,000 sqm two level the project will yield around 0.5 mn sqm of lifestyle shopping centre with 53,000 sqm of GLA. The first phase is around 60% retail shopping, built at an estimated cost of completed and the rest to be completed by the QAR 1.4 bn. Lagoona is developed by Dar end of 2012. Investment & Development and is leased and managed by Darwish Holding for an initial period of 30 years. The main contractor was • The total planned and projects underway in Al Seal Contracting & Trading Co and Hill shopping mall are USD 3.1 bn. There are International (project Management) MZ & around 10 new malls being planned in Qatar. Partners (Design and Supervision) are the The total number of projects awarded during consultant. One of Lagoona's unique features the year 2011 is USD 523 mn. Around USD 2 is a 20,000 sqm European piazza, featuring bn worth of projects is to be awarded in the 5,000 sqm of fine dining which will be home to year 2012 and 2013. 20 restaurants with outdoor patios. The shopping center comprises 170 retail stores. 7.1 Doha Festival City (DFC) Similarly, it also provides parking for over • DFC will be the largest mall in Qatar with a 2,000 vehicles. The mall is the home to mixed use of shopping, entertainment and luxurious multi brand store, Fifty One East. leisure. The project is owned and developed The store covers an area of 13,000 sqm which by Bawabat Al Shamal Real Estate Company is the biggest in the Middle East region.

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KATARA - Cultural Village Distribution Company for nearly QAR 2 bn. Q 7.3 Katara media and Qatar Cinema and Film Distribution Company plans to invest more than QAR 1 bn • Katara is the Cultural Village of Qatar, where in the next three years to open more than 50 cutting edge activities of all fields show the state-of-the-art multiplex facilities. cultural diversity of the world in one single traditionally Qatari place. It is the largest and Exhibit 30: Cinemas in the Region 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 17 USD 82 mn. Abu Dhabi • Katara hosts international, regional and local 38 Dubai festivals, workshops, performances and Kuwait exhibitions at its prestigious venues such as 13 theatres, libraries, art galleries, museums, an Qatar opera house, and a multi-purpose halland Roman-style amphi theatre which is the 14 largest in the Middle East. It also has traditional cafes/restaurants, marinas,

handicrafts souq, mosques and playing field Source: Various for children. Katara has held various performances since its opening in October • In the GCC, Qatar has the maximum number 2010 which includes Qatar Philharmonic of cinemas. The total number of cinemas in Orchestra, Doha Tribeca Film Festival, Qatar stood at 38 compared to around 30 in Photography Exhibitions (i.e. Our Time, Dubai and Abu Dhabi. Doharama) and Cultural Performance during AFC Asian Cup Jan 2011. • Aspire Zone Foundation (AZF) opened the first women cinema in Qatar capital, Doha. All the films for this cinema are provided by Qatar 7.4 Cinemas Cinema and Film Distribution Company. Qatar • Recently, Q media announced a deal to has also launched Doha Film Institute (DFI) to acquire 60% stake in Qatar Cinema and Film build a strong film industry in Qatar along with strong links to the international film

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community. World Cinema Foundation has is moving in the right direction to become the signed a three-year cultural partnership with main attraction and hosting big events in the DFI to restore and preserve international films coming years. We remain optimistic on the of cultural significance. prospects of the entertainment and believe • Doha has hosted international film festivals - that it will gradually emerge as one of the top Tribeca Film Festival Doha and Al Jazeera entertainment hubs in the GCC. Documentary Film Festival in the past. Qatar

Timeline: Retail projects

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

Lagoona Mall Mirqab Mall Project Value: USD 348 mn Project Value: USD 200 mn Completion Date: 2011 Completion Date: 2013 GLA: 127,000 sqm GLA: 36,000 sqm

2011 2012 2013 2014 2015

Gulf Mall Marina Mall

Project Value: USD 100 mn Project Value: USD 275 mn Completion Date: 2012 Completion Date: 2014 GLA: 80,000 sqm GLA: 57,605 sqm

Ezdan Mall Barwa Al Doha Mall Project Value: USD 50 mn Project Value: USD 824 mn Completion Date: 2012 Completion Date: 2014 GLA: 40,000 sqm GLA: 271,000 sqm

Barwa Commercial Avenue Doha Festival City Mall Project Value: USD 1.7 bn Project Value: USD 1,100 mn Completion Date: Q4-14 Completion Date: Q2-12 GLA: 260,000 sqm NLA: 56,600 sqm

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Spa, and a 1,850 sqm Grand Ballroom with a 7.5 Hotels & Tourism capacity of accommodating 1,200 guests. • Qatar Tourism Authority (QTA) plays an • important role in promoting Qatar as an According to the latest figures from QTA, the evolving tourist destination. The company tourism sector in Qatar is witnessing a steady organizes and supervises the development of growth. The report indicated that the the tourism industry in Qatar. According to occupancy rates have increased by around World Travel and Tourism Council (WTTC), 4% in the third quarter compared to the same Qatar is one of the fastest growing tourism period of the previous year. The revenues sectors in the world. The contribution of travel from 4 and 5 star hotels witnessed an and tourism sector to GDP is expected to rise increase during the period, indicating strong 6.4% per annum by 2021 from QAR 3.8 bn or domestic and regional interest in the sector. 0.7% of total GDP in 2011. These This increase was due to the 24% increase in assumptions are on the back of massive visitors from the GCC region, especially Saudi planned investments in the sector and in line Arabia as it accounts for around 60% of the with the government’s thrust to become a total tourist within the region. touristic destination. • According to hotelier Middle East, Qatar has • QTA have done a commendable job in 17 five star and 13 four-star hotels at the end organizing and participating in conferences of January 2011. In total, Qatar had around 66 and exhibitions over the years, which has hotels. According to QTA, the total number of transformed Qatar into a business destination hotels is expected to reach 240 by end of within the region. The increase in the number 2022. This is a substantial increase in the of business travelers due to the conferences number of hotels in the next ten years. and exhibitions is improving the hotel According to QTA, about 90% of future supply occupancy rates in Qatar. In terms of will provide four and five star accommodation. revenues, 4 star hotel revenues increased to QAR 182.4 mn in third quarter of 2011 to QAR • The total planned and underway projects are 101.9 mn during the same period of previous USD 2.4 bn. As of now, USD 1.6 bn worth of year. In terms of 5 star hotels, the revenue projects has been awarded. Currently, there increased to QAR 385.6 mn in third quarter of are 10,000 hotel rooms and additional 5,500 2011 compared to QAR 304.6 mn of the will be come on stream by the end of this year. previous 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)

250 240

200

150

100 66 58

No of of No Hotels 51 50

St. Regis Hotel, Doha 0 2008 2009 2010 2022F • 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 Source: Qatar Tourism Authority (QTA) Resort and is expected to open on 28 • Qatar Museums Authority (QMA) has awarded February 2012. The hotel is strategically a contract worth USD 434 mn to a South located near the Katara Cultural Village and Korean construction firm Hyundai Engineering Doha Exhibition Centre. It will comprise of 336 & Construction to build the National Museum guest rooms and suites, a cornucopia of of Qatar designed by the French architect signature restaurants, a world-class Remede Jean Nouvel over an area of 46,000 sqm in

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Doha. The construction of the museum is Pei, which opened in December 2008, as well expected to be completed by 2014. Qatar's as the Arab Museum of Modern Art in Doha, which opened last December. • National Museum will be an add-on to the Museum of Islamic Art in Doha designed by IM

New National Museum of Qatar

• The QMA has also announced to open a facilities like music evenings, paddle boats, “Museum of Islamic Art” (MIA) park built upon film screenings, sports events and art an area of around 280,000 sqm with no workshops. The plans for building a new entrance fees for visitors. The park is Museum of Photography designed by designed by Pei Partnership Architects of New Santiago Calatrava are in progress. York. In addition, they will also provide various

Timeline: Hospitality Projects 2011 2012 2013 2014 2015

New Doha Hilton Hotel Qatar National Museum Project Value: USD 60 mn Project Value: USD 434 mn Completion Date: Q1-12 Completion Date: Q2-14 Capacity: 320 rooms Capacity: 220 seats

Crowne Plaza Doha: The Mandarin Oriental Hotel Business Park Project Value: USD 80 mn Project Value: USD 165 mn Completion Date: Q1-14 Completion Date: Q1-12 Capacity: 160 rooms Capacity: 265 rooms Planet Hollywood Hotel St. Regis Hotel and Entertainment City Residential Tower Project Value: USD 0.1 bn Project Value: USD 415 mn Completion Date: Q4-14 Completion Date: Q1-12 Capacity: 300 rooms Capacity: 320 rooms Four Seasons Hotels and

Doha Regent Hotel Resorts Project Value: USD 100 mn Project Value: USD150 mn Completion Date: Q3-12 Completion Date: Q2-14 Capacity: 350 rooms

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8. Social Infrastructure

• The social infrastructure development infrastructure such as hospitals and education becomes important in the midst of economic is on the rise as providing adequate education development. In addition, it is important in for the growing young population is the attracting expatriates to work and live in Qatar. backbone of economic diversification. Both the These are indirect ways of creating demand, healthcare and education is part of the which will support the country’s National government’s human development Vision 2030 of reaching their target population programme. by the end of 2030. Investments in social

8.1 Education

Education City

• The education sector has undergone major • According to the recent study by Qatar’s transformation over the last two decades. The permanent Population Committee, the number country has made major investments in of students is rising by around 4.5% annually. improving the quality of its education system. The strong growth in student enrolment led to Qatar leads the GCC in terms of education reform of Qatar’s primary and secondary reforms as it ranks among the top five nations schools. Currently, there are 165 independent globally in terms of quality of primary schools serving around 80,000 students under education. The government established the the new system provided by the SEC. We regulatory body, Supreme Education Council believe that there are opportunities for the (SEC). The SEC comprises of three institutes, primary and secondary schools due to the namely Education Institute to develop rising demand, however, the main challenge curriculum and professional training for would be the exorbitant prices of land. This teachers and staff, Evaluation Institute to would be lead to higher pricing structure for assess and monitor the performance of new schools, which might be unfavorable schools and the Higher Education Institute to when compared to other existing schools. help outstanding students.

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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 continue its investment program to further education sector was the establishment of improve its education system, which is Education City by Qatar Foundation. Due to important for the overall development of the the modernization and world class facilities, it country. The government intends to bring in has attracted both universities and students modern educational curriculum, which will around the region. Six American universities benefit the development of local population. have opened their branches in Education City. This is in line with the government’s Vision 2030. • Apart from these international universities, Qatar University continues to remain the main 8.2 Healthcare attraction for the Qatari students. The university also underwent series of reform • during 2003 and 2007. The university offers The government thrust towards improving its 60 degrees from seven different colleges. In healthcare system, makes in one of the addition, the main driver for Qatari people to largest spenders in the GCC region. The rapid enroll in the public university is to secure high increase in population during the last five paying public sector jobs. years has resulted in serious shortages for healthcare system in Qatar. Qatar has a total • Hamad bin Khalifa University is an initiative of of 9 hospitals and 22 primary healthcare Qatar Foundation for Education, Science and centers. On an average, the Qatari Community Development (QF) in honor of His government allocated around 10% of the total Highness the Emir, Sheikh Hamad Bin Khalifa annual budget toward healthcare and related Al-Thani. This new multi-disciplinary university activities. In the country’s 2011/12 budget, the will combine the learning, teaching and government has allocated QAR 8.8 bn (USD research being carried out at the branch 2.4 bn) to the healthcare sector, which is campuses of the universities and other around QAR 300 mn higher compared to the academic centers at the Education City. previous year.

• • The total projects planned or underway in One of the key elements of human Qatar is USD 6.6 bn. Total projects awarded development of Qatar National Vision 2030 is during the year 2011 reached USD 1.2 bn, health of the population. Qatar has come up while it is expected that USD 620 mn worth of with its National Health Strategy (NHS) 2011- projects will be awarded during the fourth 16, in order to align with the Qatar’s National quarter of 2011. We believe that the total Vision 2030 and its ambition of becoming a investment is likely to surpass the USD 6 bn regional centre for medical research. The as the development in Qatar will induce more strategy has 35 projects in plan over the next primary and secondary schools and western six years which will improve the overall universities to meet the rising demand in healthcare services and fulfill the needs of Qatar. Going forward, the government will world class healthcare system.

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Timeline: Healthcare Projects

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

2011 2012 2013 2014 2015

Al Wakrah Hospital Hamad Medical City Project

Project Value: USD 0.5 bn Value: USD 1.1 bn Completion Date: Q1-11 Completion Date: Q2-13 Capacity: 280 beds Capacity: 1,340 Beds

• Qatar spends around USD 137 mn per annum Mozah bint Nasser Al-Missned. The aim is to to send patients outside the country for become the leading centre for the treatment as it lacks quality healthcare. In development of medical science in the Middle order to address this issue, the government is East. The three essential missions behind the planning to spend USD 8 bn on hospital initiative are patient care, medical education construction projects by the end of 2016. The and biomedical research. Sidra Medical and country’s public works ministry approved plans Research Center will be located in Education to build eight new hospitals by 2016. The new City. It is owned and funded via a USD 7.9 bn hospitals will add 5,000 beds to the current endowment from Qatar Foundation. capacity. One of the main challenges is attracting skilled professionals to achieve • Sidra Medical and Research Centre will quality healthcare system in the country. provide employment to around 5,000 people including doctors, nurses, technical staff, • The government has taken several initiatives biomedical researchers, administrators and in improving the quality and services of the support staff. The centre will also have parking healthcare system in Qatar. The government facility for approximately 2,000 vehicles and a has formed partnerships with foreign residence for 350 nurses. universities, institutions and colleges like University of Calagry Qatar and the Weill • The medical center will work closely with Weill Cornell Medical College. The institutions have Cornell Medical College in Qatar and Hamad their campus in Qatar providing Medical Corporation in regard to all three healthcare/medical education and nursing missions, raising the standard of health care training programmes. One of the most throughout the country and providing valuable ambitious projects in the healthcare sector is opportunities for training the medical students the USD 2.5 bn Sidra Medical and Research and clinician. It will also include research in Centre, USD 1.5 bn Hamad Medical City, and the field of pregnancy health, infertility, genetic USD 500 mn Al Wakhra Hospital. abnormalities, the health needs of children, and diseases specific to women. It will be the • Sidra Village: Mazaya Qatar Real Estate first hospital in Qatar to have a fully integrated Development Company has awarded a $130m clinical information system as well as the first contract to China’s Sinohydro to deliver the academic medical center in the region based Sidra Village project in 20 months. Sidra on the North American model. Village comprises 1,165 residential units, including 658 one-bedroom and 507 two- • Total building area (sqf): Approx. 2,520,000 bedroom apartments. (hospital and clinic); Approx. 3,600,000 (including structured parking). Phase I • Sidra Medical and Research Centre is consists of 380 beds, not including labor and one of several initiatives taken by HH Sheikha delivery rooms, and 53 high-risk/ICU obstetric

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beds. Phase II is planned to expand hospital • A $ 2.3 billion construction contract has been capacity to approximately 550 beds and awarded to an international consortium double the sizes of the Outpatient Clinic and including OHL and Contrack. 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. New Sidra Medical and Research Centre

Site map: Sidra Medical and Research Center

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9. Energy and Utilities

Exhibit 33: Value of planned investments in Oil 9.1 Energy and Gas projects (USD bn) • 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 131.7 134.6 is main source of revenue.

• The original planned investment in oil and gas 64.1 37.1 sector within the GCC was around USD 420 8.9 24.9 bn till 2020. However, the revised planned budget was 4% lower compared to the original Bahrain Oman Qatar Kuwait UAE Saudi Arabia planned investments. The revised planned investment in the GCC is around USD 401 bn (refer exhibit 33). The drop in value is due to Source: MEED Projects Kuwait, which has revised its budget Exhibit 34: Contracts awarded in Oil and Gas downwards by around 30%. Saudi Arabia, on projects 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, 0.6 12.7 Bahrain where the Saudi Arabia is considering 3.4 Kuwait massive investments over the next decade. 11.2 Qatar accounts for only 10% of the total Oman planned investments in the oil and gas sector 70.2 in the GCC. Qatar

• In the GCC, the amount of contracts awarded Saudi Arabia 58.3 is about USD 156.4 bn, which is around 40% of the revised planned investment in the oil UAE 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 Source: MEED Projects Saudi Arabia has awarded USD 58.2 bn. Exhibit 35: Natural gas reserves (Tncf)

• Saudi Arabia, the world’s largest producer of oil, has announced massive investments Russia 1,681 during the next five years as it wants to capitalize on the rising oil prices. UAE, on the Iran 1,046 other hand, believes that focusing and investing in the oil and gas sector would be the most appropriate to boost the overall Qatar 896 economy, especially after the sharp correction in the real estate sector on the back of global recession. Saudi Arabia 275

U.S. 273

Source: Oil and Gas journal 2011

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• Hydrocarbon sector is the main contributor to set a target of developing 400,000 bpd the robust growth witnessed during the last (64,000 m3/d) of GTL capacity by 2012. few years. Qatar is the third-largest in the world behind Russia and Iran in terms of gas • The biggest GTL project in Qatar is Pearl reserves. It is the world’s largest global GTL. In February 2007, the same week that supplier of LNG and will become the world’s Exxon Mobil decided to cancel its GTL plans, largest exporter of GTL. The government will Shell held a ground breaking ceremony for its continue investing further to enhance its Pearl GTL project. The Pearl plant is 51% capacity to meet the rising demand in the gas owned by Qatar Petroleum, though Shell will sector, however, the investment will be much act as the operator of the project with a 49% lower compared to the ones seen earlier. stake.

• Since 2006, Qatar has invested around USD • ORYX GTL is a synthetic fuel plant based in 40 bn in the oil and gas sector. In Exhibit 36, Ras Laffan Industrial City, Qatar, which is a JV majority of this was invested during the year between by Qatar Petroleum (51%) and Sasol 2006 and 2007 in order to achieve the desired (49%). The capacity of Oryx GTL is 34,000 capacity as mentioned above. In the year bpd of oil. 2011, total amount of projects awarded in the energy sector was USD 2.9 bn, which is Exhibit 36: Projects awarded in Qatar around 25% of the total projects awarded 25 during the year. 21.5

• Qatar started operation of mega train-7 20 (capacity 7.8 mtpa) in July 2009 and had brought another five plants on-stream (46.8 15 mtpa) till Feb 2011. Qatar transportation 11.0 company has 52 LNG vessel out of which 9 10 conventional vessels (145,000 – 154,000 m3), USD bn 31Q-Flex vessels (210,000 – 216,000 m3), 14 Q-max Vessels (263,000 – 266,000 m3). In 5 2.3 2.9 2011, Qatar achieved its target capacity of 77 0.8 1.3 mtpa for LNG. 0

2006 2007 2008 2009 2010 2011* • The government’s investment in the energy sector is through Qatar Petroleum (QP), which Source: Oil and Gas Directory Middle East-2011 * till Date is the only state owned petroleum company in Qatar. The company operates all oil and gas • The facility is expected to use 1.6 bn cubic activities primarily including exploration, feet or 45 mn cubic meters per day (m3/d) of production, refining, transport, and storage. It natural gas feedstock to produce 3.1mbd is also involved in sale of crude oil, NGL, LNG, (499,000 cmd) of GTL products as well as GTL, refined products, petrochemicals and 120,000 bpd (19,000 cmd) of associated fertilizers. QP accounts for about 50% of the condensate and LPG. Initially, the estimated country's total crude oil output. Qatar cost of the project was USD 4 bn, which petroleum has allocated USD 30.7 bn (2010- increased to between USD 12 and USD 18 2014) for project in crude oil, natural gas, GTL bn. The Pearl GTL is the first integrated GTL and petrochemicals. However, the budget has operation in the world, which will have been declining in gas sector as the expansion upstream natural gas production integrated is nearing its completion. with the onshore conversion plant. By 2012,

Qatar is likely to have 177,000 barrels per day • Gas-to-liquids (GTL) projects have received (28,100 cmd) of GTL capacity from Oryx GTL significant attention in Qatar over the last and Pearl GTL. several years. The government had originally

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Timeline: Energy Projects

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

2013 2014 2015 2016 2018

Ras Laffan Polysilicon KAHRAMAA - Facility D KAHRAMAA - Solar

Plant IWPP Power Complex Project Value: USD 1.0 bn Project Value: USD 2.0 bn Project Value: USD 1.0 bn Completion Date: Q2-13 Completion Date: Q4-15 Completion Date: Q3-18 Capacity: 2,000 MW

Timeline: Oil and Gas Projects

QP - Al Shaheen Refinery Ras Laffan Olefins Barzan Gas (On Hold) Complex Development Project Value: USD 11 bn Project Value: USD 6.4 bn Project Value: USD 10 bn Completion Date: Q4-14 Completion Date: Q2-16 Completion Date: Q4-21

2013 2015 2016 2017 2021

Barzan Gas Development Qatargas - Jetty Boil Off Barzan Gas Development -

- Onshore (Phase I) Gas Recovery Onshore (Phase II) Project Value: USD 1.7 bn Project Value: USD 1.0 bn Project Value: USD 2 bn Completion Date: Q4-13 Completion Date: Q1-15 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

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9.2 Solar Energy positioned over any of the stadiums in Qatar and can be maneuvered with a remote control • Winning the bid for FIFA world cup 2022 has from the ground to keep the passing sun off given further fillip to the solar energy sector in the field. Qatar. In addition to the existing investment in the sector, more investments will take place in • Qatar Science and Technology will develop a the near term as the country prepares itself for plant at Ras Laffan Industrial City, which will the World Cup 2022. The ideas and concepts be one of the first operational polysilicon conceived from solar power are likely to plants in the region. The plant will produce ensure cooling and power control within the well over 3,500 tons per annum and has been stadiums, which is very essential for the designed with future expansion in mind. successful hosting of the event. As a result, Qatar is expected to invest around USD 1 bn • The solar energy will play an important role in on alternative energy. As of now, the country successfully hosting the World Cup 2022 as has awarded projects worth USD 0.7 bn. 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 Prototype: Qatar Solar Power Stadium power sector was the establishment of Power Grid Authority known as the GCC • Qatar plans to build 9 new solar powered Interconnection Authority. The authority will be open-air stadiums designed by German responsible for overlooking and monitoring of Architects Albert Speer and Partner GmbH the GCC Power grid. The grid's existing (AS&P), and renovate 3 existing stadiums. members are Saudi Arabia, the UAE, Kuwait, Electricity to cool these stadiums will be Bahrain and Qatar (for Phase 1) with Oman generated with photovoltaic panels (PV) and joining the alliance for Phase 2. Saudi Arabia solar thermal collectors installed on the can give and receive 1,200 MW, while the stadiums’ roofs and sides. Cool air will be UAE 900 MW and Qatar 750 MW to and/or pumped at spectators’ ankles, backs, and from the grid. Members are expected to necks, and if permissible, the retractable roof maintain a minimum reserve ratio level and can provide additional shade. Similarly, negotiations for power trading (which is to scientists and engineers at Qatar University commence next year) have already begun. It have also developed a solar powered gas- is estimated that the grid would save USD 5 filled cloud that will shade spectators and bn in energy costs for member countries. All athletes from the roaring sun. In addition, the six countries have joined in the second phase USD 0.5 mn artificial clouds that can be 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

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• The total revised value of investment in the regulator responsible for transmission and power and water sector is USD 221.5 bn in distribution of electricity and water, the GCC compared to USD 216.5 bn planned development of policies and procedures for initially. According to Exhibit 38, the total value the management and supervision of the water of planned investment in Saudi Arabia is USD and electricity sectors in Qatar. 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 Exhibit 38: Planned investment in power and planned investment of USD 16.8 bn. water

• The total planned investment in the water 100 97 97 sector is USD 42.9 bn. Saudi Arabia is the largest market with planned investment of 80 USD 16.9 bn. The country has awarded 58 around USD 8.3 bn worth of projects, while 60 55 the remaining is likely to be awarded in the coming years. UAE has planned investment of 40 USD 8.4 bn, while USD 5.2 bn worth of USD bn 27 29 projects has been awarded. Qatar is the third 18 17 20 14 14 largest market in the GCC with planned 7 7 investment of USD 6.9 bn. 0 • In 2011 so far, the total value of projects Bahrain Kuwait Oman Qatar Saudi UAE awarded in utility was USD 18.3 bn in the Arabia GCC (refer to Exhibit 39). Out of this, USD Sum of Original Budget Sum of Revised Budget

10.8 bn worth of projects was awarded in Source: MEED Projects 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 Exhibit 39: Projects awarded in 2011 (USD bn) UAE.

• In the GCC, Qatar is well placed in terms of meeting the rising demand in the near future. Bahrain 2.1 0.4 The government is investing in the power 2.7 sector but in phases to ensure that the there is Kuwait no excess capacity. Qatar as well as the other GCC nations faces the problem of high 1.9 Oman consumption of electricity compared to the global averages. One of the main factors 0.5 Qatar could be the subsidies provided by the Saudi Arabia government of Qatar on the cost of power and 10.8 water in the country. Electricity and water is UAE free of cost to the nationals, which accounts for around 13% of total population.

• Qatar is among the top countries in GCC in Source: MEED Projects promoting Public Private Partnerships (PPPs) in energy and utilities sector. The drive to • Qatar is planning to privatize the transmission increase private-sector involvement in the and distribution segment, which would country stepped up in 2000, with the formation increase the transparency and efficiency of Qatar General Electricity and Water within the sector. In the past 20 years, QEWC Corporation (QEWC). In Qatar, the power has continued to expand its production sector plants are owned and operated by capacity through fully and jointly owned plants. QEWC. The company is also responsible for In 3Q 11, the company reached electricity meeting the consumption needs of Qatar. The generation capacity of 5,578 MW and water- power-generation segment of QEWC’s desalination capacity of 265 million imperial business is privatized. However, it sells its gallons per day (MIGD), representing more products through long-term power and water than 60% and 70% of Qatar’s total power and purchase Agreements (PWPAs) to Kahramaa, water production capacities, respectively. which is fully owned by the Qatari government. Kahramaa is the Qatari utilities

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• In 2011, Qatar commissioned the USD 3.9 bn expected to increase by 24% from current Ras Girtas power plant, which is expected to levels to reach 325 MIGD by the end of 2012. be one of the major power generation plants in Exhibit 40: Value of investment in power sector the country located in Ras Laffan Industrial City. The plant is expected to produce 2,730 1.8 1.7 MW of electricity and 286,404 m3/d of desalinated water. Qatar holds 60% of the 1.5 1.4 plant which is divided between QEWC (45%) and Qatar Petroleum (15%) and rest 40% is 1.2 being held by Ras Qatar Energy Company. It is a 25 year contract between Ras Qatar and 0.9 QEWC, according to which Ras Qatar will USD bn supply its production to QEWC which in turn 0.6 will use it to supply to the local network or 0.4 externally in the context of the GCC Electricity 0.3 0.2 Link-up System. 0.0 • The total planned investment in power sector 2008 2009 2010 2011

is around USD 9.0 bn. Total value of projects awarded was USD 3.7 bn since 2008, out of Source: MEED Projects which USD 3.1 bn was awarded in 2008 and 2009. In 2011, three projects were awarded Exhibit 41: Investment in Qatar water sector with a total value of USD 422 mn. The value of 1.6 1.5 projects awarded accounted for around 6% of the total value of projects awarded in Qatar. 1.4 There were a total of 19 projects awarded in 1.2 1.2 the power sector compared to 338 projects in Qatar. 1.0 0.8 • The total investment in the power sector 0.6

during 2010 and 2011 (so far) has remained USD bn 0.6 0.4 subdued especially as the major capacity is 0.4 expected to come online in 2011. Power 0.1 sector investments will continue to remain 0.2 subdued as Qatar is well placed in terms of 0.0 meeting the demand requirements. The 2007 2008 2009 2010 2011 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 Source: MEED Projects members of the GCC through Kahramaa, especially Sharjah and Kuwait as they are • The Kahramaa has invested in water storage experiencing shortages. This process may be construction activity, undertaking a USD 2.75 facilitated by the completion of the GCC bn reservoir project capable of holding seven Interconnection Power Grid. Qatar has already days' worth of fresh water as a backup for completed the first phase of this project with desalinated water supply. The 1.9 bn gallon the remaining two phases set to conclude this facility will include a network of reservoirs year. connected by a 183 km, 2.5 m-wide pipeline linking the Ras Laffan desalination facility in • In Qatar, more than 75% of the water the country’s north and the Ras Abu Fonts requirement is dependent on the supply of plant in the south. Treated wastewater desalinated water. The average per capita contribution to the water supply is expected to consumption is estimated at 310 liters per rise from 0.05 bn cubic meters per year in person per day. Construction activity 2011 to 0.065 bn cubic meters per year by (preparation for World cup 2022) and the 2015. Ensuring that more and more water in agricultural sector accounted for more than the country is re-used, the government of 70% of water demand in Qatar. Qatar has Qatar has formed a joint venture with minimal groundwater reserves with an Singapore’s Darco Water Technologies to average rainfall of about 75 millimeters a year. build a USD 5 bn wastewater recycling plant Therefore, it is more than 99% reliant on for serving the small towns and villages of desalination to meet its domestic demand. Qatar. The Public Works Authority (PWA) is The desalination capacity in the region is

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responsible for the waste water and drainage projects in the country. • Kahramaa has allocated USD 4.3 bn for two • The total planned investment in water sector is main pilot projects. The first, a water around USD 6.9 bn, which has been revised production technology independent of power upwards from USD 5.2 bn. Total value of expected to be operational by 2012, will add projects awarded was USD 3.8 bn since 2008. 0.05 mn m3/d capacity to the system. The In 2011, three projects were awarded with a second is for a reservoir with 8,000 meter total value of USD 362 mn. The expected cube holding capacity to service the West Bay investment in water sector is around USD 3 bn and Airport area in Doha. in the next decade.

Timeline: Utilities Projects

QEWC / KAHRAMAA - RasLaffan IWPP Expansion Project Value: USD 3.0 bn

Completion Date: Q3-14 Capacity: 235 mmgpd

2012 2013 2014 2015 2016

Qatar Transmission Phase KAHRAMAA - Facility D VIII IWPP Project Value: USD 2.8 bn Project Value: USD 2.0 bn Completion Date: Q3-12 Completion Date: Q4-15 Capacity: 60 mmgpd Qatar Transmission Phase IX KAHRAMAA - Water Project Value: USD 2.0 bn Security Mega Reservoirs Completion Date: Q1-12 Project Value: USD 2.0 bn Completion Date: Q4-15 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

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10. Building Materials

the construction will come from infrastructure 10.1 Cement and real estate sector, where cement sector is the direct beneficiary. • The cement industry has undergone

significant expansion during the last few years • on the back of massive investments in the Qatar’s contribution to GCC production has construction sector. The cement sector is the increased from 4.9% in 2007 to 6.2% in 2010. biggest beneficiary of the construction We believe that this is likely to increase further spending in general and real estate sector in as the companies gear to meet the rising particular. The demand for cement in GCC demand in the next five years. Qatar’s current countries has given an entry option to new production capacity stands at 6.2 mt. players in the region. In 2005, the region produced 48 mt of cement which further increased to 85 mt in 2010. Exhibit 42: World Cement Production 3,500 3,300 3.0% • 3,040 The two major cement producers in the region 2,850 3,000 2,810 are Saudi Arabia and UAE. The UAE 2,610 2.6% registered a CAGR growth of 16.6% from 11 2,500 2.6% mt in 2006 to 20.3 mt in 2010 (refer to Exhibit 2,000 2.2% 43), which is the highest in the region. The 2.2% country’s strong growth in production was MT 1,500 1.9% 1.8% driven by massive investment in construction 1,000 1.8% 1.8% during 2003 to 2008. Since then the country 1.4% has witnessed the highest number of projects 500 on hold or cancelled due to the overall liquidity 0 1.0% crisis, which was led by the global recession. 2006 2007 2008 2009 2010 Saudi Arabia is the largest producer of cement in the GCC. World Production GCC Production as % of World

Source: USGS • 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 Exhibit 43: Cement production in the GCC was on the back of massive public spending in 54.0 50.8 the construction sector, especially the real estate sector. 45.0 40.0 36.0 • Qatar is the third largest cement market in the 27.0 GCC in terms of both consumption and 20.3 MT production capacity. Historically, the cement 18.0 16.0 production in Qatar was below the consumption and the excess demand was 9.0 4.2 5.3 2.0 4.0 5.1 accommodated by importing from Saudi 0.8 1.0 2.5 - Arabia. Qatar National Cement Company (43% owned by Government of Qatar) was the Bahrain Kuwait Oman Saudi UAE Qatar Arabia only cement company in Qatar up until 2010, 2009 2010 which enjoyed the monopoly in the market. But since 2010, two new companies entered Source: USGS the cement market due to capitalize on the construction activity, namely Al Khalij and Al • Qatar National Cement Company (QNCC) is Jaber Cement Industries. the largest cement producer with a production capacity of 4.4 mt and a market share of • The production of cement has increased over around 70%. QNCC also announced that it is the years as the companies gear up for the going to increase it cement capacity by 0.93 ongoing construction activity. Currently, the mtpa to 5.36 mtpa in the coming years. Al companies are planning to further expand Khalij and Al Jaber have a market share of their production to prepare for the massive 24% and 5% respectively in the domestic investment in construction sector. Majority of market.

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• Cement prices have been volatile in the GCC, Exhibit 44: Qatar Cement Production especially in the UAE. However, the cement price in Qatar has been cement as it is 6.4 controlled by the government. Going forward, 5.6 we do not expect any volatility in the cement price and believe that it will continue to remain 4.8 stable at current levels. 4.0

3.2 • The current production capacity of cement in MT 6.2 5.3 Qatar is enough to absorb the demand. Going 2.4 4.2 forward, we believe that cement consumption 1.6 3.5 will grow at a CAGR of around 12% from 2011 2.5 to 2015 (refer to Exhibit 45). In our view, 0.8 majority of the projects that are under 0.0 construction or planned will be completed by 2007 2008 2009 2010 Current the end of 2015.

Source: USGS • Based on that assumption, we have forecasted the cement consumption in Qatar. Exhibit 45: Qatar Cement Consumption We believe that the consumption will be at its Forecast peak in the years 2013 and 2014. Qatari 16.0 15.3 cement companies are unlikely to match this 14.2 demand, which means that the excess demand will be imported from Saudi Arabia 12.2 and UAE. The outlook on cement sector in 12.0 Qatar is positive on the massive investment in the construction sector backed by strong 8.0 macroeconomic fundamentals. MT 5.5 5.5

4.0

0.0 2011 2012 2013 2014 2015

Source: Commercialbank Capital Research, ConstructionWeek

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10.2 Steel Exhibit 46: GCC Steel Production (‘000 MT)

• The global steel industry has witnessed a 1,500 1,417 1.0% 1,347 1,329 boom and bust in last few years. In last five 1,247 1,232 years, world steel production grew at a CAGR 1,200 1,136 0.8% of 2.1%, while the GCC grew by 9% in 2010. The contribution of GCC to the world has 900 0.6% remained same for the last four years (refer to Exhibit 46), indicating that the region’s 0.5% 0.5% 600 0.5% 0.5% 0.4% capacity expansion is line with global 0.4% 0.4% standards. 300 0.2%

• In the GCC, there are 18 steel companies, 0 0.0% engaged in production of raw steel and 2006 2007 2008 2009 2010 Sep-11 finished steel products. Steel consumption throughout the GCC region has increased World GCC as % of World

significantly underpinned by massive investment in the construction sector. Source: MEED Projects Exhibit 47: GCC steel production (‘000 MT) • Saudi Arabia is the largest market in not only GCC but the MENA region. Saudi Arabia’s 6,000 5,015 Hadeed is the world’s 40th largest producer of 4,690 steel with a production of around 5.0 mt.GCC 3,959 countries will continue to remain a major 4,000 consumer of steel products, which constitute 60.0% of the estimated demand as these 1,970 2,000 1,503 countries continue to invest in its infrastructure 1,448 and petrochemical sector to sustain economic 90 90 90 growth. 0

Qatar Saudi Arabia UAE • In the GCC, Qatar is witnessing the fastest growth in steel production during the last four 2009 2010 Sep-11 years. The steel production capacity in Qatar grew at a CAGR of 15%, while it grew by 5.9% Source: World Steel Association in the GCC (UAE, Saudi Arabia and UAE as shown in Exhibit 48). Qatar is increasing its Exhibit 48: Steel Production in Qatar (‘000 MT) production capacity to meet the rising demand 2,000 1,970 35% underpinned by the planned investments in the next decade. 1,503 1,600 1,406 1,448 30% • Qatar Steel, which is a wholly owned 1,147 1,200 27.8% 25% subsidiary of Industries Qatar (70% owned by 27.1% Government of Qatar), has emerged as one of 22.8% 23.2% the biggest players in MENA region with an 800 20% annual production capacity of 2 mt per year. It 19.5% is the second largest steel producer in the 400 15% GCC, after Saudi Arabia Hadeed. 0 10% • Qatar Steel plans to enter new markets such 2007 2008 2009 2010 Sep-11 as Egypt, Yemen and the Far East (Korea, Qatar Qatar % of GCC

China, and Indonesia). The company has decided to expand its steel making capacity by Source: MEED Projects 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.

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10.3 Aluminum the biggest markets for aluminum products in the region. • GCC aluminum sector has become a major non-oil industry sector and contributor to the • The total production of aluminum is likely to economic growth. Currently, the GCC increase by 8.4% annually till 2014, which will produces 7% of the world’s global production take the total production to 4.2 mt. The of aluminum (refer to Exhibit 50). The addition demand for aluminum products in the of new smelters and expansions in the construction sector is expected to increase at pipeline, the region’s production could reach 9 a CAGR of 9%, which means that GCC will mn metric tons or 13% of global supply by the continue to import to meet the excess demand year 2020. Currently, the GCC building and on the back of massive investment plans in construction industry consumes up to 400,000 the construction sector. tons of aluminum annually, making it one of 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 Exhibit 50: Aluminum Production in GCC (‘000 grow at a CAGR of 12% between 2010 and MT) 2014, faster in the GCC region. We remain optimistic on Qatar Aluminum sector and 45,000 40,752 8.0% 38,044 39,584 believe that it will continue to witness strong 36,856 7.0% demand on the back of massive investment 36,000 33,864 6.9% 6.0% plans in Qatar as it prepares for the World Cup 6.0% 2022. 27,000 5.0% 5.1% 4.6% 4.7% 4.0% • Qatar Aluminum (Qatalum) is a 50-50 joint 18,000 3.0% 2.0% venture between Qatar Petroleum and the 9,000 Norwegian company Hydro Aluminum. The 1.0% plant has a production capacity of 585,000 mt 0 0.0% per year. Qatalum’s complex facilities include 2006 2007 2008 2009 2010 a carbon plant, port and storage facilities, as well as a captive power plant. The company is World Production GCC % of WorldGCC planning to increase the production capacity and export to all countries as company does not have a specific quota. Source: MEED Projects

• Emirate Aluminum (EMAL) is a 50-50 JV • Dubai Aluminum Company Limited (DUBAL) is between DUBAL and Mubadala Development one of the largest industrial companies in the Company. EMAL is a green-field smelter UAE, located in Jebel Ali. The company was development at Al Taweelah, Abu Dhabi. established by Investment Corporation of Commissioning of EMAL Phase 1 began in Dubai in the year 1975. DUBAL is currently December 2009 and was completed by ranked as the 7th largest global producer in December 2010. The company’s current the industry with a current production capacity production capacity is 750,000 tons per year. of 980,000 tons per annum by the end of The company has USD 4.5 bn expansion 2010. plans, which will almost double its capacity to 1.3 mt per year.

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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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