Qatar’s Construction Sector at its Most Optimistic for Three Years
The index also reveals that the Finance, Real Estate & Business Services sector has recorded its second highest optimism score since the first quarter of 2011.Sponsored by the Qatar Financial Centre Authority (QFC Authority) in partnership with the Qatar Businessmen Association (QBA), the survey also reveals that the score for the Finance, Real Estate & Business Services sector was 18 points higher in Q2 2014 than in Q2 2013.
Deputy Chief Executive Officer of the QFC Authority, Yousef Mohammed Al Jaida, said:
This latest BOI Survey shows that Qatar’s Finance, Real Estate & Business Services sector continues to strengthen. No fewer than 64% of respondents in the sector expect higher profits in the second quarter of 2014. Construction is emerging as a major force behind the sector’s growth as well as boosting Qatar’s economy more generally. These trends are further evidence of the extent to which the economy is diversifying.’
The sector’s rise stems from the strong Qatari economy, higher demand for insurance for new construction and an increase in savings and investment by a growing population. Within the Finance, Real Estate & Business Services sector, the outlook for finance and insurance firms was stronger than for real estate and business services firms on volumes, new orders and profits.
On behalf of the QBA, HE Sheikh Mohammed bin Faisal Al Thani said:
Qatar’s private sector is committed to playing a productive and entrepreneurial role in the development of our nation’s economy, as set out in the Qatar National Vision 2030, under the wise guidance of HH The Emir Sheikh Tamim bin-Hamad Al Thani, the Emir of the State of Qatar. It is clear from the BOI Survey for Q2 2014 that, on measures such as investment, employment and profitability, Qatar’s businesses are fulfilling that role.’
Real Estate and Business Services firms, however, were more optimistic about selling prices and hiring. These firms are benefitting from the expected rise in construction activity, which is pushing up demand for related services such as architecture and engineering consulting, building material testing and manpower supply. Moreover, the growing number of companies establishing offices in Qatar is increasing the optimism of business services firms dealing with corporates in areas such as IT, advertising and auditing.
In the Construction sector, optimism is at its highest for three years and the strongest in the non-hydrocarbon sector. The BOI score of 54 for Q2 2014 was three points up from Q1 2014 and 13 points up from Q2 2013. Higher scores for selling prices, net profits and hiring drove the overall result for Q2 2014.
Commenting on the findings of the most recent survey, Prashant Kumar, Associate Director, Dun and Bradstreet South Asia Middle East Ltd., said:
The BOI in Q2 2014 for the non-hydrocarbon sector has improved by 7 points on a year-on-year basis, reflecting an increasing optimism amongst the business community in Qatar. Construction is observed to be the most optimistic as reflected by the fact that the sector has the highest BOI score as well as the highest proportion (49%) of businesses planning to invest in business expansion. Positive expectations for the Construction sector are driving the optimism amongst businesses in other associated sectors, with around 65% respondents in the non-hydrocarbon sector expecting an increase in sales volumes in the next quarter.’
The index for the consolidated non-hydrocarbon sector was 47 points, which was up 7 points year-on-year but showed a decline of 2 points from Q1 2014. The decline was mainly due to seasonal factors, specifically the impact of the coming summer season on sectors such as Trade & Hospitality and related services, such as event management.
Nevertheless, underlying trends in the non-hydrocarbon sector remain firm, the survey found. Of respondents in the non-hydrocarbon sector, 59% expect higher net profits, 65% expect higher sales and 67% expect higher orders in Q2 2014.
Comparing large companies and SMEs, the survey concludes that large companies are more confident about sales volumes and profitability than SMEs, but the latter are more optimistic about new orders, selling prices and employment.