There are numerous large scale construction projects taking place in Qatar in preparation for the World Cup. What will be the most significant impact of these projects on Qatar’s construction sector?
AZEEM: While many new stadiums are being built in preparation for the World Cup, the focus cannot be on stadiums alone. The entire infrastructure here must be revamped. A metro system is required to link all of the stadiums and many hotels and restaurants are required to accommodate the spectators and officials. The construction teams who come will require schools, clinics, hospitals and other accommodations for their families. So it is a general, overall, overwhelming requirement for the infrastructure. We must focus on all of this. We will also see a huge growth in the project sites, in the support teams related to the project, and the direct people involved in the project. So there will be an overall impact across the board that will impact the construction industry.
How will this new, more experienced, construction sector be impacted after the World Cup?
AZEEM: When you have a huge buildup of construction, like during the Asian Games, there will be a decline unless the government sustains the growth. This must be sustained through population growth. Unless there is a vision to sustain the population growth and keep people here, there is going to be a decline. Most foreign companies who come here aim to work on the project and then to return to their nations. The local industry will definitely get a boost in technology and in constructability but there should be projects after that to sustain these companies. If not, when another major event comes up again, we will have to build from scratch. Fortunately for Qatar, we have the 2030 vision which will go beyond the World Cup. The 2030 vision was in place before the World Cup and that should sustain the construction industry if it is implemented.
How does the volatility of the aluminum and steel markets impact business for you?
AZEEM: The steel and aluminum industry is very volatile and depends on a lot of factors. There is a global factor which is based on the demands of different countries and there is a local factor. The demand for steel and aluminum in this region will increase because it is one of the basic components for building infrastructure. There needs to be a sort of a plan to approach this. If enough notice is given to manufacturers, they can stock these products; but that comes at a price. The products can be bought and stocked locally which can control the market. If nothing is done, inflation will rise, most of the projects that we have here will be on a lump sum basis and contractors won’t be able to perform. There is a foreseen inflation based on previous trends. In your contingency, you plan for 5 or 7% but not a 40 or 60% increase. So clients need to be kind of fair in their approach on inflation; such that maybe contractors will neither earn nor lose money. The interest of both of the parties is to complete the project. If one party tries to take advantage of the other party, then the project does not get done. There must be a compromise so that neither party wins or loses, but it is something in between. So we need to sort of manage the situation to prevent such instances. We know how much steel is in demand here; maybe not by specific amount, but in general, we know. The basic, raw materials can be reserved for the country at a premium, but in the long run we gain. As the market goes up, you’re protected. So there are some protective measures. If these are not used, you will have a situation where there is a shortage of material itself. Even if you want to pay a premium, the material is unavailable. So that is what will really impact the construction industry and that is not where we want to be.
In what ways will increased smelting capacity in the region change business?
AZEEM: If you have increased capacity of local steel producers in the region, it is definitely going to be a bonus. Why? Because local producers know the region, they know the market, and they can plan the production based on that. And at the same time, there are other costs associated with the material. Transportation is a big cost and that can be minimized. Most steel comes from Europe, the former Soviet Bloc, Japan and India. But 2 months are required to move these materials by ship. So, if you have a situation where there is additional demand; by the time you can cope with that demand there has been a 2 months delay. This is substantial for a project. So if you have a regional player, Saudi has a lot of steel and Turkey has a few steel factories. Qatar has a small one. So if they gear up to the demand in Qatar and Saudi, which are the main boomers in this part of the world, it will definitely be an added advantage.
What more can be done to improve sustainability in the construction sector?
AZEEM: We should promote local industry. Most basic material required for construction, such as sheet rock or drywall, or safety equipment is imported into Qatar. So the government should help or promote the local entrepreneurs to build this kind of infrastructure because, again, there were these instances earlier where sheetrock was not available on the market. We had to put projects on hold because we had to wait for things to come from Saudi or Kuwait or from further developed countries. There should be an emphasis on developing the local market and the local industry. And that is a part of sustainability. We cannot keep on importing things and as you grow, as in Vision 2030, we need to be sustainable. Sustainability comes from having local industries which helps to reduce carbon footprints. Your transportation is reduced and you’re supporting the local economy. You’re giving employment to the local people so that is an area where there can be a drastic improvement.
While many new stadiums are being built in preparation for the World Cup, the focus cannot be on stadiums alone. The entire infrastructure here must be revamped.
To what extent have green building practices penetrated the market?
AZEEM: Green building initiatives have been pretty well adapted in Qatar; maybe not as much as it should be compared to some countries, but I wouldn’t complain as there is a huge development and emphasis on green building. If you look at the Lusail development; all of the products specified in the design are complying with the green requirements. The Msheireb development is also a major green project as a lot of green products have been specified. There is a general requirement and a general awareness but I think that is limited to the government and semi-government projects. In the private sector I do not see that sort of emphasis, primarily because the cost-benefit ratio is not there or has not been highlighted. In energy stricken countries where there is a lot of demand for energy and it is expensive, green building initiatives are more relevant and are adopted by the people. In a country like Qatar, where the energy is not that expensive, the cost of setting up a solar panel or a windmill or to have special caulking on the windows to save energy does not really offset the savings. The initiatives here are mostly because of the social responsibility and the response within the organization. To the commercial sector, this is not a major factor. They mainly look at profits and margins. So there should be some initiatives, green initiatives can become more prominent with some government regulations or support to the real estate owners like subsidies for going green. In general there are a lot of green initiatives from the Qatar Green Building Council, there are a lot of seminars and other things to bring awareness to the general public and, as a company, we also promote a lot of green products and we represent a lot of green products. We also feel a responsibility to contribute to this initiative and we work closely with both the Qatar Green Building Council and also the U.S. Green Building council.
What are the key human resources challenges facing the construction sector?
AZEEM: The boom in construction will definitely require a lot of manpower resources or human resources. This growth will require people with lots of experience from engineers, architects, and both skilled and unskilled labor. There needs to be a focused effort on bringing these skills into the country. Many countries, such as India, have these resources. So there needs to be a policy change or the policy needs to be aligned to allow the companies to be able to import this kind of labor. That is a key requirement. A company’s ability to meet deadlines and costs will be based on its most important resource: its people. So, if human resources are not developed, there is definitely going to be an impact on the efficiency of this construction.