Doha ranks as second most expensive middle eastern city
Construction cost performance
Doha's ranking ↓
Tendering conditions ↓
Contractor margins ↓
Preliminaries ↓
Material cost movements ↓
Lead-in-times ↓
Construction cost performance
Doha ranks as second most expensive middle eastern city
Doha emerged as the second most expensive city for construction in the Middle East, with average cost per square meter reaching US$2,631, an increase on the 2024 average construction cost of (US$2,096 per square meter).
Tendering conditions in Doha
In our 2024 International Construction Market Survey, Doha's tendering conditions were characterised as cold, indicating a slower and less competitive market environment. However, the report highlighted that such conditions could contribute to more stable project pricing and reduced contractor margins compared to more active markets. Additionally, a slower market can be beneficial for clients, offering the potential for more controlled and predictable project costs.
Fast forward to today, tendering conditions have evolved to reflect balanced competition. A select number of contractors are bidding for projects, allowing owners to be more discerning in their selection. This balanced market fosters healthy competition, resulting in competitive pricing.
Contractor margins
The construction market in Qatar remains highly competitive, with a mix of well-established local players and international firms bidding for a limited number of large-scale projects. Following the post-World Cup slowdown, contractors have been competing more aggressively on price to secure work, leading to margin pressure across the sector. This environment has made it increasingly important for firms to differentiate themselves through technical expertise, value engineering, and efficient delivery.
Currently, contractor profit margins in Qatar typically range between 5.0 percent and 10 percent, although this can vary depending on the type and scale of the project, contractual arrangements, and prevailing market conditions. In particular, oil and gas projects in Qatar tend to have the highest profit margins, usually between 10 percent and 12 percent, due to their technical complexity, higher risk profile, and the specialised expertise required.
Preliminaries
In Qatar preliminaries typically account for around 8 percent to 15 percent of the total construction cost, depending on the natura and scale of the project. The percentage can also vary depending on client requirements (e.g. high HSE/ reporting standards), labour conditions and accommodation needs, or site conditions (access, logistics, utilities availability).
Commodity and material assessment
The government of Qatar regulates the pricing and supply of essential construction materials to control costs and ensure availability for key projects. Key raw materials, such as steel, are experiencing a surge in demand, with supply lagging behind. Global shipping costs are currently high and are expected to remain elevated, impacting tender costs in Qatar due to minimal local manufacturing. Prices for several main raw materials, including steel, concrete, and aggregate, are higher compared to neighbouring countries. The main contracting market is still developing, and the efficiencies of a mature supply chain have yet to be realised. The transient nature of the market adds to business costs and results in a loss of knowledge and skills at the management level.
Despite these challenges, there has been an increase in manufacturing capability within the country, reducing the need for imported construction materials. This aligns with Qatar's drive towards self-reliance and sustainability. For instance, the cost of structural steel has seen a significant decrease, while other materials like concrete and timber have remained stable. This shift towards local production is a positive step towards achieving a more sustainable and self-sufficient construction industry in Qatar.
Material cost movements
Procurement challenges
Qatar’s construction market has entered a period of adjustment following the completion of the World Cup, with activity slowing and overall capacity in the market reducing. This is partly due to elements of the supply chain scaling back or consolidating operations in response to shifting demand.
These changes have led to increased pressure on costs, with higher overheads and management expenses now being spread across a smaller volume of work. This is contributing to elevated preliminary tender prices, which have remained consistently high. The past year has also seen disruption across the supply chain, including delays to programme delivery, a trend that may take time to fully stabilise.
However, there is a pipeline of ongoing and emerging activity across multiple sectors, not limited to LNG. Investment in transport, tourism, and infrastructure continues to drive demand, and while the pace of construction may be slower than in recent years, it remains a key contributor to Qatar’s broader development ambitions.
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