DOHA: Even as major construction projects in Qatar remain unscathed by the global financial crisis, a lull in the market has triggered concern among firms operating in this sector.
Prices of construction materials have started falling thanks to dwindling demand in the market. At the same time, several trading, contracting and maintenance companies have been hit, as investors have become choosy and the demand for real estate properties has plummeted.
Industry sources say ongoing projects, particularly those backed by the government, are not likely to be stalled by the financial crisis. However, private projects could be hit, with banks becoming more prudent in issuing loans. Investor confidence in the real estate sector remains shaken, as elsewhere in the world, which should also have a negative impact on the industry, at least until the market shows signs of recovery.
"The impact of the crisis in Qatar comes from a fear of what would happen next, rather than from real economic factors. This fear has already caused a lull in the market. Trading companies are perhaps the worst hit due to a fall in demand for construction materials. Many traders have stocked large quantities of materials in view of the construction boom. They would incur losses due to a lull in the market," said a senior engineer working with a contracting company.
Sources from a trading company dealing in pipes, fittings and other building accessories told this newspaper that the demand for such materials had already fallen after the crisis struck. "The number of our customers has dwindled suddenly. We are also facing difficulty in getting payments from those who already made purchases on credit. Suppliers have not reduced the prices so far, but they are expected to fall as soon as the existing stocks in the market run out," said a trader.
An official from a private maintenance company said even major government-backed establishments and institutions were cutting their expenses on maintenance works as a fallout of the crisis.
"It is now easy to get the materials needed for maintenance works on credit. We would also have benefited from the falling prices. But our clients have started cutting down their maintenance expenditure," he said.
An engineer from a contracting company said prices of major construction materials like cement, steel and copper had fallen over the past two months. "Sand and cement bricks are the two items that have not seen a drop in prices so far. This is probably due to a shortage in local supply," he said.
There are also contractors who stand to gain from this scenario -- those who had taken up projects and saw a sharp rise in the prices of construction materials.
"No wonder if construction activities in the country become more hectic in the coming few months, as all the contractors who have pending projects would rush to finish their work, taking advantage of the favourable market situation," said a contractor.