VOL. 1, ISSUE 1
JULY 31, 2014
The Stream A weekly update of the top business news and developments in Qatar brought to you by
2022 World Cup: addressing overcapacity
Vodafone leads Qatari telecom growth
Diversification efforts begin to show progress
REPORT: ‘Innovating SME Banking in the GCC’ by de Kerros
2022 World Cup: addressing overcapacity In recent weeks, Qatar has gotten quite a lot of heat over the economic viability of hosting the 2022 World Cup. According to the IMF, the economy could be driven into overcapacity meaning that hotel rooms, stadia, and related infrastructure could end up being empty investments as seen in past host nations. Construction on the first of eight stadiums has already begun while an estimated 45,000 - 60,000 additional hotel rooms will be needed to accommodate incoming fans. However, there is disagreement among experts, analysts at Bank of America Merrill Lynch say direct spending on hosting the tournament is relatively small amounting to $16 billion or under 1.5% of annual GDP over the next six years—a manageable loss. In recent weeks, one innovative solution to addressing overcapacity has come to our attention. Baltic Floating Structures, a water construction company, specializes in building aquatic villas, restaurants, and even hotels on controlled water locations. If demand dips these structures can be relocated making them a safe real estate investment. Given the abundance of unused coastline in Doha, aquatic hospitality developments may be an ideal solution to meet temporary capacity needs. For the full text click here
Vodafone leads Qatari telecom growth Ooredoo Group, the international arm behind the largest local telecom, continues to perform well reporting a QR 1.7 billion profit this year. Ooredoo’s strong performance in Qatar, Oman, and Algeria has offset losses in other markets including setup costs to launch in Myanmar. Meanwhile, rival telecom Vodafone has done exceptionally well in the local market achieving 27% annual growth. Over the past four years, Vodafone has rapidly eroded Ooredoo’s market share capturing 33.8% of the local user base as of this financial year. This can be attributed to the successful combination of its aggressive pricing, social media marketing campaigns, the launch of the high-end RED plans, and most recently the deployment of its own 4G network. For the full text click here
Sammy Hasan sfh27@georgetown.edu
Diversification efforts begin to show progress Over the past few years, we’ve seen Qatari authorities increasingly affirm their commitment to realizing economic diversification. But how far have those efforts really come? The first true step towards economic diversification was seen in 2011 with the government mandated moratorium on gas extraction in the North Field. However, it’s no secret that the numerous SME support initiatives, which aim to foster a robust private sector, are works in progress. Yet there are signs of improvement with hydrocarbonrelated growth slowing from a high of 28.9% to 0.1% over the past three years. Meanwhile, we’ve seen accelerating growth particularly in the construction and financial services industries. In fact, QNB Group predicts the non-hydrocarbon sector to continue double-digit growth (11.5%) over the next two years. The real question is: can Qatar maintain the momentum towards sustainable development when World Cup related projects near completion? For the full text click here
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