Qatar to Award $3 Billion of Construction Contracts for New World Cup City

Lusail Real Estate Development Co., the state-owned Qatari company building a new city in time for the 2022 soccer World Cup, plans to award about $3 billion worth of contracts for roads and infrastructure over the next year.

“Our strategy is to go for an open bid,” Chief Executive Officer Essa Mohammed Ali Kaldari said in an interview. “We would like to give an opportunity to many companies.”

Lusail City, which will have 200,000 residents and capacity to accommodate twice that many people, is scheduled to be completed by 2019, Kaldari said. The city will include manmade islands, an entertainment district, an office park for energy companies, a golf course and five stadiums. The World Cup final will be held in a venue north of the city, the CEO said.

The largest of the projects to be awarded in the next year will be for construction of the Al Khor Highway, running along Lusail City’s western border, Kaldari said. He didn’t provide details of other contracts to be given out.

Hochtief AG, Germany’s biggest construction company, started a joint venture with Lusail Real Estate in May to provide planning and construction services for the new city. The company plans to bid for other contracts.

“We are interested in infrastructure projects and building projects as well,” Hochtief spokesman Bernd Puetter said in a telephone interview. “We will be bidding.”

Qatar’s sovereign wealth fund acquired a 9.1 percent stake in Hochtief in December. The German company is building a commercial area for Qatari developer Barwa Real Estate Co. Spain’s Actividades de Construccion & Servisios SA said this month it controls 33.5 percent of Hochtief as it pursues a hostile takeover of the company.

Hotels, Railways

Qatar will spend about $65 billion getting ready for the World Cup, awarded to the country in December, Bank of America Merrill Lynch estimates. The country plans to double the number of hotel and apartment rooms in the country, build a new rail network, construct nine World Cup stadiums and refurbish three existing ones. Plans to build Lusail City were included in plans shown in September to inspectors from FIFA, world soccer’s governing body.

“Before, people were beginning to come to us for building permits and concept design approval. Things were going in a normal manner,” Kaldari said. “Now it’s starting to speed up because people know that they need to deliver.”

Private Developers

Lusail City’s infrastructure will cost about $5 billion and will be finished by 2015, Kaldari said. About 75 percent of the city’s land has been sold to private developers, mostly from the Persian Gulf. The companies are required to complete their projects within four years of receiving the land, Kaldari said.

Mourjan Marinas is developing the Lusail marina, and Qatar Real Estate Development Co. plans to construct a 1 billion riyal ($275 million) mall.

Qatar, a country of 1.6 million, is using revenue from the world’s third-biggest gas reserves to invest in infrastructure, research centers and universities. The country’s government forecasts that its gross domestic product will grow 21 percent this year, after a 16 percent increase in 2010. The population may rise to 3 million by 2020, Kaldari said, citing government projections.

Lusail Real Estate is part of Qatari Diar Real Estate Investment Co., the development arm of Qatar’s sovereign wealth fund. Lusail city will be financed through Diar, Kaldari said.

To contact the reporter on this story: in Doha at rtuttle@bloomberg.net; Zainab Fattah in Dubai at zfattah@bloomberg.net

To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net

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