Qatar offers best opportunities in Middle East for infrastructure investors, finds EC Harris

The firm's 'Infrastructure Investment Index' ranked 40 countries across the globe according to the ease in which lenders could secure a return on the finance they provide for large-scale infrastructure schemes within the transportation, power & utilities sectors.

The study found that the level of risk facing investors in the Middle East was comparatively low, with high levels of income per capita, low taxation and strong government support for large-scale infrastructure schemes, three of the primary factors that were helping to reduce risk and build real confidence within the investor community.

Qatar and the UAE were both placed in the top five in the final rankings, finishing in second and fourth position respectively. According to the report their willingness and ability to quickly move major projects forward, contrasted heavily with the UK and parts of Western Europe where overly high levels of regulation, bureaucracy and tax are threatening to undermine their future competitiveness.

Infrastructure Investment Index - Middle East rankings

1. Qatar (2nd globally)

2. UAE (4th)

3. Saudi Arabia (11th)

4. Egypt (34th)

The report also underlined the scale and volume of opportunities on offer across the Middle East particularly in Qatar where a major capital investment programme is already underway to help improve the country's infrastructure ahead of the 2022 FIFA World Cup™. Between now and 2022, an estimated $100bn is expected to be allocated to infrastructure projects, including many high-profile schemes such as the Doha Bay crossing, the Doha Metro system, and a major new airport development.

Alistair Kirk, Head of Infrastructure, Industry & Utilities, Middle East at EC Harris said: "The Qatari government has shown a real willingness to enter into joint venture agreements with the private finance community, to build the infrastructure needed to deliver their 2030 National Vision. Qatar offers an excellent business environment however for investors the biggest challenge is likely to come from a project delivery perspective. Securing access to the right capability within the supply chain and to the volume of materials required to deliver so many projects in such a short window, will require rigorous and early planning."

Finishing just outside the global top ten, Saudi Arabia (11th) was also deemed to be a low-risk market for infrastructure investors. Strong economic and population growth meant the demand for new assets was likely to remain high over the coming years, whilst the market also offers strong investor protection through a mature and transparent legal framework.

"Saudi Arabia has equally ambitious plans to improve its hard infrastructure particularly the rail links throughout the country and its power generation & distribution networks. We're already starting to see a flow of capital between Asian economies and markets like Iraq and Saudi Arabia, and provided the political situation remains stable this looks set to continue. However, if social unrest does become an issue funds are likely to stay within the region and just shift their focus on to safe haven markets such as the UAE or Qatar," added Kirk.

Looking beyond the Gulf, the report also highlights potential opportunities in the North Africa region particularly in markets such as Egypt and Libya as they look to rebuild large parts of their national infrastructure in the aftermath of the Arab Spring. With available capital in short supply, both countries are keen to attract foreign investment through PPP projects however Egypt's 34th place finish indicates the level of risk associated with these markets. From an investor perspective this heightens the need to carry out detailed due diligence audits before committing any capital to infrastructure schemes in these locations.