Photo credit: Maher Najm
The escalating demand for heavy equipment in Saudi Arabia is being fuelled by the growth of the construction and infrastructure sectors, expansion of public transport systems, construction of commercial and recreational properties along with the rising growth in the metal and mining sectors. However, there was a recess in the Saudi Arabian heavy equipment market during the years 2015 and 2016 as a result of the declining construction sector. This decline was an effect of lesser spending on the part of the government due to dropping prices of oil which led to the cease of several infrastructural projects.
Heavy equipment market forecast
Research conducted by various organizations and experts concludes that the heavy equipment market in Saudi Arabia is likely to grow at a CAGR of 3.1% between the years 2017 and 2022. Earthmoving equipment market enjoyed the largest share in the overall market in 2016, followed by material handling equipment and cranes.
Amongst all the other sectors, the construction sector is the main propeller of the heavy equipment market in the country and it is expected to continue to have the most significant influence in the next three years with $195.4 billion worth of planned construction to take place during this time.
The thriving real estate sector, along with the increasing commercial infrastructure initiatives, is expected to boost the construction market in Saudi Arabia by 32-35% every year.
Earthmoving equipment market in Saudi Arabia
The heavy machinery market is considered to have been enjoying the largest piece of the overall heavy equipment market pie. By the end of the year 2020, experts claim that this market is expected to have grown at an incredible CAGR of around 11%. The demand for equipment will be mainly driven by sustained economic growth along with consistent growth in the construction sector from major regions including Riyadh, Madinah, Makkah and Tabuk. The expansion of new railway lines will also increase the demand for this equipment along with new development projects such as in NEOM Tabuk and Al-Ula.
The increasing demand for energy-efficient equipment is also expected to result in a hike in the earthmoving equipment market in Saudi Arabia. In this country, initiatives are being taken by various companies to adopt sustainable means of construction like green building construction. To do so, companies would have to reduce emissions and pollution throughout the lifespan of the project. This, in turn, will increase the need and demand for energy-efficient equipment which would drive manufacturers to develop energy-efficient earth moving equipment.
Heavy equipment rental market in Saudi Arabia
While mentioning the heavy equipment market of Saudi Arabia, it's hard to overlook the contributions of the heavy equipment rental market in this regard. Surprisingly, the heavy equipment rental market in Saudi Arabia is expected to surpass the $1 billion mark by 2023. In the near future, this market is expected to have surged at a CAGR of 12% by the year 2020 from the year 2014. The factors deemed to be responsible for this breakthrough are the advancement of the construction sector in the country, increasing government expenditure through the expansion of budget and the rise in the number of real estate and residential projects.
Moreover, the growing demand for heavy equipment from unavoidable sectors like oil, gas and mining is further anticipated to promote the heavy equipment rental market by the year 2023.
All in all, the heavy equipment market in Saudi Arabia exhibits a very high potential for tremendous growth. It is also a very competitive market place due to the presence of several massive vendors. And the ultimate contributors to the growth of this market in the upcoming years are the increasing investment in infrastructure projects and the initiatives of the government to develop transport systems.