The heavy equipment market in the UAE

Posted on 19 March 20


The ripe and growing economy of the United Arab Emirates thrives with construction and building opportunities throughout the year. All year round, there remains a consistent demand for the buying, renting, or leasing of heavy equipment. And the fluctuations in this demand pattern is almost negligible. 

With Expo 2020 Dubai knocking at the doors, the construction market and its allied sectors await an exciting growth rate in the near future. Experts predict that this grand event is set to generate the highest figures in the construction sector. And it's not going to stop there. The momentum looks will continue even after this grand world fair as the nation plans to progress with several significant projects. All these factors have led to rapid growth in the demand for heavy equipment in UAE, which is expected to further increase in the coming years. 

The Statistics

As per the research conducted by Research and Markets, the heavy equipment market in UAE is expected to witness a growth CAGR of 1.8% between 2018 and 2024. 

The initiatives taken by the government of UAE (like UAE Vision 2021 and Saudi Vision 2030) are bound to trigger the growth in demand for heavy equipment in this region. Expansion of metros and airports, along with the construction of new shopping malls and hotels, are a part of these initiatives, which gives the outlook of a boost in the heavy equipment market. 

Various impending infrastructural projects also promise growth in the demand for heavy machinery and equipment, especially mobile cranes and earth moving equipment for their significant uses. 

A Summary of the Market Developments

The growth of the heavy equipment market in the UAE was quite stagnant after the year 2014 owing to the crash in the prices of crude oil. The infrastructural sector greatly influenced the demand for heavy equipment, which was severely affected during the years 2014 to 2018.

On the bright side, the recovery of the prices of crude oil, economic diversifications and government-aided infrastructural projects brighten the prospects in the heavy equipment market. Besides, the Expo 2020 Dubai has already stirred an increase in activities that require the use of heavy equipment. 

The Heavy Equipment Rental Market

Purchasing new heavy equipment often involves diverting of finances from working capital to be blocked in the form of a long-term investment. The demand for renting heavy equipment arises in an attempt to avoid investing this huge amount in new equipment and to be free of the burden of maintenance, license, taxation, and transportation expenses. Currently, the leading sectors with the largest share in the overall heavy equipment rental market are hospitality, residential, and transportation sectors, followed by oil and gas and industrial sectors. 

Increase in construction activities along with the strengthening of residential, commercial and hospitality sectors have registered significant growth in the heavy equipment rental market of UAE. And the Expo 2020 Dubai is also majorly influencing this market.

According to another research conducted by Research and Markets, the heavy equipment rental market in UAE is expected to witness a growth CAGR of 3.3% between the years 2018 and 2024. Dubai had the largest share of revenue in the country, followed by Abu Dhabi. 

The increase in the number of construction projects across the residential and commercial sectors paired with the thriving hospitality sector is expected to stir the growth of the heavy equipment rental market in the nation. 

The imminent challenges

Despite the bright side of growth and prosperity, companies engaged in heavy equipment business have a few things to be careful about. And these things are price, liquidity, and oversupply. Clients in search of in-house finance and long-term payment plans can be a significant concern in this market. Besides, with technological innovations bringing in the concept and benefits of autonomous vehicles, more responsive solutions might be needed to regain the balance. 

Despite these hurdles standing in the way, the upcoming global mega-events and initiatives from the government reaffirm the growth prospects of the heavy equipment market in UAE. A few challenges in the face of tremendous growth opportunities bring optimism in the heavy equipment market, which is bound to prosper soon. 

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