GCC ​Construction Equipment Market-Strategic Assessment & Forecast 2023-2029

MARKET INSIGHTS

The GCC construction equipment market is expected to reach 98.5 thousand units by 2029, growing at a CAGR of 5.42%. Countries across GCC are heavily investing in infrastructure development projects, including expanding airports, railway lines, roadways, and highways across the region. A surge in infrastructure development projects is expected to drive the GCC construction equipment market during the forecast period.

KEY HIGHLIGHTS

• Earthmoving equipment accounted for the largest GCC construction equipment market share in 2022. Excavators in the earthmoving segment accounted for the largest share in 2022. Rising investment in housing, warehouse expansion, and public infrastructure projects is expected to drive the demand for excavators in the GCC construction equipment market.
• The Saudi Arabia Ministry of Transport planned road construction projects in 2022. In 2023, public infrastructure development is a major focus, and the government plans 1,000 infrastructure and road construction projects. The ministry allocated a USD 160 billion fund to transform the country and improve its transport infrastructure in 2022.
• The logistics sector witnessed a surge in investment in Saudi Arabia in 2023. For instance, Investcorp plans to invest USD 1 billion in the real estate market across Gulf Cooperation Council countries over the next five years, focusing on Saudi Arabia as the country’s logistics industry has robust growth due to the expansion of warehouses.
• In May 2022, Oman’s Public Establishment for Industrial Estates announced 30 consultancy works and infrastructure projects distributed over 11 industrial cities across the sultanate at a total cost of over USD 518 million. The company also attracted 130 industrial, commercial, and service projects in 2022.
• Oman Power and Water Procurement Company (OPWP) announced its plans to build solar and wind projects in 2023, which expects to generate 13% of electricity by 2025. The company has plans to develop a 100 MW capacity wind-based IPP at Aalan Bani Bu Ali in North Al Sharqiyah Governorate. In Duqm, on Oman’s southeast coast, OPWP has plans to develop a pair of wind IPPs with a combined capacity of around 360 MW.
• The upgradation of Dubai Transport Link aims to boost road safety, increase vehicle capacity, and cut travel times by more than half. The project ranges 8 km of Ras Al Khor Road, from the intersection of Dubai-Al Ain Road to the intersection of Sheikh Mohammed bin Zayed Road. The project includes the construction of four bridges, widening Ras Al Khor Road from three to four lanes in each direction, and creating two-lane service roads on both sides.
• The UAE launched 11 environment-friendly energy projects worth USD 43 billion in 2022. Moreover, the UAE has invested over USD 40 billion in clean energy over the last 15 years. It has plans to invest an additional USD 160 billion in clean and renewable energy sources over the next three decades.
• Kuwait’s Ministry of Public Works awarded the main construction contract for its [North] Kabd sewage treatment plant expansion by the early first quarter of 2023. The project expects to expand the Kabd sewage treatment plant and associated facilities to increase its treatment capacity by 90,000 cubic meters/day.

Increased Investment in Public Infrastructure Projects

• According to the Bahrain government, the country has recently received many foreign investments in its construction and infrastructure sector. The country’s 2021 Economic Recovery Plan stimulated the sector with 22 strategic infrastructure projects worth over USD 30 billion. Moreover, Bahrain announced investments in improving housing and public sector projects in its Kingdom’s Vision 2030 economic development strategy.
• Under the “Oman’s Vision 2040” program, the government focuses on diversifying the economy, which depends on the oil & gas sector. In 2021, the government announced 130 projects mainly enabling manufacturing, tourism, logistics, labor market, business environment, fisheries, energy, and mining sectors. The program will support the GCC construction equipment market growth during the forecast period.
• The Hamad International Airport (HIA) City Development will spread over 10 square kilometers in Qatar. It will be a township that will create a boundary between Doha City and the new Hamad International Airport. The master plan will include developing a series of 4 districts along HIA runways. The project has an estimated value of $4.4 billion.
• The Kuwait government raised USD 6.8 billion to develop the South Saad Al-Abdullah project. The project is about developing an Eco-friendly and smart city in line with international standards, spread over 64.4 square kilometers, comprising more than 30,000 housing units to accommodate 400,000 people. 
• The Saudi Arabian government has planned more than 60 projects related to water desalination and treatment, with an investment of $9.3 billion to overcome the challenges of climate change and water scarcity in 2022. In 2021, the government approved the construction of 8 independent water treatment projects, 14 independent strategic water reservoirs, and seven small industrial wastewater treatment projects.
• In 2022, Saline Water Conversion Corporation announced water treatment projects worth USD 3.4 billion in Saudi Arabia. The company planned to invest in 21 water projects expected to be completed within five-year. These projects cover seven regions: Riyadh, Makkah Al-Mukarramah, Madinah, Asir, the eastern region, Al-Baha, and the western coast region of Saudi Arabia.
• The UAE-Oman rail link was launched in Sept 2022, which will boost trade & tourism opportunities between UAE-Oman and other GCC countries. Passenger and freight lines will be developed as part of the network. The 303 km line will majorly link Sohar to Abu Dhabi. However, the government anticipates the project's growth will be sluggish with the derailed oil prices in 2023.

MARKET TRENDS & DRIVERS

GCC’s Increased Investments in Public Infrastructure to Propel the GCC Construction Equipment Market

• GCC’s construction sector is one of the fastest growing among other sectors (energy, manufacturing, logistics, and power generation), having a huge number of projects in the pipeline, including expansions to oil and gas sector production capacity, new residential and commercial real estate, upgrades to transport, power, and water systems and major industrial developments. The growing number is projected to impact the GCC construction equipment market positively.
• GCC’s construction output is majorly dependent on Saudi Arabia and UAE owing to their fastest-growing economy and massive wealth. GCC recorded contracts worth USD 100 billion in 2021, and the pipeline projects were estimated at USD 2.6 trillion in June 2022.
• Saudi’s goal ‘Vision 2030’ plans to build over 555,000 residential units, more than 275,000 hotels, 4.3 million square meters of retail space, and over 6.1 million square meters of office space by 2030.

A Surge in Renewable Energy Projects in the Region Will Propel the Demand for Material Handling Equipment

• The government of Abu Dhabi and Dubai has planned several renewable energy projects. An investment of USD 3.9 billion was made by the government in 2021 for the development of several projects in Dubai, such as 950 MW of hybrid projects, 700 MW of concentrated solar power projects, and 250 MW of photovoltaic projects.
• Qatar’s Energy Sustainability Strategy 2021 had been set to achieve various targets such as a methane intensity of 0.2% by 2025, carbon reduction intensity of 15% from upstream and 25% from the Liquefied Natural Gas (LNG) facilities by 2030, and add 2-4 GW of renewable energy by 2030.
• The Kuwaiti government planned to build a 5GW solar power complex in the north. In addition, 280 GW of solar capacity will be installed at Shagaya by 2030 with an investment of USD 20 million.

The Robust Growth in the Development of Ports to Boost the Sales of Overhead Cranes in the Region

• In July 2021, Saudi Ports Authority invited the private sector to build 8 new terminals (terminals in Jeddah Islamic Port, King Abdulaziz Port in Dammam, Ras Al-Khair Port, Jizan Port, Yanbu Commercial Port, King Fahad Industrial Port in Jubail, King Fahad Industrial Port in Yanbu, and Jubail Commercial Port)​.
• In Oct 2022, Kuwait’s transport & logistics minister Saleh Al-Jasser launched an innovative economic zone for the logistics sector in Riyadh. The logistics zone will span 3 million square meters and be strategically located to serve Africa, Asia & Europe.
• Kuwait’s Port Authority (KPA), in Mar 2023, launched the first phase of the Shuwaikh Port Redevelopment Project at USD 160 million. The project scope includes redevelopment and rehabilitation of the docks of the 1.3 km-long Shuwaikh port and maintenance work for the western dock of the port and the suspended part of dock 8.

Extensive Demand for Cranes in the GCC Construction Equipment Market in Response to Various Projects in the Pipeline
Due to the large number of active projects, domestic and international tower crane manufacturers are keenly interested in the region's construction activities. This is due to the huge demand for this equipment in the local market. For instance, the construction of the Jeddah Tower in Saudi Arabia is underway in 2022, an 826-foot-tall building structure. Furthermore, to attain its vision, the Qatari government has increased infrastructure spending such as the construction of roads, expansion and modernization of airports and ports, construction of malls and shopping centers, and building of new rail and metro lines.

Shift Towards Green Hydrogen Fuel-Based Construction Equipment to Reach Net-Zero Emissions Target
Saudi Arabia, in line with its ‘Vision 2030’, aims to achieve the goal of net-zero emissions by 2060. The country’s government is taking initiatives to develop green hydrogen fuel. For instance, in 2021, new projects in the energy sector included renewables and hydrogen fuel (USD 5 bn Helios Green Fuels hydrogen project). Moreover, Oman aims to increase green hydrogen production from 32,500 to 3.75 million tonnes annually by 2040 and from 3.5 to 8.5 million tonnes annually by 2050. Oman announced to build one of the world’s largest green hydrogen plants. The “Hydrogen-Centric Economy by 2040” program, which is the shift towards hydrogen fuel-based construction equipment, has stimulated the demand for green hydrogen fuel-based construction equipment in Oman.

INDUSTRY RESTRAINTS

GCC’s Over-Dependency on the Hydrocarbon Industry Can Impact Region’s Growth Negatively
Oil prices are volatile and can be adversely impacted by several external factors, such as fluctuations in supply and demand, political conflicts & tension among countries, and increasing global environmental concerns. Hence, overdependence on the oil and gas market will likely hamper economic independence in the long run. According to Oman government projections, energy prices are expected to remain high over half of 2023 and then gradually fall in the coming few years. Falling oil prices may drive Oman to curtail or postpone government investment, restricting the construction industry's expansion and resulting in lower demand for construction equipment.

Increasing Building Material Prices to Restrict the Sales of Construction Equipment in the Region
The copper prices in the UAE have risen tremendously post the Russia-Ukraine conflict, and the robust demand expects to keep the prices high over the next few years. Additionally, the cost of steel also showed an upward trend during 2022, and the major steel producers in the country are pushing the prices due to planned infrastructure development projects. According to Dubai Statistics, in Q1 2022, in Dubai, the Construction Cost Index 2022 went up by 2.77%, with the materials cost rising by 4.81% compared to 2021. Moreover, the tender price inflation increased by 3.5% in 2022 compared to 2021.

Skilled Labour Shortage in the Region Hampers the Pace of Construction Projects
A labor shortage in the construction & mining market can hamper ongoing projects. The construction projects can be delayed, increasing overall construction costs and reducing contractors' profit margins in the GCC construction equipment market. Saudi Arabia's labor force shortage problem is expected to hamper the sale of construction equipment in the region. Further, in a recent survey conducted in 2022 by the government in Qatar, 60% of the respondent's employers mentioned a severe skill shortage in the region. The survey highlighted a massive skill gap in the manufacturing sector. This skill gap can be attributed to labor misallocation, a skewed labor market, and rigid immigration policies.

VENDOR LANDSCAPE

• Caterpillar, Volvo CE, Komatsu, Liebherr, Hitachi Construction Equipment, and XCMG are front runners in the GCC construction equipment market. These companies have a strong market share and offer diverse sets of equipment.
• In 2019, XCMG hosted a new product release ceremony in Muscat, Oman, to introduce the new Middle East series, including cranes, truck cranes, crawler cranes, tower cranes, and aerial work platforms. 
• Manitou, CNH Industrial, Liugong, Yanmar, and Merlo SPA are niche players in the GCC construction equipment market. These companies offer low product diversification and have a strong presence in the market.
• Tadano, Terex, SDLG, Kubota, Doosan, Yongmao, and ElectroMech have low product diversification. These companies are lagging in adopting new technologies used in construction equipment.
• SANY, Kobelco, HD Hyundai Construction Equipment, JCB, and Zoomlion are emerging in the GCC construction equipment market. These companies are introducing new technologically advanced products to challenge the market share of leaders in the GCC market.