Oman Construction Equipment Market - Strategic Assessment & Forecast 2022-2028

MARKET INSIGHTS

Oman construction equipment market is expected to grow at a CAGR of 4.60% and is projected to reach $157 million by 2028 from $116 million in 2021. Oman construction equipment market was estimated at 2,662 units in 2021 and expected to reach 3,560 units by 2028, growing at a CAGR of 4.43%. The growth in construction equipment is majorly driven by government endeavors, such as Oman Vision 2040, and supporting factors such as increased budget 2022 by USD 3.3 billion and rising demand for diversifying the economy, i.e., major investments in mining and manufacturing projects.

The pandemic repercussions and recuperation of the Oman economy

Despite the government's quick response, COVID-19's proliferation wreaked havoc on Oman's economy in 2020, particularly when combined with severe drops in oil prices. In 2020, the GDP contracted by 16% (at current prices).

According to the IMF's most recent data, Oman's GDP growth (at current prices) is estimated to show a strong recovery with 27.21% in 2021, supported by the vaccine rollout and the ease of lockdown restrictions. Additionally, rising oil prices and increased development of the hydrocarbon sector will develop a backloaded rebound in GDP growth reaching ~6.5% in 2022.

The government's commitment to its diversification policy is expected to encourage non-oil sector growth in the future, particularly in the tourist and manufacturing sectors. According to the World Bank Group, Oman's GDP growth will average ~4.5% between 2022 and 2023, supported by the government's development and diversification drive. The demand for construction equipment in Oman is expected to boost due to planned investments in the tourism and manufacturing sectors and ongoing oil and gas projects.

The demand for construction equipment in Oman to increase due to water infrastructure projects

In 2021, the Ministry established 12 artificial rain stations to enhance the amount of rainfall, which will increase groundwater. Groundwater represents 83% of water sources in Oman, followed by desalination water at 10%. Surface water constitutes only 5%, while treated wastewater represents only 2%.

Oman's annual renewable water resources are estimated at 1,318 million cubic meters, and demand for these resources is increasing, particularly in the agricultural field. Hence, the government is implementing dam projects, due to which the number of dams in Oman will reach 174 by the end of 2021. The number of new permits issued in 2021 reached 1,274, including 876 for digging new water wells.

Water projects such as the creation of dams and Water Distribution Line from Al Ghubrah Pumping Station to Al Seeb, from Barka Pumping Station to Ad Dakhiliyah Governorate, Water Distribution Line to Ad Dakhiliyah Governorate, etc. would increase the demand for the construction equipment over the forecast period.

Housing requirements to drive the market

Oman's population will reach ~7.5 million by 2040, which will generate the need for housing units by then. By 2040, ~911,940 housing units would be needed to accommodate the population. Hence, the government has started to invest in housing infrastructure. In 2021, the government distributed 23,066 plots of land in various governorates of the Sultanate.

Roads and other public infrastructure, such as schools, shopping malls, etc., will also be developed around the housing units. This will support the demand for material handling equipment in Oman and increase the demand for overall construction equipment.

Focus on economic diversification will boost the construction and manufacturing sectors

In 2021, the government announced 130 projects mainly enabling manufacturing, tourism, logistics, labor market, business environment, fisheries, energy, and mining sectors. These projects are under Oman's Vision 2040, which includes a well-developed manufacturing base with advanced technology, boosting tourism with attractive sites, improving logistics by increasing the number of ports, etc. Seven new tourism projects are to be started in 2022 with allocated funding of ~$501 million, compared to ~$137.7 million in 2021, an increase of ~260%.

The initiatives toward diversifying the economy will surely increase the demand for the overall construction equipment in Oman over the forecast period, as infrastructure would be required to boost all other sectors.

A drop in oil prices is a major challenge

Government finances most of Oman's large infrastructure projects. Falling oil prices may drive Oman to curtail or postpone government investment, restricting the construction industry's expansion and lowering demand for construction machinery.

For instance, the sharp reduction in oil prices in 2020 led to a drop in oil revenue. As a result, the demand for new construction machinery in Oman fell by 7.2%. All oil-producing countries, including Oman, were adversely affected due to the reduction in oil prices.

Contractors, consultants, and manufacturers will face similar uncertainty due to the reduction in global oil prices, which will drop the number of new project opportunities and delayed payments, potentially affecting cash flow for companies in the Oman construction industry. Due to the interruption in cash flow caused by pandemic circumstances, businesses may close, leading to a drop in demand for construction equipment.

Russia-Ukraine war to impact demand for construction equipment

The agriculture sector is adversely impacted in Oman due to the Russia-Ukraine war, resulting in inflation. Prices of products and food commodities, particularly wheat, minerals, and agricultural raw materials, are likely to rise in the coming months. This will lead people (citizens of Oman) not to invest the money in the construction sector, i.e., buy a new property, build a new property, etc. This will impact the construction sector's growth, affecting the demand for new construction machinery to decline in Oman.

Hydrogen-Centric Economy by 2040: Shift toward hydrogen fuel-based construction equipment

Under the "Hydrogen-Centric Economy by 2040" program, a shift toward hydrogen fuel-based construction equipment triggers the demand for green hydrogen fuel-based construction machinery in Oman.

Protecting the environment is one of the key goals of Oman's tenth five-year plan (from 2021 to 2025). The green hydrogen fuel-based construction equipment is as efficient as gasoline fuel-based construction machinery. This will also promote green hydrogen fuel-based construction equipment (such as Caterpillar's 100% green hydrogen fuel-based construction equipment) in Oman over the forecast period.

KEY HIGHLIGHTS IN THE REPORT

• In 2021, the earthmoving equipment segment was the largest in the Oman construction industry, followed by material handling and road construction equipment. Excavator was the largest segment by type. The demand for excavators is expected to rise due to various government investments in infrastructure development and growth in renewable energy.
• The construction industry is expected to generate the highest demand in terms of end-users, owing to "Oman's Tenth-Five Year Development Plan (2021-2025)" and "Oman's Vision 2040" programs, which are expected to continue to dominate the construction equipment market over the forecast period.
• By switching to intelligent systems driven by IoT and data analysis for service, networking, and sustainability, the construction machinery market in Oman is transitioning to a more innovative industry faster than other developing nations worldwide.
• Construction equipment rental companies account for the major market share in Oman. Due to the significant number of SMSEs (64,662) in Oman, rental companies are expected to demand greater than non-rental companies.

VENDOR LANDSCAPE

• XCMG, Komatsu, Caterpillar, Liebherr, Volvo Construction Equipment & Hitachi construction machinery are market leaders who account for 59% of the Oman construction equipment market share.
• Other Chinese manufacturers such as Zoomlion & SANY are gaining market share in Oman due to low equipment prices compared to other OEMs operating in Oman.
• Due to the rising demand for construction equipment in the Sultanate, OEMs across the globe have been introducing new machinery and enhancing their product portfolio in the Oman Construction machinery market. For Instance, SDLG, the Chinese subsidiary of Volvo, provided a wheel loader & Motor Grader in Oman and expanded its products by launching B877F Backhoe loaders in the Oman market in 2019.

REPORT COVERAGE:

Earthmoving Equipment:

• Excavator
• Backhoe Loaders
• Motor Graders
• Other Earthmoving Equipment (Others loaders, Bulldozers, Trenchers)

Road Construction Equipment

• Road Rollers
• Asphalt Pavers

Material Handling Equipment

• Crane
• Forklift & Telescopic Handlers
• Aerial Platforms (Articulated Boom Lifts, Telescopic Boom lifts, Scissor lifts)

End Users

• Construction
• Manufacturing
• Mining
• Others