UAE Construction Equipment Market - Strategic Assessment & Forecast 2023-2029

MARKET OVERVIEW

The UAE construction equipment market size was estimated at 19,231 units in 2022 and is expected to reach 29,294 units by 2029, growing at a CAGR of 6.20%. The increasing government investment under the ‘Dubai 2040 Urban Master Plan’ and the renewable energy sector is expected to propel the UAE construction equipment market during the forecast period. The Dubai 2040 Master Plan includes the development of Dubai Islands’ which will entail boutiques, luxury and wellness resorts, and family-friendly and eco-conscious hotels. This will help Dubai boost its tourism and hospitality industry. The project will include over 20 kilometers of beaches, including around two square kilometers of parks and open spaces, a Blue Flag-certified beach, and world-class golf courses overlooking the Persian Gulf. These developments will boost the demand for earthmoving equipment over the forecast period.

Government Investment in Public Infrastructure

The development of Al Quoz Creative Zone is a master plan to create a cultural and creative destination in Dubai. The master plan is designed to include various infrastructures, public services, and commercial spaces. The project is expected to be completed over the next four years, i.e., 2026. The zone will also provide residential facilities for over 8,000 residents and attract 33,000 daily visitors. The project will be completed in three phases.

The Al Jurf project has been planned to be constructed on a 3.7 km area on the Gulf Coast. The project will be constructed in two phases; the first phase will include 293 villas and stretch 1.6 km long along the coast. Furthermore, the 2nd phase will include 98 additional villas with an approximate value of $4.08 billion.

Louver Abu Dhabi's residential project launched in Q1 2022 will include exquisite studios and 1–3-bedroom apartments. It will also include an infinity pool, well-being Centre, yoga and pilates studio, meditations lawns, and a museum. The project is expected to be completed by 2025.

In Feb 2023, Marathon Digital Holdings Inc. announced the opening of a new block reward mining facility in Abu Dhabi with an approximate value of USD 400 million. It will set up and operate two mining sites comprising 250 MW in Abu Dhabi. Approximately 96% of the country’s oil reserves are located in Abu Dhabi, ranking sixth worldwide. The UAE produces an average of 3.2 million barrels of petroleum and liquids daily.

Another mega project is Meyday One, which will boost the UAE construction equipment market, including constructing new malls within 12,000 square km. The area will include 620 retail shops, two major department stores, and a 131,150-square-foot hypermarket.

Bloom Holdings is constructing a gated community (Bloom Lining) in Abu Dhabi to facilitate the growing demand for properties in the region. Bloom Living will feature over 4,000 Spanish-style villas, townhouses, and apartments surrounding a large lake. The project will be built on an area of 2.2 million square meters.

KEY HIGHLIGHTS

• The material-handling segment of construction equipment accounted for the largest UAE construction equipment market share in 2022. In the material handling segment, cranes accounted for the largest share in 2022.
• The excavator is used for digging, lifting, earthmoving & drilling. In 2022, the UAE government's increased investments in residential buildings, roads, and railways are expected to drive the demand for excavators during the forecast period. A few upcoming road construction projects in 2022, like the Etihad Rail construction, are underway and scheduled to complete by mid-2024 and are expected to boost the demand for earthmoving construction machinery in the UAE construction equipment market. Other construction projects, such as the upgradation of the Dubai Transport Link, aim to boost road safety, increase vehicle capacity and cut travel times by more than half.
• In 2021, the Crown Prince of Ajman announced a USD 27.77 million package of infrastructure development projects in the northern emirate. Therefore, the Traffic and Transportation Plan 2030 will accelerate new public-private partnership projects in the sector over the forecast period.
• Moreover, in Feb 2023, Dubai announced to build off a Loop, including a 57-mile-long enclosed bicycle and walking path to provide for the harsh desert conditions. The project is planned to connect more than 3 million residents. In addition, Dubai’s RTA aims to extend the total length of cycling tracks to 819 km by 2026.
• The UAE laid out 11 environmentally friendly energy projects worth USD 43 billion in 2022. Moreover, 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.
• Dubai’s Decree No. 22 of 2022 aims to boost Real Estate investments in Dubai. Moreover, the Dubai government, in 2023, announced spending USD 1.72 billion for housing and land for 4,610 Emirati citizens. The UAE government also provides free land, housing, loans, and maintenance to deserving Emirates.

MARKET TRENDS & DRIVERS

Surge in Public Infrastructure Investments in the Country to Boost the Sales of Road Construction Equipment
The recent project announced in the country includes the Abu Dhabi National Oil Company’s (ADNOC) Al-Nouf seawater treatment plant, Dubai Municipality’s strategic sewerage tunnel, and other construction projects like redeveloping Mina Rashid in Dubai, and the Dubai International Financial Centre Expansion 2.0. Moreover, the ‘Projects of the 50’ initiative aims to implement a series of projects and attract USD 149.8 billion in foreign direct investment (FDI) over the next nine years (2022-2030). Further, the Ministry of Energy & Infrastructure, in 2021, planned to invest USD 3.2 billion in nearly 130 state-funded development projects by 2023. The plan included 12 educational facilities and 15 government buildings.

Increased Investment in Renewable Energy Projects to Boost the Demand for Material Handling Equipment
The government plans several renewable energy projects in Abu Dhabi and Dubai. 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. Further, the Gulf state signed an agreement with the U.S. in Nov 2022 to invest USD 100 billion in clean energy projects to produce 100 GW by 2035. The Ministry of Energy & Infrastructure, in 2022, mentioned that UAE has further launched 11 environmentally friendly energy projects worth USD 43.2 billion. Such initiatives by the government are projected to support the UAE construction equipment market.

Government Investment in Affordable Housing to Encourage the Sales of Construction Equipment
In May 2022, the government announced that the housing loans should be financed through collaboration between the SZHP and national banks, which will help citizens easily access bank loans. Additionally, in Dec 2022, 14,064 housing loans were disbursed to UAE nationals in Abu Dhabi with a total value of USD 6.07 billion. The Federal Authority of Identity and Citizenship, Customs & Ports Security (ICP) disclosed that the total number of new residential permits issued to expatriates amounted to 3,415,241 permits during 2022, an increase of 46% compared to 2021, where 2,032,855 permits were issued.

The Government’s Focus on Waste Management Activities Is Expected to Boost the Demand for Excavators in the Country
In 2021, Caterpillar launched the next generation of new 345 GC excavators in the Middle East and Africa, which increases fuel efficiency by up to 25% and lowers operating costs by up to 30%. The machinery is highly versatile for waste management projects. Moreover, in Sept 2022, Hyundai Construction Equipment revealed its HW150A CR compact wheeled excavator in its A-Series range in Dubai. The machine is specifically designed for confined spaces in urban areas.

Increasing Demand for Sustainable Construction to Boost the Usage of Electric and Hybrid Construction Equipment
Awareness of sustainable construction & green building has gained momentum over the past years in the UAE construction equipment market. The UAE’s Net Zero by 2050 strategic initiative 2021 (a national drive) has further propelled the idea. The government focuses on producing clean energy solutions and has recently invested over USD 40 billion in the renewable sector. On the other hand, construction companies are significantly demanding electric equipment to reduce their carbon footprint.

Extensive Demand for Luffing Cranes in the Country in Response to Various Infrastructure Projects in the Pipeline
With the rising number of active infrastructure projects, domestic and international tower crane manufacturers are keenly interested in the country's construction activities. This is due to the huge demand for this equipment in the local market; for instance, Nouman Fouad Trading (NFT), a UAE-based tower crane supplier and Potain dealer, has 208 tower cranes available for hire in Abu Dhabi, Dubai, and Sharjah. Further, highrise towers, which are highly popular in the UAE, necessitate large capacity luffing cranes like the Potain MR 418. For example, 10 MR 418s have been installed at the Royal Atlantis Residences over the last two years.

INDUSTRY RESTRAINTS

Rising Prices of Building Materials to Have a Negative Impact on the Country’s Construction Sector
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. Increasing inflation adds further pressure, and construction companies are witnessing difficulties with the rising construction cost. Moreover, the increasing real estate prices may impact the demand for residential and non-residential infrastructure.

Skilled Labor Shortage in the Country to Hamper the Pace of Construction Projects
A government survey found that approximately 46% of the laborers are unskilled in the country. Over 50% of the UAE industry companies have mentioned skill shortages in more than one key area in their company. Therefore, by 2030, the UAE will likely experience a skilled labor gap worth USD 50 billion, making up 5% of the economy, thereby hampering the UAE construction equipment market growth.

Water Scarcity Issues in the Country May Impact the Activities of the Construction Industry
The UAE is highly dependent on water, and UAE’s industries consume approximately 9% of the total water in the country. Therefore, the country's water table has dropped by around one meter every year over the last 30 years, and it has been anticipated that the nation will run out of natural freshwater resources within 50 years. The government, in 2022, estimated that the country is expected to face a USD 27 billion total GDP loss between 2022 and 2050 due to changing droughts, floods, and storm conditions.

VENDOR LANDSCAPE

• Prominent vendors in the UAE construction equipment market are Caterpillar, Volvo Construction Equipment, Liebherr, Hitachi Construction Machinery, Komatsu, XCMG, & Zoomlion.
• Other prominent vendors are JCB, Sany, Manitou, Kobelco, Tadano, HD Hyundai Infracore, Liugong, & ElectroMech.
• Caterpillar has the strongest share in the market. Caterpillar, Volvo CE, Komatsu, & Hitachi Construction Machinery are the leaders in the UAE construction equipment market and has a strong distribution network & have a diversified product portfolio.
• SANY, JCB, Zoomlion & XCMG are emerging strong in the UAE construction equipment market. These companies introduce innovative products to capture the UAE construction equipment market’s share.
• A few distributors/dealers include Abdulla Saeedi General Trading LLC, Anwar Al Quds Machinery, Kanoo Machinery, AL Futtaim Auto & Machinery Company (FAMCO), and AL Mahroos in the UAE construction equipment market.