The value of the market declined in 2009 due to weak foreign investment during the global financial crisis and the Dubai debt crisis, which had supported economic development until 2008. This resulted in a decrease in construction activity and a subsequent fall in sales of construction equipment.
London – July 7, 2011 – During the review period (2005–09), the consumption of UAE construction equipment recorded a CAGR of 3.49% to reach a value of US$1.2 billion, largely due to a strong decline in consumption during the global economic crisis.
However, construction equipment consumption is expected to improve throughout the forecast period as a result of a rapid increase in the UAE population, which is expected to drive the demand for urban infrastructure construction, and increase the development of tourism and the non-oil industries. WMI expects the consumption value of the UAE construction equipment market to record strong growth over the forecast period, more than doubling in value by 2015.
Government increases investment in non-oil industries
Similar to other GCC (Gulf Cooperation Council) countries, the effect of the global economic crisis was less severe on the economy of the UAE, which benefits from the support of its substantial oil revenues. Despite this, there have been continuous governmental efforts to diversify the nation’s economy and reduce its dependence on the oil sector. As a result, the non-oil sectors in the UAE accounted for an increased 71% of the gross domestic product (GDP) of the country, with the highest shares of revenue sourced from manufacturing, construction, and the wholesale and retail trade.
As a result of increased construction activity due to efforts to expand other industries, the demand for construction equipment escalated during the review period. Earth moving equipment accounted for the largest share of sales in the UAE construction equipment market over the review period, with a value of over US$400 million in 2009. However, despite its lower value, road equipment was the fastest growing category. The only type of equipment to experience a decline was concrete equipment, as sales of which fell by over 40% in 2009 due to a decrease in building construction activity as a result of the global financial downturn.
Infrastructure improvements will increase demand
The revival of the global economy is expected to increase construction industry activity in the UAE, particularly in the infrastructure, commercial and industrial construction markets. Not only is rapid population growth expected to drive the demand for urban infrastructure development, but increased public spending and foreign investments are also likely to support the growth of the industry.
With a 3.4% increase in the federal budget for 2010, the UAE's strategic priorities are focused on social development, education, health and infrastructure development projects. Rapid economic and infrastructural developments in the country are also attracting foreign investment, largely for the development of infrastructure for the tourism, hospitality, retail and healthcare industries.
Although the real estate and business services sectors experienced considerable decline in 2009, output from these sectors nonetheless accounted for almost 10% of the country’s GDP, as large infrastructure projects in Abu Dhabi offset the decline in residential and commercial construction in Dubai. At the same time, the large amounts of capital already invested in projects to improve Dubai’s infrastructure, such as the construction of the Dubai Metro, the Burj Khalifa tower, the Al Maktoum International Airport and the Green Line metro project, and major developments in Abu Dhabi, including Saadiyat Island, the Masdar City project and the Khalifa City project, are expected to have a positive effect on economic growth over the forecast period.
Small domestic equipment market attracts foreign investment
As the UAE does not domestically produce a significant amount of its own construction equipment, it is largely dependent on imports from the US, Japan, China, and European nations such as Italy, France and Sweden.
The rapid growth of the UAE construction industry and the small domestic equipment manufacturing industry has attracted the investment of some of the world’s leading construction equipment manufacturers, including Volvo, Komatsu, Hitachi, LiuGong, Liebherr, Manitowoc, Tadano and Caterpillar. In order to improve product supply and after sales service quality to clientele in the UAE, many firms from the US, China and Europe have established a local market presence by establishing distribution centers and contracting exclusive distributors. While a large construction firm will often maintain its own equipment fleet, equipment rental services have also succeeded over the past two decades.
To buy the full version of the report, "The Future of the Construction Equipment Market in the United Arab Emirates (UAE) to 2015," please click here.
About Industry Review:
Industry Review is a collection of incisive, regularly updated market reports across 40+ industry sectors and 100+ countries.
We provide access to the latest data on global and local markets, key industries, top companies, M&A activity, new product launches and trends so you can make faster and better informed business decisions.
The reports in our store draw on robust primary and secondary research, proprietary databases, industry surveys and insightful analysis from our own expert teams and from carefully selected third-party publishers.
With access to over 400 in-house analysts and journalists, and a global media presence in over 30 industries, Industry Review delivers in-depth knowledge of local markets worldwide.
For more information, please visit our website at www.industryreview.com
For more information on the article, please contact:
Press Contact:
Shelly Wills
Tel: +44 (0) 20 7936 6671
shelly.wills@industryreview.com
London – July 7, 2011 – During the review period (2005–09), the consumption of UAE construction equipment recorded a CAGR of 3.49% to reach a value of US$1.2 billion, largely due to a strong decline in consumption during the global economic crisis.
However, construction equipment consumption is expected to improve throughout the forecast period as a result of a rapid increase in the UAE population, which is expected to drive the demand for urban infrastructure construction, and increase the development of tourism and the non-oil industries. WMI expects the consumption value of the UAE construction equipment market to record strong growth over the forecast period, more than doubling in value by 2015.
Government increases investment in non-oil industries
Similar to other GCC (Gulf Cooperation Council) countries, the effect of the global economic crisis was less severe on the economy of the UAE, which benefits from the support of its substantial oil revenues. Despite this, there have been continuous governmental efforts to diversify the nation’s economy and reduce its dependence on the oil sector. As a result, the non-oil sectors in the UAE accounted for an increased 71% of the gross domestic product (GDP) of the country, with the highest shares of revenue sourced from manufacturing, construction, and the wholesale and retail trade.
As a result of increased construction activity due to efforts to expand other industries, the demand for construction equipment escalated during the review period. Earth moving equipment accounted for the largest share of sales in the UAE construction equipment market over the review period, with a value of over US$400 million in 2009. However, despite its lower value, road equipment was the fastest growing category. The only type of equipment to experience a decline was concrete equipment, as sales of which fell by over 40% in 2009 due to a decrease in building construction activity as a result of the global financial downturn.
Infrastructure improvements will increase demand
The revival of the global economy is expected to increase construction industry activity in the UAE, particularly in the infrastructure, commercial and industrial construction markets. Not only is rapid population growth expected to drive the demand for urban infrastructure development, but increased public spending and foreign investments are also likely to support the growth of the industry.
With a 3.4% increase in the federal budget for 2010, the UAE's strategic priorities are focused on social development, education, health and infrastructure development projects. Rapid economic and infrastructural developments in the country are also attracting foreign investment, largely for the development of infrastructure for the tourism, hospitality, retail and healthcare industries.
Although the real estate and business services sectors experienced considerable decline in 2009, output from these sectors nonetheless accounted for almost 10% of the country’s GDP, as large infrastructure projects in Abu Dhabi offset the decline in residential and commercial construction in Dubai. At the same time, the large amounts of capital already invested in projects to improve Dubai’s infrastructure, such as the construction of the Dubai Metro, the Burj Khalifa tower, the Al Maktoum International Airport and the Green Line metro project, and major developments in Abu Dhabi, including Saadiyat Island, the Masdar City project and the Khalifa City project, are expected to have a positive effect on economic growth over the forecast period.
Small domestic equipment market attracts foreign investment
As the UAE does not domestically produce a significant amount of its own construction equipment, it is largely dependent on imports from the US, Japan, China, and European nations such as Italy, France and Sweden.
The rapid growth of the UAE construction industry and the small domestic equipment manufacturing industry has attracted the investment of some of the world’s leading construction equipment manufacturers, including Volvo, Komatsu, Hitachi, LiuGong, Liebherr, Manitowoc, Tadano and Caterpillar. In order to improve product supply and after sales service quality to clientele in the UAE, many firms from the US, China and Europe have established a local market presence by establishing distribution centers and contracting exclusive distributors. While a large construction firm will often maintain its own equipment fleet, equipment rental services have also succeeded over the past two decades.
To buy the full version of the report, "The Future of the Construction Equipment Market in the United Arab Emirates (UAE) to 2015," please click here.
About Industry Review:
Industry Review is a collection of incisive, regularly updated market reports across 40+ industry sectors and 100+ countries.
We provide access to the latest data on global and local markets, key industries, top companies, M&A activity, new product launches and trends so you can make faster and better informed business decisions.
The reports in our store draw on robust primary and secondary research, proprietary databases, industry surveys and insightful analysis from our own expert teams and from carefully selected third-party publishers.
With access to over 400 in-house analysts and journalists, and a global media presence in over 30 industries, Industry Review delivers in-depth knowledge of local markets worldwide.
For more information, please visit our website at www.industryreview.com
For more information on the article, please contact:
Press Contact:
Shelly Wills
Tel: +44 (0) 20 7936 6671
shelly.wills@industryreview.com
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ReplyDeleteArun Panchariya
Global real estate prices have been going down recently worldwide so this has resulted in rise in purchase pf properties which indirectly resulted into rise in price of equipment. The construction in the middle-east is booming thanks to some companies like Galfar
ReplyDeleteUAE construction equipment market is directly linked to the construction industry which again to a great extent is linked to oil & gas industry. Thank you for the informative blog post!
ReplyDeleteGulf Job Consultant