Market Trends of GCC Construction Machinery Industry
Growth of the Construction Industry Likely to Drive Demand for the Construction Equipment Market
The growing demand for housing in urban areas, increased infrastructure development activities, and increased modernization and renovation of buildings to increase energy efficiency are all factors contributing to the growth of the construction market in GCC countries. Construction of commercial infrastructure, including offices, schools, hotels, restaurants, and recreational facilities, is increasing as a result of the region's strong economic growth.
Developing nations are making significant investments in infrastructural development to address pressing issues like traffic congestion, population growth, high manufacturing costs, and deteriorating transportation infrastructure. Developed nations are investing in technologies like the hyperloop and earthquake-proof buildings to upgrade their existing infrastructure. Sales in the target market are rising as a result of these factors.
The GCC region is anticipated to award project contracts with a combined value of USD 110 billion this year. Among these, Saudi Arabia is expected to account for over half of the total as it accelerates the implementation of its Vision 2030 plans for economic diversification.
Out of the overall value, Saudi Arabia holds the highest share with USD 64 billion, followed by the United Arab Emirates with USD 23 billion, Kuwait with USD 10.2 billion, and Qatar with USD 10.1 billion.
Additional notable contracts include the USD 2.5 billion allocated for Abu Dhabi National Oil Company's Al Mirfa desalination plant. In addition, there is a USD 2.5 billion project at Al Marjan Island, a leisure destination being constructed in Ras Al Khaimah, United Arab Emirates. Furthermore, a USD 1.2 billion contract for supplying utilities has been awarded for Red Sea Global's (RSG) Amaala luxury hospitality development.
In line with the abovementioned factors, the market’s growth is expected to continue during the forecast period.
The United Arab Emirates Expected to Witness the Fastest Growth Rate
The UAE construction machinery market is expected to witness the fastest growth rate among the GCC countries over the coming years, as the construction industry is a key driver for the UAE's economy. However, the industry has come under substantial pressure due to the prolonged slump in oil prices. Despite the prevailing climate, the construction industry remains resilient, and its outlook remains cautiously optimistic over the coming years.
The UAE government is focusing on making investments in energy and infrastructure, such as utilities, transportation, decarbonization, the production of renewable and nuclear energy, and addressing the persistent shortage of water. In the United Arab Emirates, numerous projects and opportunities for engineering and construction firms have been made possible by the government's significant commitment and resources.
With both private and public players in the United Arab Emirates extensively focusing on investing in several new mega-construction projects, the demand for construction equipment in the country is witnessing surging growth. For instance,
- In February 2024, Larsen & Toubro announced that it had secured a substantial engineering, procurement, and construction (EPC) order to establish the largest renewable generation plant in the United Arab Emirates, marking a significant stride in the region’s commitment to sustainable energy.
- Further, in February 2024, Etihad Rail in the United Arab Emirates announced the commencement of the construction work on the UAE’s high-speed rail project. The company also stated that the early works for the UAE’s high-speed network would involve a contractor clearing and preparing sites for actual construction work, including Earthmoving and the diversion of existing infrastructure or utilities in the area.
The country's development plan, which focuses on expanding its energy, transportation, and industrial infrastructure, will drive growth over the coming years. The UAE government has announced plans to implement a series of projects as part of the Projects of the 50 initiative to accelerate the country's economic development, transform it into a comprehensive hub for all sectors, and attract USD 149.8 billion in FDI over the next nine years.
The United Arab Emirates must continue to develop its transportation and road infrastructure to meet the requirements of its expanding population and automobile fleet. This is consistent with the government's plans to boost tourism and urbanism in Dubai and Abu Dhabi. The USD 11 billion Etihad rail project, the USD 5.9 billion proposed hyperloop project between Dubai and Abu Dhabi, the USD 2.7 billion Sheikh Zayed double-deck road project, and many other projects are in the pipeline for the country's transportation and road infrastructure. Rail and road development will also be driven across the nation by the rising demand for urban transportation and the government's plans to boost tourism and expand transportation infrastructure.
The abovementioned trends in the country are anticipated to result in positive demand for construction machinery during the forecast period.
