France Construction Equipment Rental Market - Strategic Assessment & Forecast 2023-2029

The France construction equipment rental market size was estimated at USD 3.11 billion in 2022 and is expected to reach USD 4.25 billion by 2029, growing at a CAGR of 4.55%. French government aims to become carbon neutral by 2050 and has taken strong steps to control emissions by reducing mining production in the region and completely banning fossil fuel extraction by 2040. In 2021, USD 1 billion worth of funds were allocated to develop nuclear power plants, followed by USD 1.9 billion in funding for green hydrogen. Development of office, commercial, and institutional infrastructures is vital under the ‘New Greater Paris’ (the project seeks to link up the entire Greater Paris region) project to be completed by 2030. Further, residential growth will be supported by developing another 1.5 million households by 2030. Further, the launch of the ‘France 2030’ investment plan in 2021 focused on transforming major sectors of the economy and expects to propel the growth of the France construction equipment rental market during the forecast period.

KEY HIGHLIGHTS

• The Material handling segment of the overall rental construction equipment accounted for the largest France construction equipment rental market share in 2022. In the material handling segment, aerial platforms accounted for the largest share in 2022.
• Various infrastructure projects are under construction in Paris in response to the upcoming Olympic Games 2024. Approximately 70 Olympic projects, such as Olympic Village and Aquatic Centre, are expected to be ready by 2024. The Village will have the capacity to accommodate 14,000 athletes in 2024. Similarly, the Aquatic Centre near the France Stadium will include water polo, diving, and artistic swimming events.
• The planned construction of Metro Line 16 to connect the Olympic venues in Seine and Saint-Denis will be completed by 2026. Construction on Metro Line 17 to Media Village is also planned during the forecast period.
• The construction of various infrastructure and residential projects in the country is expected to drive the demand for renting aerial platforms in the France construction equipment rental market. In 2022, the government introduced the ‘France Renov’ program to provide financial aid for home renovations nationwide. Under this policy, the government targeted to repair 800,000 housing units in 2022.
• In 2022, the French government approved the bypass project in the City of Rouen. This bypass is designed to connect with the A28 and A13 Autoroutes on the city's eastern side. Construction on this project is expected to commence in 2027 or 2028. The bypass length would be 41.5 km, with an approximate investment of USD 950.1 million.
• Construction of Eco-Pole Waste Storing Plant includes constructing a waste storing plant on a 7-hectare land with a processing capacity of 200,000 tonnes per annum. The plant will be in the Chene-en-Semine, Haute-Savoie department, Auvergne-Rhône-Alpes region. Work on the project started in Q1 2022 and is expected to be completed by Q1 2023.

INCREASED INVESTMENT IN PUBLIC INFRASTRUCTURE

• Construction on the Nantes New CHU Hospital Development commenced in Q1 2022 and is expected to be completed in Q4 2027. The project includes the construction of a new 2,25,000m²area hospital complex with medical facilities on 10.1ha of land in Nantes, Pays de la Loire region. The estimated value of the project is USD 1.4 billion.
• Approximately USD 60 billion would be invested by the government to repair surface transportation nationwide. The Glassboro-Camden rail line development would cost approximately USD 1.6 to USD 1.8 billion and is expected to be completed in 2028. The train would stop at Glassboro, Pitman, Sewell, Mantua, Woodbury Heights, and Camden stations.
• In 2022, the French government announced its objective of developing 50 territorial water management projects by 2022 and around 100 projects by 2027. A surge in water management projects is expected to drive the demand for rental backhoe loaders in the France construction equipment rental market.
• The development of the Paris Tour Triangle High-Rise Building includes constructing a 42-story triangular office building on an 80,000m²area at Porte de Versailles in the 15th arrondissement of Paris. Work on this project commenced in Q1 2022 and is estimated to be completed by Q1 2026. The cost of the construction is estimated to be USD 755 million. The project intends to provide for the city's growing hotel and office amenities demand.
• In 2022, the French President introduced the Renewable Energy Acceleration Bill, which boosted the country’s renewable energy development, including offshore wind farms and solar power. BayWa r.e. has planned to build a project combining solar power production and battery storage. Additionally, Lhyfe will build a green hydrogen production unit using the solar park. These developments in the country will boost the demand for rental cranes in the France construction equipment rental market.

MARKET TRENDS & DRIVERS

Government Investment in Public Infrastructure is Expected to Support the Demand for Rental Construction Equipment
In 2021, the French government rolled out the ‘France 2030’ investment plan with a total investment of USD 57.9 billion. This plan focused on transforming major sectors of the economy, for instance, energy, automotive, and aeronautics. The investment plan announced the development small nuclear reactor (USD 1 billion), carbon-free hydrogen, zero-emission vehicles, and biomedicines. The plan also announced investments in the transport sector; for instance, USD 1.2 billion worth of expenditure was granted to develop the use of bicycles and public transport by improving existing services. It also involved improving the rail network across the country to link the densely populated areas to the urban areas.

Growth in Housing Renovation Projects Across the Country to Benefit the France Construction Equipment Rental Market
In 2021, European Investment Bank (EIB) granted a loan to BATIGERE Network (the company that builds social housing) of USD 134.2 billion to build 1,500 homes over five years for 3,500 residents. Moreover, there was a surge in housing renovation projects nationwide in 2021. According to France Housing data, more than 750,000 housing units were renovated in 2021, and the government disbursed USD 3.1 billion for the renovation of additional 751,646 housing units in 2021.

In 2022, the French government introduced the ‘France Renov’ program to provide financial aid for home renovations nationwide. Under this policy, the government targeted to repair 800,000 housing units in 2022. The government also focused on public building repair projects in 2022. The government allocated USD 4 billion in funds for school & public administration buildings, followed by USD 2 billion, liquidated for private houses, & social housing (USD 0.5 billion).

Rising Inflation & Supply Restraints in the Country are Likely to Propel the Demand for Rental Machinery
According to the IMF projections for 2023, the inflationary effects will shrink household real incomes and consumption. The year will witness a decline in investments due to growing interest rates. In October 2022, the inflation rate reached 7.1% and was expected to remain high in the coming months. Therefore, IMF anticipated that inflation would peak in the coming months but remain near 5% in 2023 on average as price controls ease. It will remain persistent in 2024 and will only gradually decline to around 2% in 2025. Further, the supply disruptions have also hampered the manufacturing of new equipment leading to a surge in the prices of the new equipment. Such factors have propelled the growth of the France construction equipment rental market.

Integration of Innovative Technologies in the Rental Fleet to Support the France Goal of Net-Zero Emission by 2050
In line with France’s ambition to eliminate greenhouse gas emissions by 2050 and decrease emissions by 40% by 2030, rental companies in France focus on environmentally safe solutions. For instance, LOXAM, one of the European leaders in rental equipment, launched its LOXGREEN range in 2021 in response to reducing the environmental impact of its operations and helping customers reduce their carbon footprint. This initiative by the leader centers around its core business and associated activities (such as delivery, servicing, maintenance, and procurement).

INDUSTRY RESTRAINTS

Skilled Labour Shortage to Hamper the Pace of Construction Projects
Various sectors, such as construction, transportation, healthcare, and agriculture, are witnessing a significant shortage of skilled labor, accounting for approximately 400,000 vacant jobs. Surprisingly, Ile-de-France, the most populated region, has the most vacancies (160,000). In line, Auvergne Rhône-Alpes is the 2nd largest region with vacant jobs (145,000). Additionally, the unemployment rate in Hauts-de-France during Q1 2022 was 8.7%, the highest in France.

The Pandemic added further pressure to this situation in 2020. France’s unemployment rate rose to its highest level in Q2 2020. The unemployment rate in the country was significantly affected by the ‘Great Resignation.’

Strict Environmental Regulations Can Hamper the Demand for Large Rental Construction Equipment
France aims to achieve its national goal of cutting carbon emissions by 40% by 2030 and eliminating greenhouse gas emissions by 2050. In France, the decarbonization of construction sites and buildings is one of the major challenges. As per the data published by the Ministry of Ecological Transition, the construction industry in France accounts for approximately 43% of yearly energy consumption and 23% of GSG emissions. Policies like Extended Producer Responsibility (EPR) which mandates the producer (manufacturer, importers, and distributors) to consider all the environmental costs of the product, have disrupted the construction activities and hampered the France construction equipment rental market growth.

Increasing Housing Prices Due to the Energy Crises May Restrict the Demand for Residential Units in the Country
In 2022 the government introduced a new policy that restricted the new mortgage loan limit to a maximum of 25 years, which is less than 2021, and the total amount borrowed would be covered at 35% of the borrower’s income. Housing prices over the last five years have increased significantly by 27.8%. During Q3 2022, the prices increased by 6.4% over 12 months. Consequently, housing sales also witnessed a continuous decline.

For houses five years older, the prices rose by an average of 8.2% over 12 months to Q3 2022. Houses situated in non-urban areas; the prices saw an increase of 8.6% during the same period. In areas like Nice, Paris, Toulon, Lyon, Montpellier, and Rennes, the average housing prices are above USD 428,728.

VENDOR LANDSCAPE

• Prominent vendors in the France construction equipment rental market include Caterpillar, Volvo Construction Equipment, Liebherr, Hitachi Construction Machinery, Komatsu, SANY, Hyundai Construction Equipment, and JCB & Kobelco. Other prominent vendors are Yanmar, Kubota, JLG & Terex.
• Liebherr, Caterpillar, Volvo Construction Equipment, Komatsu & Hitachi Construction Machinery are market leaders. They have a strong market share, and these vendors offer various products in the France construction equipment rental market.
• JLG, SANY & Hyundai Construction Equipment are emerging strong in the France construction equipment rental market. These companies are introducing innovative products to capture the market.