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

The Italy construction equipment rental market was estimated at USD 1.13 billion in 2022 and is expected to reach USD 1.67 billion by 2029, growing at a CAGR of 5.75%. In 2020, the Italian government introduced the ‘Relaunch Decree,’ which liquidates USD 58.2 billion to revitalize the Italian economy after the turmoil caused by the pandemic. Through this policy, the government has provided various incentives and income support to households, workers, and businesses. The launch of ‘Relaunch Decree’ & ‘Super Bonus’ in 2020 focused on the residential sector and is expected to propel the demand for rental construction equipment during the forecast period. The same year, the government also launched the ‘Super-Bonus,’ a tax benefit for families who upgrade their property to meet energy efficiency requirements. The requirements include the external insulation coating for at least 25% of the building. The launch of ‘Relaunch Decree’ & ‘Super Bonus’ in 2020 focused on the residential sector and is expected to propel the demand for rental construction equipment during the forecast period.

KEY HIGHLIGHTS

• The material handling segment of the overall rental construction equipment accounted for the largest Italy construction equipment rental market share in 2022. In the material handling segment, aerial platforms accounted for the largest share in 2022.
• In 2022, the government announced an investment of USD 4.1 billion to upgrade water infrastructure and reduce leaks in cities and the agricultural sector. This will include checking the water supply, detecting and revamping leaks, and checking water networks of new aqueducts, reservoirs, and dams. It will also include revitalizing irrigation channels.
• The government of Italy, in 2022, invested a total of USD 3.1 billion in road and rail links across the country. The plan includes six rail infrastructure projects, three road infrastructures, two port infrastructures, two transport building works, five railway stations, one water project, one port project, and one project linked to rapid mass transport for promoting sustainable mobility.
• The construction of various infrastructure and residential projects in the country is expected to drive the demand for renting aerial platforms in the Italy construction equipment rental market. For Instance, MilanoSesto, a mixed-use development project with an investment of USD 7.3 billion- and 69-acres Union Zero is constructing seven buildings worth USD 1.4 billion in Sesto San Giovanni in Milan. Another project, Margaritaville Resort on Fort Myers Beach, will include 254 luxurious rooms and apartments.
• Under the ‘Next Generation Italia’ Recovery Plan, USD 211.0 billion was granted, including USD 29 billion for high-speed roads, USD 3.9 billion for logistics transport, and USD 30.6 billion for energy efficiency. Additionally, programs in Italy, for instance, ‘Italia Veloce,’ aimed to relaunch 60 major infrastructure projects, such as the high-speed line between Brescia and Padua.
• In 2023, Italy joined the US-led Mineral Security Partnership that promotes ethical mining. This partnership will restrict countries from investing in projects that might destroy precious rainforests.

Government Investment in Public Infrastructure

• The country’s 2021 Budget allocated USD 36.1 billion to the Ministry of Infrastructure & Sustainable Mobility (MIMIS) to expand the country’s mobility systems. The infrastructure developments will focus on energy transition and environmental sustainability.
• In Feb 2023, Webuild Construction was granted USD 354.0 million for constructing a rail bypass of 13 kilometers (km) in the Fortezza-Verona section of the high-speed railway south of the Brenner Base Tunnel. This contract is estimated to generate around 1,000 direct and indirect jobs. The contract involves the construction of a natural tunnel and includes constructing two short sections above ground alongside the existing line.
• In 2022, the Ministry of Health (MoH) Italy announced an investment of USD 151 million to upgrade and redevelop the Hospital of Cattinara in Trieste. The project is designed to develop two six-story 55m-tall hospital buildings with a 20,439 square meter area comprising 730 beds on 22.2 hectares of land. The project is scheduled to complete by 2023.
• Approximately USD 60 billion would be invested by the government to repair surface transportation nationwide. Development of the Glassboro-Camden rail line 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 Anagni (Frosinone, Lazio), GLP (Good Laboratory Practice) purchased a 22,000 square meter of land to develop a Building Research Establishment Environmental Assessment Method (BREEAM) certified warehousing space. This facility is expected to reach completion by the end of 2023 and contribute to the Italy construction equipment rental market.
• Under the Italy Recovery and Resilience program, the government invested USD 35.5 billion in 2021 to improve public transport infrastructure, including USD 31.5 billion for high-speed network and road maintenance and USD 4 billion for inter-modality and integrated logistics. Projects also include the coverage of access rail links such as the Turin-Lyon line and the 55-kilometer-long Brenner Base Tunnel, which would be completed by 2025. This line will connect Fortezza in Italy with the Austrian city of Innsbruck.

MARKET TRENDS & DRIVERS

Rental Companies Integrating Digital Technologies to Provide Safe & Secure Solutions
Rental companies are adding advanced technologies to their fleet to protect their customers from unauthorized usage of machines. For instance, Jungheinrich, a rental company, use EasyAccess in their forklifts. Through this technology, the customer can manage keyless access to forklifts, protecting the fleet against unauthorized persons. The technology also enables recording the last ten recordings in case of misuse. The company offers EasyAccess in three variants, EasyAccess Softkey, EasyAccess PinCode, and EasyAccess Transponder.

Increased Investment in Renewable Energy Projects to Boost the Demand for Rental Material Handling Equipment
In Feb 2023, the European Investment Bank (EIB) announced a loan of USD 52.9 million to Asja Ambiente Italia (Turin-based company) to construct wind and solar power plants in Campania, Sardinia, and Sicily. The combined capacity of power plants will be 238-megawatt peak (MWp) and generate some 460-gigawatt hours (GWh) of energy per year, providing for more than 190,000 households in Italy.

Under the National Recovery & Resilience Plan (NRRP), the Italian government, in 2021, declared an investment of USD 6.2 billion in developing renewable energy projects. In addition, the Italy parliament voted to invest USD 25.2 billion under the European Union (EU) funds in renewable energy, hydrogen, smart grids, and mobility projects. Sunwin Energy (Swiss energy company), in Nov 2022, signed an agreement with a European firm to sell its 375 MW solar portfolio in Italy. The projects are expected to start online between 2022 and 2026, with each capacity ranging from 10MW to 75MW.

Increased Government Investment in Public Transport and Rail Infrastructure to Boost the Demand for Rental Road Construction Equipment
The Italian railway company, Ferrovie dello Stato Italiane (FS Group), announced an investment of USD 169.5 billion in the next ten years in infrastructure and USD 201.3 billion in overall transport. The rail capacity is expected to increase by 20%, cutting the traveling time to major Italian cities, such as Naples, Bari, Rome, Milan, and Turin. 

The NRRP contributed USD 42.3 billion towards infrastructure works. In addition, another USD 20.1 billion was allocated for projects with a higher degree of complexity. Some key high-speed rail projects include Treviglio-Brescia and Milan-Genoa lines with an approximate value of USD 2.1 billion and USD 12.7 billion for expansion of Fiumicino airport in Rome planned until 2044.

INDUSTRY RESTRAINTS

Skilled Labor Shortage in the Country to Hamper Construction Activities in the Region
Italy is facing an acute skilled labor shortage similar to other European countries. In 2022, the construction sector required 260,000 workers, but the Italian government only trained 3,000 workers. Moreover, it was estimated that there would be around 200,000 jobs vacant in sectors such as food & beverages, textiles, and chemicals in 2022. Additionally, in 2021, around 263,000 vacancies in the tourism sector were discontinued because of labor shortages. The pandemic added further pressure to the situation. In 2020, about 215,000 workers lost their job in the tourism sector.

A Surge in Mortgage Rates to Restrict the Demand for Residential Units in the Country

The main factors hampering the housing market in Italy are rising energy prices and high mortgage rates. In June 2022, housing prices increased by 1.7%, a 4.6% rise compared to 2021. Mortgage rates became more expensive after the EIB hiked interest rates to control inflation. The average cost of buying a house in Italy is between USD 2,047.3 million and USD 2,674.5 million per square meter. In March 2022 in Milan, the average price for residential houses was recorded at USD 4,238.9 million per square meter.

Rising Construction Costs Amidst Inflationary Pressure May Hamper the Construction Activities
Italy's inflation rate was 8.7% in 2022 (compared to 1.9% in 2021). The unexpected events, for instance, the lockdown in China and the war in Ukraine, disrupted the supply chain across Europe. The National Association of Building Contractors, in 2021, claimed that iron and steel prices increased by approximately 226.7% compared to 2020. Prices of other prime important materials such as polyethylene, copper, and diesel also significantly increased.

VENDOR LANDSCAPE

• Prominent vendors in the Italy construction equipment rental market are Caterpillar, Volvo Construction Equipment, Liebherr, Hitachi Construction Machinery, Komatsu, Hyundai Construction Equipment, JCB, SANY & CNH Industrial.
• Other prominent vendors in the market are Kobelco, Yanmar, Manitou Group, John Deere, and Merlo.
• Liebherr, Caterpillar, Volvo Construction Equipment, Komatsu, Hitachi Construction Machinery, and CNH Industrial are the leaders in the Italy construction equipment rental market. These players have a strong industry share and offer diverse products.
• JCB, SANY, and Hyundai Construction Equipment are emerging strong in the market. These companies are introducing innovative products to capture construction equipment market share. For instance, Hyundai Construction Equipment launched 15 new pieces of equipment, including excavators and wheeled loaders.
• Kobelco specializes in producing excavators, cranes, and construction equipment spare parts. ROMANA Diesel is one of the few distributors in Italy of Kobelco. Apart from dealing in new and used equipment, it also deals with rental construction equipment in the region.