Saudi Arabia Construction Equipment Market - Strategic Assessment & Forecast 2024-2029

MARKET OVERVIEW

The Saudi Arabia construction equipment market by volume was valued at 35.3 thousand units in 2023 and is expected to reach 49.7 thousand units by 2029, growing at a CAGR of 5.85% during the forecast period. The country is heavily investing in renovating its infrastructure and developing new projects, such as expanding ports, railways, roads, and highways. In June 2024, Saudi Arabia unveiled a trillion-dollar infrastructure project pipeline to diversify its economy beyond oil as part of its Vision 2030 plan. This initiative includes developing and expanding infrastructure nationwide, with projects such as giga-tourism destinations, city expansions, new housing, transport network upgrades, clean energy generation, and establishing the country as an international logistics hub. Key government programs, including ‘Saudi Arabia's Vision 2030’, are expected to boost Saudi Arabia construction equipment market during the forecast period.

Increased Investment in Public Infrastructure Projects Across Saudi Arabia

1. Saudi Arabia's largest infrastructure projects are giga and mega projects, with around 20 currently under development. The crown jewel is NEOM, one of the world's largest construction sites. As of April 2024, it employed 140,000 workers, with numbers expected to rise to 200,000 in 2025.
2. Saudi Arabia is set to become the world’s largest construction market by 2028, with projected construction output reaching USD 181.5 billion, driven by the Vision 2030 initiative. This plan, which aims to diversify the economy and reduce dependence on oil, includes extensive investments in residential properties and large-scale projects and supports the growth of Saudi Arabia construction equipment market.
3. Unveiled in 2017 by Crown Mohammed bin Salman Al Saud, NEOM is the most ambitious project in north-western Saudi Arabia, spanning an area of 26,500 square kilometers. Neom will consist of 10 projects. So far, four projects' details have been announced - The Line, Oxagon, Trojena and Sindalah. The first phase of NEOM is expected to be completed by 2025.
4. Saudi Arabia's construction output is projected to reach USD 181.5 billion by 2028, driven by the Vision 2030 initiative. In 2023, the sector's output value was USD 141.5 billion, with residential construction leading at USD 43.5 billion. Vision 2030 aims to deliver 660,000 residential units, 320,000 hotel rooms, and 6.1 million square meters of office space.
5. The King Salman International Airport in Riyadh, expected to be the world's largest airport, will be developed in phases. The project covers 57 square kilometers and is designed to handle 120 million passengers annually; the project includes new private aviation terminals, runways, and terminals set to open between 2026 and 2030.
6. In 2023, Riyadh launched its first public bus network and completed its metro, which is not yet open. The Public Investment Fund-backed company EVIQ was established to develop EV infrastructure nationwide. Additionally, plans are in place to expand the country's rail network from 5,000km to over 8,000km of track.
7. The Saudi Arabia Highway Renewal Project will involve extensive work on Riyadh's Western Ring Road (WRR). Nesma & Partners will carry out the work under a USD 320 million contract.
8. The Ministry of Transport of Saudi Arabia invested in road construction projects in the Al-Ahsa region in the country's eastern provinces in 2022. A 3921 km roadway is under maintenance, and 330 km are under construction in 2024.
9. Saudi Arabia’s King Abdulaziz Port has increased its crane capacity by 9.7% through a SAR 7 billion (USD 1.86 billion) investment deal. Operated by Saudi Global Ports Co., the port has added three automated quay cranes and three rubber-tired gantry cranes, bringing the total to 18 quay cranes and 50 gantry cranes.

KEY HIGHLIGHTS

1. Earthmoving equipment accounted for the largest market share in the Saudi Arabia construction equipment market in 2023. Excavators in the earthmoving segment accounted for the largest share in 2023. Rising investment in housing, port expansion, and public infrastructure projects is expected to drive the demand for excavators in the Saudi Arabia construction equipment market.
2. Due to its sandy terrain, crawler excavators are mainly used for construction projects in Saudi Arabia. They account for a significant share of the total excavators sold in the country.                                              
3. The 20-ton excavator is extremely popular in the Saudi Arabia construction equipment industry. It has a massive market share, followed by the 50-ton excavator.
4. In June 2024, XCMG expanded its operations in Saudi Arabia by opening a new service center in Dammam. This facility includes a transit warehouse, a component warehouse for key projects, and a training center. It joins existing Riyadh, Jeddah, and Tabuk service centers to boost regional service efficiency. XCMG is involved in major projects like the Red Sea, NEOM, and DGDA and aims to support Saudi Arabia's Vision 2030 and the Belt and Road Initiative.
5. Waste management in Jeddah faces significant challenges due to rapid population growth, which generates over 5,000 tons of solid waste daily. The primary landfill, Buraiman, handles 1.5 million tons annually but has environmental issues, including a large sewage lake that causes groundwater contamination.

MARKET TRENDS & DRIVERS

Focus on Green Hydrogen Fuel-Based Economy to Reach Net-Zero Emissions Target

1. Saudi Arabia is positioning itself as a key player in the global green hydrogen market. The Saudi Arabia Public Investment Fund (PIF) is driving efforts to establish the world's largest green hydrogen production facility in NEOM, a planned smart city.
2. This facility is expected to leverage the region's abundant solar and wind resources to produce green hydrogen, contributing significantly to the global supply and supporting the shift towards sustainable energy solutions in various sectors, including construction equipment​.

Extensive Demand for Cranes in the Saudi Arabia Construction Equipment Market in Response to Various LNG Projects

Sinopec Engineering Group and Spain's Técnicas Reunidas are building a USD 3.3 billion liquefied natural gas (LNG) complex in Saudi Arabia. The project includes engineering, procurement, and construction tasks, aiming to establish distillation and joint facilities with a production capacity of 510,000 barrels per day. The first phase will take 46 months, and the second will take 41 months, reflecting the project's scale and complexity. This initiative strengthens Saudi Arabia's position in the global LNG market.

Rising Trend for Waste-To-Energy Projects to Boost the Sales of Wheeled Loaders in the Saudi Arabia Construction Equipment Market

1. Edama Organic Solutions, a King Abdullah University of Science and Technology startup (KAUST), inaugurated Saudi Arabia's first dedicated organic waste recycling facility. This new facility in the KAUST Research and Technology Park aims to address significant environmental issues and support the Vision 2030 sustainability goals. The facility is designed to recycle 100% of KAUST's food and green waste, transforming it into approximately 4,500 cubic meters of high-quality soil improvement each year.
2. Waste management in Jeddah faces significant challenges due to rapid population growth, which generates over 5,000 tons of solid waste daily. The primary landfill, Buraiman, handles 1.5 million tons annually but has environmental issues, including a large sewage lake that causes groundwater contamination.

Increased Investments in Public Infrastructure and Real Estate Sector

1. Saudi Arabia's Vision 2030 aims to diversify its economy through major infrastructure projects, which are significantly ahead of schedule. This plan includes the construction of Neom, a USD 500 billion megacity, and other ambitious developments like The Line.
2. In July 2024, Saudi Arabia launched major data infrastructure projects, including developing new data centers and expanding existing ones. These initiatives aim to bolster the Kingdom's digital transformation, enhance data storage, and improve internet connectivity. The projects are part of Saudi Arabia's broader Vision 2030 plan to diversify its economy and reduce reliance on oil revenues by investing in technology and digital infrastructure. The development of these projects is anticipated to support the growth of the Saudi Arabia construction equipment market.

Surge in Renewable Energy Projects in the Country

1. Saudi Arabia's recent signing of power purchase agreements in June 2024 for 5,500 MW of solar PV projects represents a significant milestone in its renewable energy strategy.
2. This initiative includes three mega solar PV projects and contributes to the country's goal of achieving a renewable energy capacity of 20 GW by the end of 2024.
3. These developments are expected to stimulate demand for material handling equipment, particularly as the projects progress into construction phases. They will require extensive logistical and material handling solutions to manage the large-scale deployment of solar panels and associated infrastructure​. 

Robust Growth in the Development of Ports to Boost the Sales of Overhead Cranes in the Saudi Arabia Construction Equipment Market

1. Saudi Arabia's King Abdulaziz Port has increased its crane capacity by 9.7% through a USD 1.86 billion investment deal in June 2024. Operated by Saudi Global Ports Co., the port received three automated quay cranes and three rubber-tired gantry cranes, bringing the total to 18 quay cranes and 50 gantry cranes. 
2. This upgrade improves the port's ability to handle large ships efficiently and supports workforce skill enhancement. The initiative aligns with the National Transport and Logistics Strategy to establish Saudi Arabia as a global logistics hub. Recent data shows a 12.48% annual increase in container handling and a 3.77% rise in tonnage at Saudi ports, reflecting significant infrastructure development efforts.
3. Moreover, in June 2024, Gantrex was selected to supply and install crane rail solutions for the new Oxagon Port, part of Saudi Arabia's NEOM project. 

INDUSTRY RESTRAINTS

High Construction Costs in Saudi Arabia Are Hampering the Pace of Construction Activities

1. The stability of oil prices offers some reassurance, yet volatility persists, impacting developer confidence. Regulations on sustainability are tightening across the Gulf region, spurred by events like Dubai hosting COP 28. While these measures aim for long-term decarbonization and operational cost reductions, initial compliance costs are rising.
2. Saudi Arabia's ambitious mega-projects, including NEOM and Vision 2030, are driving up construction costs in the region. Riyadh is now the most expensive city in the Middle East for construction, with costs averaging USD 2,593 per square meter. 

Skilled Labor Shortage and Regulatory Challenges in the Country’s Construction Industry

1. A major issue for Saudi Arabia's construction sector is the scarcity of skilled labor. Efforts to decrease reliance on foreign workers have not succeeded, as the industry still depends heavily on expatriates to fulfill project demands. The construction shortage of qualified Saudi nationals hampers the sector's growth and sustainability.
2. Therefore, Saudi Arabia faces a significant talent crisis, with a projected skilled worker shortage of 663,000 by 2030, potentially leading to USD 206.77 billion in unrealized revenue. Contributing factors include the rapid creation of jobs by the Public Investment Fund and intense competition for Saudi professionals, leading to soaring salaries. 

Saudi Arabia’s Overdependency on Hydrocarbon Industry

Oil prices are volatile and can adversely be impacted by several external factors, such as fluctuations in supply and demand, political conflicts & tensions among countries, and increasing global environmental concerns. Hence, overdependence on the oil & gas industry will likely hamper economic independence in the long run. Further, according to government projections, energy prices are expected to remain high for 2024 and gradually fall in the coming years. Falling oil prices may drive the country to curtail or postpone government investment, restricting the construction industry's expansion and resulting in lower growth of the Saudi Arabia construction equipment market. 

VENDOR LANDSCAPE

1. Caterpillar, Komatsu, Liebherr, Volvo CE, XCMG, SANY, and Hitachi Construction Machinery are the front runners in the Saudi Arabia construction equipment market. These companies have strong market share and offer diverse sets of equipment. 
2. Tadano, Terex, Manitou Group, SDLG, Merlo Spa, Yanmar, Yongmao, Bomag, and ElectroMech are niche players in the Saudi Arabia construction equipment market. These companies offer low product diversification and have a strong presence in the country’s market.
3. Kubota, JCB, Kobelco, HD Hyundai Construction Equipment, CNH Industrial, LiuGong, Zoomlion, and DEVELON are emerging in the Saudi Arabia construction equipment market. These companies are introducing new technologically advanced products to challenge the market share of market leaders in the country’s market.
4. Kato Works, AUSA, Wacker Neuson, Hidromek, Haulotte, Ammann, JLG, Toyota Material Handling, and Manitowoc have low product diversification in the Saudi Arabia construction equipment market; these companies are lagging in adopting new technologies used in construction equipment.