Spain Compact Construction Equipment Market - Strategic Assessment & Forecast 2023-2029

MARKET INSIGHTS

The Spain compact construction equipment market is expected to reach 24,043 units by 2029, growing at a CAGR of 5.12%. Regions across Spain are heavily investing in infrastructure development projects, including repairing and renovating airports, railway lines, roadways, and highways. Moreover, a surge in renewable energy projects under the country’s Recovery and Resilience Plan is expected to propel the Spain compact construction equipment market during the forecast period.

Increased Investment in Public Infrastructure Projects

• The government is working on the A-67 highway between Polanco and Santander with an estimated budget of $1.7 billion. The project's main objective is to expand the capacity and resolve the safety issue. Another large investment funded by the ADIF Alta Velocity, costing USD 1.3 billion, involves the expansion and remodeling works of the Ourense intermodal station.
• In June 2023, the government announced that 11 Spanish transport infrastructure projects would receive European funding. A total of 107 transport infrastructure projects will receive funding worth $6.6 billion in EU grants from the Connecting Europe Facility (CEF), the EU instrument for strategic investment in transport infrastructure. Of all of them, 11 projects are Spanish.
• OHLA has commenced constructing the Malpartida bypass road in the province of Cáceres (Extremadura). This project was awarded by the Ministry of Transport, Mobility and Urban Agenda (MITMA) for approximately USD 48 million.
  • The project involves constructing the bypass road of the N-521 highway and a dual carriageway duplication of the same road between the junction with the A-66 highway and the municipality itself. 
  • The project will have a total length of 10.7 km and is expected to be completed in 2026.
• In July 2022, the Government of Madrid invested USD 533.3 million to extend Line 11 of the Metro in Madrid. The project will be completed over 3.5 years and involve the construction of 6.9 km of new tracks and two new stations: Comillas and Madrid Río.
• Another renovation project is underway in Galicia. The Monforte de Lemos to Lugo Railway Line Renovation involves improving the quality and reliability of the railway connection between Monforte de Lemos and Lugo. The project is estimated to be completed by the end of 2023 with a projected value of USD 132 million.
• In Sept 2023, Spain, Italy, and Portugal received USD 1.8 billion from the European Investment Bank. The funding was directed towards developing approximately 120 photovoltaic solar plants, which will be led by Solaria (a leader in developing solar power plants). Furthermore, the plants are designed to have an aggregate capacity of 5.6 gigawatts and are expected to come into operation by 2028. The InvestEU Programme backs the project.
• In August 2023, Ferrovial and EBA announced the new School of Medicine, Nursing, and Physiotherapy construction for the University of the Basque Country in Bilbao, Spain. The construction will include a 9-story building spread over more than 44,500 sq m. The project cost is approximately USD 55.6 million, also encompassing the development of sidewalk replacements, enhanced access points, the establishment of an interior plaza, and the creation of a new street. The building is projected to open by 2026; moreover, project construction is projected to support Spain compact construction equipment market.
• In July 2023, the Catalonia Regional Government’s Territory Department granted a USD 334 million contract to Ferrovial, in association with Sacyr and Copisa, to extend the Llobregat-Anoia line of the Ferrocarrils de la Generalitat de Catalunya (FGC) commuter rail system in Barcelona. The project involves the construction of a 4 km tunnel and three new stations, as well as upgrading two existing stations.
• Spain’s Ministry of Transport, Mobility and Urban Agenda (Mitma) approved the Indicative Railway Strategy (IRS) between 2021 and 2026, including developing, maintaining, and renovating Spain’s high-speed railways for the following three years. The development will attract USD 25.7 billion worth of investments during the respective years.
• In June 2022, GLP planned to open a large sustainable logistics park in Madrid by 2025. The project will cover an area of over 270,000 sqm. Therefore, the location will enable efficient, sustainable, fast delivery using green vehicles. The area will encompass green areas, sports fields, open-air gyms, restaurants, electric charging areas, bicycle parking, and a running track.

KEY HIGHLIGHTS

• Compact forklifts accounted for the largest market share of the Spain compact construction equipment market in 2022. Application of compact construction equipment in the material handling segment accounted for the largest share in 2022. Rising investment in housing, warehouse expansion, and public infrastructure projects is expected to drive the demand for compact excavators in the Spain compact construction equipment market.
• The joint venture of Kronos Real Estate Group and Nuveen Real Estate has assigned Dragados to construct the project in a build-to-rent format, which will house around 1,000 tenants. The work on the 531-home residential development has begun in Madrid and is scheduled to be completed in 2025.
• Another project, the Caixa Forum Madrid, is a brownfield development transforming Mediodia Power Station into the new headquarters of the Caixa Forum in Madrid. It will encompass an area of 10,000m2; however, it will have the same appearance as the previous. The facility will comprise seven floors: house offices, a restaurant, showrooms, a 300-seat auditorium, conservation workshops, and a warehouse.
• Approvals for new office construction projects in Spain have increased significantly in 2023. Among the recent deliveries, ‘Alaba 111’ in Barcelona, owned by Blackstone, is one of the important projects. Alaba 111 is a smart office building of 18,300 square meters, which is Wired Scored and has been LEED Gold certified.
• BP p.l.c. in Feb 2023 launched the green hydrogen cluster of the Valencia region (HyVal) at its Castellón refinery. The development will include 2 GW of electrolysis capacity by 2030 for producing green hydrogen at BP’s refinery. The project will support the decarbonization of the refinery’s operations, replacing its current use of ‘grey’ hydrogen.
• Toyota Material Handling expanded its material handling products and solutions in March 2023 by introducing three new electric forklift models. Customers are being offered versatility and performance on the job site with the new electric product launch, which includes an Industrial Tow Tractor, a Center Rider Stacker, and a Side-Entry End Rider.
• Develon launched the new DX62R-7 and DX63-7 6-tonne Stage V mini-excavators. The DX62R-7 and DX63-7 are ideal for work in confined spaces on projects in landscaping, construction, utilities, agriculture, rental, recycling, waste, and many other areas. The machines are equipped with a new D24 Stage V-compliant diesel engine providing 44.3 kW (59.4 HP) of power. 
• HD Hyundai Construction Equipment Europe launched the HW65A wheeled excavator and the HX65A crawler model.
  • Both the models are equipped with Stage V Hyundai engines, flaunting a spacious new cab, standard proportional joysticks, and improved serviceability.
  • It has TPowerful 48.5kW with 248Nm of torque, Proportional joysticks with a ram-lock on the joystick, and increased swing speed and swing torque.

MARKET TRENDS & DRIVERS

Increased Investment in Hydrogen Fuel Networks to Support the Spain Compact Construction Equipment Market

• The Hydrogen Roadmap of Spain lays down national targets for 2030 and 2050, where the country believes in achieving climate neutrality and having a 100% renewable energy system. The government has announced its plans to increase production (10 million tonnes) and green hydrogen consumption (20 million tonnes) by 2030.
• The ‘European Strategy’ has also laid out three phases of renewable hydrogen development. The first phase (2020-2024) is planned to have at least 6 gigawatts of electrolyzers installed in the EU and up to one million tons of renewable hydrogen production.

Increased Investment in Water And Solid Waste Management Activities Across the Country to Support the Demand for Compact Material Handling Equipment

• In March 2023, Smurfit Kappa announced to invest USD 28.7 million into a new waste management and recovery facility at its Nervión paper mill, where a lime kiln and gas treatment system expects to divert 75,000 tonnes of waste from landfill.
• In June 2023, Madrid-based Sacyr S.A. sold its Valoriza Servicios Medioambientales (VSM) waste and recycling services business unit to the New York-based Morgan Stanley Infrastructure Partners.
• EnergyLOOP, in Jan 2023, announced the installation of its innovative blade recycling plant in Spain. The company will begin construction of the facility in August 2023, which is scheduled to operate from 2024. The company will also contribute to developing an innovative value chain with an investment of approximately USD 10 million and creating more than 100 jobs.

Integration of Technological Solutions in the Spain Compact Construction Equipment Market

• Caterpillar’s new D series skid steer loaders are integrated with the Cat Intelligent Leveling™ (ILEV) system, which provides several industry-smart features, including dual self-leveling, electronic snubbing, return-to-dig, and work tool positioning. Moreover, this new series model is equipped with the necessary emission control standards provided by the government.
• The digitization of construction equipment through advanced sensors, communication technology, and data analytics has revolutionized construction equipment. Real-time data collection enables predictive maintenance, minimizing downtime and extending equipment lifespan.​ AI-integrated equipment improves efficiency, delivers quality, enhances supply chain management, and reduces risks.

Increased Public Infrastructure Investment to Propel the Demand for Compact Construction Equipment

• The European Funds has planned to contribute approximately USD 2.1 billion in Spain until 2027. The Recovery and Resilience Mechanism (MRR) has significantly pushed infrastructure investment. The plan also supports the green transition through investments of over USD 8.3 billion in the energy efficiency of public and private buildings, including new social housing.
• The high-speed network is expanding, with the new Madrid-Murcia and Madrid-Burgos sections announced in 2022 and the inauguration of the Madrid-Asturias line scheduled for 2023. The Spanish Government has estimated that between 2025 and 2026, the construction of the entire corridor from Almería to the French border will be completed.

Increased Investments in Green Energy Projects Across the Country to Propel the Sales of Compact Construction Equipment in the Spain Compact Construction Equipment Market

• Of 490 projects, 24 have achieved the Administrative Authorization for Construction (AAC) for the power of 1,948.32 MW. 19 installations are photovoltaic, three are wind, and two are hybridized sites.
• With the Spanish energy market's largest capacity, Iberdrola is developing three projects for 399 MW of capacity. These are “Tagus” and “Casetona” photovoltaic energy sites, with 329.9 MW and 27.675 MW of power, respectively, and a hybrid with wind energy site called “Ballestas” with 41.58 MW.
• The MRR Plan includes a Law on climate change and energy transition , which aims at renewable targets for 2030 and asserts to attain climate neutrality by 2050, including a 100% renewable electricity system.  

Flourished Tourism Sector in the Country to Support Construction Activities
Madrid and Barcelona are the most popular regions attracting investments, followed by other regions like Mallorca, Tenerife, and Las Palmas. Most of the money invested in the sector recently has come from investment funds (Next Generation EU). In addition, approximately 50% of all annual investment volume in 2022 was made by Spanish investors. Moreover, Spain has at least 75 hotel projects that are under construction with more than 14,225 rooms. Of the total, 37 will be 5-star luxury hotels representing 7,333 rooms. The remaining 38 hotels, which will be four stars, will have 6,892 rooms. The growing construction activities of hotels are projected to impact the Spain compact construction equipment market positively.

INDUSTRY RESTRAINTS

Skilled Labor Shortage to Hamper Construction Activities in the Region

• A survey conducted by the Bank concluded that 62% of the companies in the hospitality sector have various difficulties in retaining the staff required to maintain and boost their businesses, and the construction market was recorded with 49% of the companies facing the same issues.
• The aging population is another reason for the shortage. In 2012, the population aged 65 and over accounted for 17.4%; by 2022 already exceeded 20%. In contrast, the population under 20 fell to 19.2% in 2022, after years of stagnation at around 20%.

High-Interest Rates to Restrict the Growth of the Housing Sector
The Spanish residential market is slowing down, with several factors contributing to reduced demand for property. Rising interest rates, tighter credit conditions, global economic uncertainties, and geopolitical instability have dampened housing demand. According to the National Bank of Spain, affordability has declined significantly over the past year (2022). At the beginning of 2022, households only needed to spend 30% of their income to repay loans, but by the fourth quarter, this percentage had escalated to more than 36%. Interest rates rose further in the first half of 2023, likely degrading housing affordability.

Surge in Input Prices and Difficult Market Situations Increase the Overall Construction Cost in the Market
Since Jan 2021, the construction cost index of Spain has escalated sharply, predominantly driven by the strong global demand recovery and the war crises in Ukraine. The prices of energy-intensive building materials, such as concrete, cement, and bricks, have continued to increase despite declining energy prices. Moreover, in the coming years, the Spanish construction and real estate sector will be significantly affected by stringent regulations on the energy efficiency of buildings. The construction companies must meet higher sustainability and energy efficiency standards at each stage of the project’s lifecycle. Therefore, these mandatory regulations may also escalate the cost of new construction projects.

VENDOR LANDSCAPE

• Caterpillar, Volvo CE, Komatsu, JCB, Kubota, and Hitachi Construction Machinery are front runners in the Spain compact construction equipment market. These companies have strong market share and offer diverse sets of compact equipment.
• Caterpillar, Komatsu, and Volvo CE account for the highest revenue in the Spain compact construction equipment market.
• LiuGong, Manitou, Mecalac, Merlo Spa, Toyota Material Handling, Yanmar, and Bobcat are niche market players. These companies offer low product diversification and have a strong presence in the Spanish market.
• SANY, CNH Industrial, XCMG, Kobelco, Liebherr, and HD Hyundai Construction Equipment are emerging in the Spain compact construction equipment market. These companies are introducing new technologically advanced products to challenge the share of market leaders.
• Develon, Hinowa, Wacker Neuson, Kalmar, Venieri, Takeuchi, Dieci, AUSA, Eurocomach, and Haulotte have low product diversification; these companies are lagging in adopting new technologies used in construction equipment.