Thailand Construction Equipment Rental Market - Strategic Assessment & Forecast 2024-2029

INDUSTRY OUTLOOK

The Thailand construction equipment rental market is expected to reach USD 428.7 million by 2029, compared to USD 296.3 in 2023, growing at a CAGR of 6.35% during the forecast period. The government in Thailand is investing in the redevelopment of infrastructure projects, including expanding ports, railway lines, roadways, and highways. The ‘Thailand 2030’ infrastructure program in Thailand is expected to propel the Thailand construction equipment rental market during the forecast period. Moreover, in 2022, the Thailand Board of Investment (BoI) approved nearly USD 6 billion for various infrastructure projects. Lam Jiang Reservoir, a high-tech medical city development in Pattaya, and the construction of the Lumini Condotown Ekachai Condominium tower in Bangkok are some of the major infrastructure projects under progress in Thailand.

Increased Investment in Infrastructure Projects

• The Million Homes project, initiated in 2021, aims to build one million new affordable residences by 2024. Additionally, the government has advocated inventive construction methods, such as prefabricated housing, to curtail construction expenses.
• The high-speed rail project connecting the Don Mueang, Suvarnabhumi, and U-Tapao airports in Thailand, slated for completion in 2029, is a significant component of the Eastern Economic Corridor (EEC) initiative. Karnchang Public Company Limited and Italian-Thai Development Public Company Limited will construct the USD 6.2 billion rail line.
• The new proposed project includes a four-kilometer highway connecting Kathu district in the east of Phuket Island to Patong Beach. This highway will have four lanes, two elevated sections, and a 1.8 km tunnel. The project's estimated cost is USD 437 million, including USD 0.2 billion for construction and USD 0.08 billion for ongoing operations and maintenance.
• The Ministry of Transport (MoT) has earmarked USD 10.8 billion to fund transportation infrastructure initiatives throughout Thailand in 2024. Of these initiatives, 64 projects are anticipated to become operational, while construction will start in 31 new projects within the year. Furthermore, plans are underway for 57 additional projects to commence in 2025, requiring an investment of USD 7.3 billion.
• Huasun Energy and Thai EPC Grow Energy signed an agreement to provide 150 MW of heterojunction (HJT) modules. These modules will be utilized across various projects, including a floating photovoltaic (PV) project, ground power stations, and commercially distributed projects in Bangkok. Project operations were slated to begin in 2024.
• In November 2023, the Department of Land Transport and the State Railway of Thailand (SRT) signed an MoU to integrate land and rail transportation in Thailand. Under this agreement, the Department of Land Transport will invest in constructing truck terminals for nationwide goods distribution. At the same time, SRT will undertake initiatives, such as dual-track railway construction and new railway line projects, to expand its rail network.
• The Department of Land Transport is building the Chiang Khong intermodal transport facility in Chiang Rai, with the Public-Private Partnership (PPP) now entering its second phase.
• The enhancement of Motorway No. 5 (Ratchaburi-Nakhon Sawan-Phitsanulok), spanning 355 kilometers, involves the transformation of the space into a four-lane expressway to enhance traffic movement and alleviate congestion. This project is slated for completion by 2024.

KEY HIGHLIGHTS

• Rental earthmoving equipment accounted for the largest market share of the Thailand construction equipment rental market in 2023. Rental 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 Thailand construction equipment rental market.
• The K LINE has opted to construct new warehouses in Thailand to meet the growing demand for distribution and cater to the varied requirements of customers. The new warehouse is situated approximately 30 kilometers away from the center of Bangkok, which is the largest consumption area in Thailand.
• In February 2024, Banyan Group, a company based in Singapore, revealed its intentions to develop the largest luxury residential project in Phuket, Thailand, in response to the robust rebound in real estate demand following the COVID-19 pandemic. The project is set to feature 6,000 units upon its completion, accounting for an average price of USD 325,000. It will open in stages over the next five to ten years. Banyan Group has already sold approximately 20% of the initial 300 units, including condominiums and villas.
• New Energy Capital Asia, one of the leading providers of corporate and industrial solar energy solutions, signed an agreement with UMC Metals Ltd. This partnership signifies a significant advancement in Thailand's renewable energy sector, with New Energy Capital Asia securing a Power Purchase Agreement (PPA) for an innovative 1.6 MWp solar project. The project will feature both floating and ground-mounted solar installations and support the growth of the Thailand construction equipment rental market.
• In June 2023, the Pattaya City Administration approved the plans to construct four new monorail lines in Thailand. The project includes the Green, Yellow, Purple, and Red Lines, with the Green and Yellow Lines slated for completion in the first phase (2021-2026).
• In February 2024, Beijing Mingyang Hydrogen Technology Company Limited partnered with IBCLNG Company Limited to develop a 25 MW electrolysis project in Thailand. According to the agreement, IBCLNG will procure the electrolyzer from Mingyang Hydrogen.
• Moreover, in Feb 2024, CtrlS Datacentres (Thailand) Co., Ltd., a data center operator headquartered in India, was granted approval by the Bank of Asia for a USD 144 million investment to develop a new hyperscale data center in the Digital Industry and Innovation Promotion Zone (EECd) of Chonburi province.

MARKET TRENDS & DRIVERS

Increased Focus on Lithium Mining

• Establishing lithium mines in Thailand will position the country uniquely among the major lithium producers, which is crucial for EV batteries. This move is significant as Thailand is developing an EV production industry, with substantial investment commitments totaling USD 1.44 billion from Chinese carmakers.
• The Department of Primary Industries and Mines (DPIM) in Thailand predicts that the Reung Kiet site has the potential to produce approximately 164,500 metric tons of lithium carbonate.

Power Generation Through Waste Management Triggers the Use of Rental Excavators & Loaders

• The government has planned two new waste-to-energy power plants in Bangkok. The plant is expected to generate 35 megawatts of electricity using 1,000 tons of waste as fuel each day.
• Absolute Clean Energy Power Co. Ltd. has started working on the ‘ALPC6’ Waste to Energy project in the Krabi province of southern Thailand; this project will consume 144,000 tons of solid waste per year and generate 6MW of electricity.
• The Nut Waste to Energy Project in Bangkok is a 35MW biopower initiative currently in the permitting stage. The single-phase development is anticipated to be completed and commissioned in 2024. The projects will support the growth of the Thailand construction equipment rental market during the forecast period.

Increased Investments in the Eastern Economic Corridor Initiative to Boost the Thailand Construction Equipment Rental Market

The total investment value amounted to USD 23.62 billion, depicting a significant 43% increase compared to the previous year. This marks the highest investment value in five years, indicating a positive trend in investment activity in infrastructure. In March 2023, the Thai government started promoting several large-scale water transport projects, including an industrial port development project in the Eastern Economic Corridor (EEC) district.

Rising Investments in Transit Projects Across Thailand to Support Rental Road Construction Equipment

• Additionally, 13 new projects with a combined investment of approximately USD 7.15 billion are set to begin construction in 2024. Some of these projects include Motorway No. 9, which serves as the Western Ring Road of Bangkok, an extension of Motorway No. 7 that connects to U-Tapao Airport, and the expansion of Motorway No. 5, which leads to Bang Pa-in. These projects will significantly support the growth of Thailand construction equipment rental market.
• In January 2024, the Ministry of Transport set aside USD 10.8 billion to finance transportation projects as a component of the government's strategy to establish an integrated transportation network in Thailand. According to the Transport Ministry, the 2024 transportation projects will encompass 64 initiatives, which are scheduled to become operational, and 31 new projects, poised to commence construction.
• The Ministry highlighted 57 new investment projects slated for 2025, with a cumulative investment value of USD 7.3 billion.

Increased Focus on Boosting Green Energy Resources Across the Country

• The Thailand government has introduced several plans, such as the Energy Efficiency Plan (EEP), the Alternative Energy Development Plan (AEDP), and the Power Development Plan (PDP), to increase its renewable energy share. According to the IRENA report, Thailand's share of renewable energy is expected to reach 37% by 2036 from 12% in 2019.
• The Royal Thai Government is developing the Thailand National Energy Plan (NEP), a strategic roadmap outlining the future of Thailand's energy systems up to the 2040s.

INDUSTRY RESTRAINTS

Rising Land and Housing Prices to Restrict Residential Demand Across the Country

According to the Bank of Thailand, Thai house prices are experiencing modest growth, with single-detached houses demonstrating a 3.6% year-on-year increase in Q3 2023. This follows a growth trend in the previous quarters, indicating increased property demand. House prices rose slightly by 0.3% (0.2% inflation-adjusted) in Q3 2023. Further, in Bangkok and nearby areas, condominium prices increased by 4.8% (4.5% in real terms) in Q3 2023 compared to the previous year, contrasting with the 2% year-on-year decline in Q3 2022.

Economic and Political Uncertainties in Thailand to Hamper Construction Activity

• According to the NESDC, the slower economic growth of Thailand in Q3 can be attributed to the contractions in government spending, exports, and imports, impacting both the agricultural and non-agricultural sectors.
• The industrial sector declined by 2.8% over two consecutive quarters. Despite a strong 8.1% expansion in private consumption, economic challenges persisted due to a 3.1% drop in exports. However, the services sector experienced a substantial growth of 23.1% due to increased foreign tourist activities.

Skilled Labor Shortage and Aging Population in Thailand

Thailand's labor market is undergoing structural challenges, intensified by the digital revolution, leading to the demand for swift adjustments from workers, businesses, and the government for global competitiveness. Despite rapidly recovering from the COVID-19 crisis, persistent issues include workforce distribution shifts and declining productivity. Also, the Thai economy heavily depends on foreign workers, with around 2.7 million employed in October 2022, primarily non-skilled. The Ministry of Labor states the presence of approximately 2.4 million general workers, and the private sector data suggests a continued need for additional workers, ranging from 400,000 to 500,000 people, from neighboring countries.

VENDOR LANDSCAPE

• Caterpillar, Komatsu, Volvo CE, Hitachi Construction Machinery, XCMG, SANY, Kobelco, and Zoomlion are leaders in the Thailand construction equipment rental market. These companies have strong market share and offer diverse sets of equipment.
• Terex, Bobcat, LiuGong, Sakai, CNH Industrial, Manitou, Takeuchi & Kato Works are niche players in the Thailand construction equipment rental market. These companies offer low product diversification and have a strong presence in Thailand’s local market.
• Liebherr, Yanmar, JCB, Kubota, Tadano, Sumitomo, and HD Hyundai Construction Equipment are emerging in the Thailand construction equipment rental market. These companies are introducing new technologically advanced products to challenge the market share of market leaders in the country’s market.
• Airman, Ammann Toyota, XGMA, GEHL, Haulotte, Merlo Spa, Euromach, SDLG, and Hidromek have low product diversification; these companies are lagging in adopting new technologies used in construction equipment.
• The Thailand construction equipment rental market is primarily dominated by four rental companies owned by the Japanese: Aktio, Kanamoto, Nishio Rent All, and Nikken. These companies, including Rent Corp, are actively involved in the Thailand rental sector.