| Forecast Period | 2025-2029 |
| Market Size (2023) | USD 1990.97 Million |
| CAGR (2024-2029) | 9.56% |
| Fastest Growing Segment | Forklift |
| Largest Market | Northern & Central |
| Market Size (2029) | USD 3395.11 Million |
Market Overview
Download Sample Ask for Discount Request Customization
The Saudi Arabia construction equipment lease/ rental market has shown robust growth, reaching a value of USD 1,990.97 million in 2023, and it is forecasted to expand to USD 3,395.11 million by 2029 with a compound annual growth rate (CAGR) of 9.56%.
This growth is largely fueled by Saudi Arabia's ambitious infrastructure and urbanization initiatives under the Vision 2030 framework, which seeks to reduce the nation’s reliance on oil by diversifying its economy. As a result, the demand for construction equipment has surged, particularly in the leasing and rental segment. Saudi Arabia’s commitment to transforming the nation is evident, having already achieved the top position in the global RICS Construction Activity Index, highlighting the continuous expansion and potential of its construction industry. The emphasis on mega projects like NEOM and the Red Sea Project has amplified the demand for advanced construction machinery, offering substantial growth opportunities within the leasing and rental sector as companies aim to control operational costs and capital expenditures.
Key growth drivers include the extensive infrastructure projects that require an assortment of construction equipment for execution. Leasing and renting enable companies to access a wide range of machinery without the significant financial commitment of outright purchases, particularly beneficial as technology advances and equipment demands vary across projects. The construction sector in Saudi Arabia is witnessing a shift toward urban development and smart city projects, which necessitates specialized machinery and technology. Leasing offers flexibility, allowing construction companies to access the latest equipment that meets stringent project requirements while supporting cost-effective operations. For instance, projects like the Riyadh Metro and Jeddah Economic City demand state-of-the-art machinery, driving a preference for rental services. This approach helps companies manage costs and risk while benefiting from high-quality equipment that can be easily updated as new technologies emerge.
While the market presents promising opportunities, certain challenges remain, particularly in terms of regulations, logistical requirements, and fluctuating equipment costs. Leasing companies must continuously invest in fleet upgrades to keep pace with technological advancements, which can be costly. There is also a rising demand for sustainable construction equipment, as the industry moves towards eco-friendly practices, necessitating electric or hybrid machinery to meet environmental goals. Companies in the lease and rental sector face the challenge of balancing these investments with competitive pricing. Moreover, the construction industry’s reliance on high-quality equipment and specialized machinery requires efficient supply chains and skilled personnel, which could strain resources, particularly for smaller firms. As the market continues to grow, players in the leasing and rental sector are expected to navigate these challenges, capitalizing on opportunities to support Saudi Arabia’s transformative vision and the evolving demands of the construction industry.
Market Drivers
Booming Construction Sector
Saudi Arabia’s Vision 2030 initiative, aimed at diversifying the economy and reducing dependence on oil, has led to an unprecedented rise in infrastructure and construction projects. In February 2024, NEOM announced the world's largest earthworks and piling operation at the site of The Line. Other megaprojects include the Red Sea Project, Diriyah, Qiddiya, and ROSHN. Riyadh also has several projects in various stages of construction. These megaprojects are driving demand for construction equipment across various segments, including earthmoving machinery, material handling equipment, and heavy machinery. Large-scale projects are key factors boosting the demand for rental equipment in the Kingdom, as companies prefer renting to avoid high upfront costs and maintenance responsibilities. Saudi Arabia's Vision 2030 is driving an impressive USD 1.3 trillion in investments across the kingdom's real estate, infrastructure, and other sectors. Furthermore, Aramco and TotalEnergies have granted contracts for engineering, procurement, and construction related to the Amiral complex, which is valued at USD 11.0 billion. This complex represents a significant expansion of the SATORP refinery located in Jubail, Saudi Arabia. This petrochemical facility is anticipated to support SATORP in furthering Aramco’s strategy of converting liquids to chemicals, with commercial operations expected to commence in 2027.
Growing Strategic Partnerships & Technological Advancements
Saudi Arabia's construction equipment lease/ rental market is thriving due to significant investments and strategic alliances. Technological advancements have increased demand for modern machinery, leading to a surge in strategic partnerships and joint ventures. These partnerships aim to leverage advanced technologies, expand equipment fleets, and strengthen service networks. For instance, in 2024, the Front End Limited Company, a Saudi-based enterprise, announced an exclusive partnership agreement with Crane+. Similarly, Al Marwan Machinery signed an exclusive agreement to supply KOBELCO Crawler cranes in the Saudi market, capitalizing on the demand for high-quality heavy machinery, particularly lifting equipment, in Saudi Arabia's construction and infrastructure sectors.
Key Market Challenges
High Competition and Demand Pressure
In Saudi Arabia’s construction equipment lease/ rental market, high competition among local players and demand pressure present significant challenges. The construction sector, driven by ambitious projects under Vision 2030 (such as NEOM and The Red Sea Project), experiences fluctuating demand. Peaks occur during certain phases of these projects, creating pressure on equipment availability and logistics. This intermittent demand requires companies to manage their fleets flexibly, often resulting in equipment shortages or surpluses that can disrupt profitability. Consequently, many companies, especially smaller or local rental service providers, face difficulties in maintaining profitability.
To remain competitive, they often resort to offering discounts, bundling services, or providing extended rental periods, all of which impact their profit margins. Additionally, the pressure to maintain and upgrade equipment to meet client demands for modern, reliable machinery further adds to the operational costs of these companies. Smaller players, with limited resources, often struggle to invest in larger, modern fleets or to match the pricing strategies of global competitors, leading to increasing market consolidation.
Maintenance and High Operating Costs
One of the critical challenges in the Saudi Arabia construction equipment lease/ rental market is the high cost of maintaining and operating rental fleets. Harsh climatic conditions, including extreme heat, dust, and sandstorms, significantly increase the wear and tear on equipment, leading to frequent breakdowns and higher maintenance costs.
Companies are forced to invest in frequent repairs and replacement parts, which raises operational expenses and decreases profitability.
In Saudi Arabia, delays in construction projects contribute to increased downtime for construction equipment. Large infrastructure projects, such as Neom and the Red Sea Project, are often subject to delays due to various factors, including regulatory approvals, funding issues, labor shortages, and changes in project scope. These delays directly affect the utilization rate of rented construction equipment, as machinery scheduled for deployment on a specific project often remains idle until the project resumes. Equipment that sits unused during project delays incurs costs.
Key Market Trends
Rising Preference for Chinese Equipment
Saudi Arabia's construction equipment rental/lease market has seen increasing popularity for China-produced equipment, fueled by a variety of reasons like cost savings, technology improvements, and the presence of advanced features in Chinese machinery. Companies like SANY, XCMG, Zoomlion, and LiuGong provide construction machinery at competitive prices, which are many times less than those provided by their Western counterparts. This allows rental companies to increase their fleets with less capital expenditure, putting them at a competitive advantage in the price-sensitive market. With project costs still on the increase, contractors and rental companies demand cost-effective solutions in order to stay profitable. Chinese equipment companies have enhanced the after-sales service capabilities in Saudi Arabia, such as service centers, dealer associations, and instant availability of spare parts, in order to raise the confidence of rental companies.
Emphasis on Diversified Rental Solutions
One of the major trends in the Saudi Arabian construction equipment lease/rental industry is the increasing focus on diversified rental solutions. For example, Kanoo Rental, the rental division of Kanoo Machinery, is broadening its services from conventional equipment leasing to more flexible and customized solutions. These consist of dry lease agreements (short- and long-term), lease-to-own schemes, and buy-back and trade-in facilities for customers who want to upgrade or exchange equipment. In addition, the purchase of used and refurbished equipment, as well as the refurbishment of existing machines, is increasingly becoming popular, enabling companies to have access to high-quality, low-cost equipment while retaining operational flexibility. This is because of the requirement for scalable solutions in several industries, enabling companies to regulate the cost of capital expenditure while taking care of project-specific requirements. For example, in 2022, Expertise Contracting Co. placed an order of 79 Tadano Cranes, which include 50 AC 3.055-1, 17 AC 5.130-1, 11 AC 5.250-1, and 1 AC 8.500-1 models in order to diversify its crane portfolio. The company provides services to more than 1,500 customers in industries such as petrochemicals, oil and gas, and energy in the Middle East.
Segmental Insights
Type
The Saudi Arabian construction equipment leasing/rental industry provides a wide variety of machinery to cater to the unique requirements of infrastructure, commercial, and residential developments. Loaders play a critical role in earthmoving and transporting material, facilitating site preparatory foundation support. Forklifts, being compact in nature, allow for careful maneuvering in confined areas and, therefore, are highly sought on building sites for the transportation of bulky building material with ease.
Excavators are multi-purpose and utilized for digging, demolition, and lifting. They have attachments to fit different applications, enabling them to carry out specialized functions such as trenching and land clearing, which are vital in massive developments. Dozers, designed for heavy-duty earthmoving and grading, grade and prepare land, which is vital in creating stable groundwork.
Download Sample Ask for Discount Request Customization
Region Insights
The northern and central parts of Saudi Arabia are significant contributors to the construction equipment leasing and hiring industry, with a high concentration of large infrastructure projects. This regional leadership is attributed to high-profile projects like the Riyadh Metro project, the King Abdullah Financial District project, and the NEOM mega-city project, among others, which collectively drive demand for varied construction machinery on a massive scale. These projects demand high levels of equipment resources such as loaders, excavators, cranes, and dozers, thus strong leasing and rental opportunities for suppliers serving such high-demand areas.
In the heart of Saudi Arabia, Riyadh's metropolitan area is the best example of the country's focus on urbanization. The Riyadh Metro project, perhaps the most widespread public transportation system under development in the area, requires huge building equipment for both over-land and under-city construction, prompting equipment needs for lease and rentals. The same goes for King Abdullah Financial District, which is expected to put Riyadh on the map as a financial hub, and whose multifaceted building requires high-specialized equipment at different levels of high-rise and infrastructure construction. These projects not only demonstrate Riyadh's strategic economic position but also its influence on the construction equipment market.
Located even further north is NEOM, one of the Kingdom's more ambitious projects for Vision 2030, touted as a next-generation mega-city with sustainable and smart infrastructure. NEOM is so large in scale and ambitions that it calls for high-technology construction machinery to facilitate accelerated, eco-friendly development. LEASING EQUPMENT INTO NEOM and surrounding areas requires the flexible scalability that leasing ensures, to deliver to the evolving needs of the project without making significant capital contributions from single firms.
Recent Developments
- Zahid Tractors, the authorized CATERPILLAR dealer and equipment rental firm in Saudi Arabia, has significantly benefited from the NEOM giga project. The company has reported the provision of 5,000 units, including tractors, excavators, loaders, graders, and trucks, which are presently deployed on-site. Furthermore, Zahid Tractors anticipates that this figure will increase to 10,000 units in the forthcoming years.
- In December 2023, Arabian Machinery & Heavy Equipment Co. (AMHEC), a prominent crane and heavy haulage firm, placed an order for 55 new cranes from Liebherr. This order marks the largest ever received by Saudi Liebherr Co. The acquisition includes a diverse range of mobile cranes with lifting capacities ranging from 100 to 800 tonnes. As part of this significant order, AMHEC will obtain the following modelsLTM 1100-5.3, LTM 1110-5.2, LTM 1160-5.2, LTM 1230-5.1, LTM 1250-5.1, LTM 1300-6.3, LTM 1450-8.1, LTM 1650-8.1, and LTM 1750-9.1.
- In November 2024, Dayim Holdings, a rental and logistics company based in Saudi Arabia, secured a substantial investment from the private equity firm LetterOne. This firm oversees a portfolio of USD 20 billion, focusing on various sectors including energy, telecommunications, retail, and healthcare. Dayim Equipment operates rental facilities across Saudi Arabia, Qatar, Kuwait, Bahrain, and the United Arab Emirates, offering an extensive selection of construction equipment and tools for rent.
Download Sample Ask for Discount Request Customization
Key Market Players
- Expertise Contracting Co Ltd
- Mohammed Abdullah Al Areedh Company
- Arab International Transport and Heavy Equipment Company Ltd
- Fahad S. Al-Tamimi Group
- Zahid Tractors and Heavy Equipment Company Ltd
- Al Jaber Heavy Lift & Transport Co. Ltd
- Bin Quraya Company Limited
- Source Machinery for Trading & Contracting Company Ltd
- SAQCO Arabia Limited Company
- National Basics Company Limited
|
By Type |
By Application |
By Power Output |
By End User |
By Region |
|
|
|
|
|
|
|
Related Reports
FAQ'S
For a single, multi and corporate client license, the report will be available in PDF format. Sample report would be given you in excel format. For more questions please contact:
Within 24 to 48 hrs.
You can contact Sales team (sales@marketinsightsresearch.com) and they will direct you on email
You can order a report by selecting payment methods, which is bank wire or online payment through any Debit/Credit card, Razor pay or PayPal.
Discounts are available.
Hard Copy