The construction equipment rental market in Saudi Arabia is poised for solid growth over the next five years, registering a CAGR (compound annual growth rate) of 10.24 per cent till 2021 on the back of government's endeavour to diversify the economy into non-oil sector, said a study.
 
Another key reason for the growth is the increasing customer inclination towards renting construction equipment,  rather than buying, so as to overcome the burden of associated ownership costs, such as operating, transportation, regulatory certification fees and maintenance, according to the report by TechSci Research.

The forecast was based on the anticipated stabilisation of crude oil prices along with bullish outlook towards construction and infrastructure sectors of Saudi Arabia to drive the country's construction equipment rental market, stated the research-based global management consulting firm.

In 2015, Saudi Arabia emerged as the largest exporter of oil, globally. With GDP of around $753 billion in 2014, the country's economy is largely dependent on revenue earned from oil and gas sector, it stated.

During 2003-2013, increasing oil production and growing oil prices translated into large fiscal surpluses, on the back of which, the country managed to lower its debts. However, slump in global oil prices, at a CAGR of over 16 per cent during 2011-2015, impacted the economy of Saudi Arabia, thereby leading to decline in revenue earned by the government in 2015.

The fiscal deficit of Saudi Arabia stood at around $98 billion in 2015, which in turn led to downfall in the construction sector of the country, said the research firm.

This year, the government trimmed down the kingdom's infrastructure and transportation budget by 64 per cent compared to 2015, thereby impeding the growth of construction sector of the country.

On account of anticipated growth in crude oil prices at a CAGR of over seven per cent, during 2016-2021, the country's economy is expected to witness revival, thereby leading to an increase in government spending on construction, infrastructure, mining and other related sectors, it stated.

On account of consistent growth in public and private infrastructure development projects, surge in the country's construction equipment rental market is anticipated during the forecast period.

"Owing to the non-availability of transmission & distribution lines in various remote areas in the country along with easy availability of diesel gensets and lower diesel prices, Saudi Arabia construction equipment rental market is presently dominated by diesel genset segment, said TechSci Research in the report.

However, telescopic handlers segment is expected to emerge as the fastest growing segment due to its use in multiple applications in the construction sector, it added.

"The construction equipment rental market of Saudi Arabia is cluttered with more than 50 per cent of the market share held by small and medium sized rental companies, as of 2015," remarked Karan Chechi, research director with TechSci Research.

Few of the major construction equipment rental companies operating in Saudi Arabia are Bin Quraya Rental, Zahid Tractor and Heavy Machinery, ISDC Rental, Altaaqa Alternative Solutions Company and General Contracting Company, he added.-TradeArabia News Service