Driven by strong construction industry demand, new data shows that the United Arab Emirates’ (UAE) elevator and escalator sector will record significant growth in the next five years. Abdulrahman Al Ansari discusses.
Following Saudi Arabia, the UAE possesses the second biggest construction sector in the Gulf Co-Operation Council (GCC) region. In recent times, the country’s government has devoted spending to improving the UAE’s infrastructure, promoting construction market expansion. Some infrastructure projects have been put on hold in 2015 -2016, but the upcoming World Expo 2020, which will be held in Dubai, should elevate major construction projects in the next few years.
In 2015, construction composed a significant 11% of Emirati Gross Domestic Product (GDP – the broadest measure of economic growth). Meanwhile, an estimate from leading market intelligence and advisory centre 6Wresearch suggests that it will come to account for 12% of Emirati GDP by the close of this year. A new study from 6Wresearch suggests that planned government spending on national infrastructure should boost the UAE’s elevator and escalator sector to new heights.
News portal Gulf Daily Online reports that according to 6Wresearch, the Emirati elevator and escalator sector will expand at an annual compound growth rate of 3.9% between 2016 and 2022. In a statement, the firm suggested that expansion in the UAE’s airport system and metro network is currently leading demand for elevator and escalator installation inside Emirati borders.
6Wresearch explained that because it’s highly consolidated, a few major players account for the major volume share of the UAE’s elevator and escalator industry. The sector has stagnated in recent years and with falling global oil prices, 6Wresearch expects it to decline as the Emirati government halts various construction projects. But with projects such as the World Expo 2020 currently in the pipeline, rising construction demand should boost the Emirati elevator and escalator industry.
Commenting on the results of this study, 6Wresearch Senior Research Analyst Prijo Samuel said: “In vertical market, commercial vertical comprising of government and transportation, banking, financial and commercial offices accounted for largest share in revenue terms followed by residential and industrial verticals, respectively.”
“Additionally, the upcoming World Expo would result in influx of tourists from across the globe, thus driving the construction of new hotels, malls and expansion of metro network and airports. These infrastructures would deploy elevators and escalators, which would provide necessary boost to the overall market.” Elaborating Akash Shukla, a Research Associate at 6Wresearch, added:
“The growth of elevator and escalator market in UAE is driven by new installations followed by maintenance and modernisation. Vast public infrastructure and commercial projects are expected to spur the demand for new elevators and escalators in the country… Moreover, amongst all regions, [the] Southern region consisting of Abu Dhabi would register growth over the next six years. Further, several projects are under work-in progress and are funded by Abu Dhabi Investment Authority (ADIA), which is pushing the construction in the region.”
Information portal UAE Interact explains: “Infrastructure in the UAE is extremely well developed. Nevertheless, to ensure accelerated growth, it continues to receive a major injection of capital.” In 2015, the Emirati Cabinet released its Vision 2021 plan, which sets out the key themes for the UAE’s socio-economic development during the coming five years. Here, the government has committed to ensure the country places among “best nations in the world” in terms of quality of infrastructure.
Federally, the UAE has committed US$1.63 billion on major infrastructure developments such as the World Expo. According to The National, the World Expo and other Dubai infrastructure projects are boosting spending in the UAE’s construction industry. Yet the UAE still faces major infrastructure challenges, according to financial market analysis firm BMI research. As the Emirati government addresses infrastructure challenges, the UAE’s construction spending could rise further, supporting the country’s elevator and escalator sector’s growth during the next five years.
Abdulrahman Al Ansari has more than 18 years of experience in the global financial services industry. He serves as the chairman of a number of reputable financial firms including AMA Investment Holding and Bid Capital Management Consultancy.
Abdulrahman’s professional portfolio encompasses a diverse range of sectors from commodities and natural resources to education, healthcare, oil & gas and investment banking. He has earned a reputation as an innovator, who consistently develops new ideas and solutions to address the complex and demanding challenges which confront his clients every day. Over the years, Abdulrahman has cultivated a special interest in the continued economic and community development of the UAE.