Gulf Construction Online - UAE elevator market set to rise

Lifts & Escalators

UAE elevator market set to rise

01 July 2016

The elevator and escalator market in the UAE is projected to grow at a compound annual rate of 3.9 per cent from 2016-2022 against a backdrop of increased government spending on public infrastructure that is leading to the growth of construction industry in the country, according to 6Wresearch, a leading market intelligence and advisory centre.

The UAE is the second largest construction market in the GCC region after Saudi Arabia. Construction contributed nearly 11 per cent to the UAE’s gross domestic product (GDP) in 2015 and is further estimated to add 12 per cent by the end of 2016, the report states.

According to 6Wresearch, expansion in the areas of metro network and airport has led the growth of elevators and escalators in the UAE.

The UAE elevator and escalator market is highly consolidated with a few players accounting for the major volume share. Although it has remained stagnant in the last few years, the upcoming World Expo in 2020 is forecast to boost the number of major construction projects in the coming years.

Prijo Samuel, senior research analyst, Research and Consulting, 6Wresearch, comments: “In the vertical market, commercial vertical that comprises government and transportation, banking and financial and commercial offices accounted for the largest share in revenue terms followed by residential and industrial verticals, respectively.

“Additionally, the upcoming World Expo will result in an influx of tourists from across the globe, thus driving the construction of new hotels, malls and expansion of metro network and airports. These infrastructure projects would deploy elevators and escalators, which would provide the necessary boost to the overall market.”

Akash Shukla, research associate, research and consulting, 6Wresearch, says the growth of the elevator and escalator market in the 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.

“Amongst all regions in the country, the southern region consisting of Abu Dhabi will register growth over the next six years. Furthermore, several projects are in progress and are funded by Abu Dhabi Investment Authority (ADIA), which is pushing the construction in the region,” Shukla concludes.

Meanwhile, an earlier report issued by 6Wresearch in February, indicated that Saudi Arabia’s elevator and escalator market is expected to grow at a compounded annual growth rate of 1.9 per cent during 2016-22, registering a decline due to slumping oil prices, weakening economy and expected cut in investments.

Though Saudi Arabia recorded substantial demand for elevators and escalators in the last five years, the market growth is expected to decline owing to falling oil prices, explained the report entitled “Saudi Arabia Elevator & Escalator Market (2016-2022)”.

With declining oil prices, infrastructure development activities are anticipated to be affected for the next two years. However, the market would regain momentum when oil prices start appreciating, the report said.

Rajat Kharbanda, senior consultant, Research and Consulting, 6Wresearch, said: “Commercial vertical has generated the majority of the market revenues in the overall market. Also, increasing construction in the residential vertical would further stimulate the growth of the market.”

“Moreover, the increasing number of foreign tourists has driven the construction of new hotels, especially in the western region, which is resulting in the increase in deployment of elevators in the country,” Kharbanda adds.

“The central and western regions are the key revenue-generating regions in the elevator and escalator market. Increasing investments, rise in infrastructure, growing IT sector, and establishment of several skyscrapers in these regions have contributed for their growth. Riyadh, Jeddah, Makkah and Madinah have led for the growth of these regions,” Goel concludes.