A cascade of large-scale project cancellations in the UAE has
hammered the region’s leasing companies, as heavy equipment prices
crash, and contractors scramble to cancel long-term leases in
favour of newer, discounted deals.
With the UAE’s construction boom withering, used machinery
prices are virtually half what they were 18 months ago, and new
lease rates are following close behind.
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Mohammed Arif, of construction plant lessor Al Toor, spoke to
Emirates trade journal Business 24-7 on the dramatic shift from a
demand-driven seller’s market: “An excavator that was previously
leased at Dh50,000 per month now costs Dh35,000, and some are
charging only Dh30,000. There is more competition in the market and
rates may fall further.”
As a result of the new rates, he says, many companies in the
half built cities of Dubai and Abu Dhabi are cancelling equipment
leases in the hope of signing new ones at current rates.
The vehicle leasing market is hardly brighter. Contractors facing
uncertainty about future business are cancelling rental and lease
agreements on car and CV fleets, and the depressed vehicle market
is making used asset sales a difficult proposition.
The UAE has been a major buyer of Europe’s surplus construction
assets in recent years, although now that its own market has tipped
into oversupply, the situation is unlikely to continue for
long.
