European construction equip-ment
manufacturers, resellers and lessors will face renewed hardship
this year as demand for yellow metal assets in the United Arab
Emirates slumps into what appears to be a terminal decline.
With the UAE’s construction boom withering,
import rates from Europe have plunged, and regional used machinery
prices are virtually half what they were 18 months ago.
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“Demand in the Gulf has underpinned asset
prices in many sectors, especially in con-struction,” said Matthew
Harvey, a partner at the law firm Denton Wilde Sapte. “With the
extent to which Dubai has slowed, the logical extrapol-ation is
that this will have a significant effect on sales and pricing in
Europe.”
The situation is no better for lessors in the
region. A cascade of large-scale project cancellations in the UAE
have hammered leasing companies, and contractors are said to be
rushing to cancel long-term leases in favour of newer, discounted
deals.
Mohammed Arif, of construction plant lessor Al
Toor, said: “An excavator that was previously leased at AED50,000
[€10,400] per month now costs AED35,000, and some are charging only
AED30,000. There is more competition and rates may fall
further.”
As a result of the new rates, Arif said, 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 very difficult.
Fred Crawley
