Used equipment prices remain stable in Middle East

Richard Sweatt, the Middle East representative of Euro Auctions, provides insights into the demand for used construction and agriculture equipment

Euro Auctions site in Dubai
Euro Auctions site in Dubai
Richard Sweatt, Middle East representative of Euro Auctions
Richard Sweatt, Middle East representative of Euro Auctions

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Demand for both new and used construction and agricultural equipment across the Middle East is generally seen as improving, following the global economic downturn in the late 2000s.

However, what has been noticeable in recent months is a significant shift in the commercial buying processes with large equipment users becoming more financially aware of the ownership, operational cost and disposal values of their inventory. 

The global reduction in oil prices has definitely had a knock on impact on some construction contracts with a few high profile projects having been postponed in recent months.  

However, construction is evident on almost every corner in Dubai and there is still significant activity underway right across the whole region.

It is evident that buyers are streaming back to the market and in general, used equipment prices in the Middle East have remained relatively stable over the past year.

And in some instances, because prices are actually lower than those commanded in parts of Europe and the Far East, we are seeing an influx of new buyers looking to acquire equipment for export into these regions to meet requirements.

The models sold in the region also tend to be focused more towards functionality rather than incorporating additional gadgets, making it easier to maintain them.

In the past, new equipment was typically purchased for a project and then disposed of upon completion.

This approach has shifted somewhat as many of the big local construction operations and the leasing companies that support them seek to extract more value out of the project.

In some instances nearly new, well maintained equipment in all shapes and guises will return to the market within a couple of years of purchase as they command premium prices and are in much demand. 

Some construction operations are also opting to hold onto key items of equipment for between four and eight years, choosing instead to invest in comprehensive maintenance but benefit from the lower rates of deprecation on older plants.

When these lots come onto the market they are also still in high demand because despite their age, they have full service histories and still have a number of productive years ahead of them.

Prospective buyers here tend to be Tier-2 operations, looking for quality equipment to take on smaller building schemes and ongoing maintenance contracts.

Look carefully and you’ll probably also spot a yard containing near new equipment that hasn’t moved for a year or so.

These are typically the construction plant that was bought in for large projects that were postponed by the buyers have held onto them awaiting the recommencement of the project, or are looking to redeploy it to another new project.

They’d rather hold onto the asset than write off the depreciation. However, if they don’t get deployed in the next year or so some pieces of highly desirable, ‘as new’ plant could be coming under the auctioneers hammer.

With regard to buyers, the Middle East market remains really active with a major increase in the popularity of used equipment auctions being reported.

The initial Euro Auctions sale was well attended by locals from UAE, Saudi and beyond, with a 40% increase in attendance at the second sale.

Considerable interest was also reported from buyers outside the immediate region and Internet bidding increasingly provides buyers from further afield direct access to the events.

In general, all types of equipment, particularly if it is well maintained and in good condition will attract buyers and there isn’t any one type of machine that has gone out of favour.

There are ready and waiting buyers for telehandlers, dozers, excavators, cranes and access equipment right down to mini-diggers and even smaller items like generators and the like.

All have their place and what cannot be repurposed within the region or can command a premium in Europe or the Far East will typically be shipped south to meet ever increasing demand for low cost, functional equipment within Africa where the age or condition is often irrelevant.

One noticeable change however is the reducing number of older trucks seen on the roads. 

This is mainly due to the introduction of some quite hefty fines for vehicle related offences. In some cases these can be more than the vehicle is actually worth.

Operators of these older lorries, and in the main they tend to be owner/ drivers, are therefore trading up to newer, more sought after modern models, with the environmental and feature benefits they incorporate.

Good quality, low mileage and well maintained lorries, typically between four and eight years old, are therefore currently commanding a premium.

The construction equipment market in the Middle East is clearly poised to go from strength to strength and Euro Auctions, which this year marks 20 years of operation, will continue to meet local demand.

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PMV Middle East - August 2018

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