Wednesday, 18 June 2014

Construction Market Trends for 2014

The greatest method to define the construction industry for 2014 is to paraphrase the great Bette Davis, “fasten your seatbelts; it’s going to be a bumpy ride!” As global economies progressively recover from the Great Recession and infrastructure spending raises, 2014 signifies a intermediate year for the industry. Global construction, led by Brazil and Central America, looks to be poised for a positive growth year while, lessees will remain their push to rejuvenate construction assets that have continued on month-to-month rentals throughout the recent cycle. 

Contrary to this, as foreseen by Axis Capital Equipment, Singapore, the explosive growth in China, Jakarta Indonesia and the Pacific Rim has cooled. Whereas their domestic construction market is remains estimated in the $2.1 trillion range, Chinese construction development grew at only a 12.4 percent rate, as compared to the further than 20 percent rate it had been growing at since 2008. Chinese housing mandate has steadied and the Chinese government remains to prop up the declining construction industry to reserve jobs for the more than 43 million people employed in construction-related industries.

Locally, the U.S. saw a bit of a resurgence in residential building in 2013, with a highest of nearly 1.1 million new homes in November, which was the highest monthly total since February 2008. As a bellwether for the construction market as a whole, this presents a very positive sign of continued recovery.

The great demand for well-maintained used equipment has led contractors to assess their under-utilized asset pool more carefully. This action will drive chances in the “trade-in/trade-up” market. Contractors comprehend that they can easily monetize their under-utilized or non-essential equipment to aid bolster their working capital. This, in turn, provides lessors the opportunity to exploit asset values by financing the trade-ups whereas providing a higher trade-in value on the used equipment. Lessors who have enjoyed lengthy month-to-month renewals should be prepared for an influx of off-lease equipment as we move into Q3 and Q4.

Another area of concern is the level of technical knowledge required to uphold equipment. The classy emission recollects systems necessitate a skillset that does not occur outside North America. While this will be addressed by training and education, the learning curve for third world countries is significant. The good news is, given the higher price points and potential pitfalls of equipment will see a rise in value as global buying pressure drives up the value of other equipment.

All in all, 2014 looks to be a promising year for the construction equipment market. Sellers will have the opportunity to sell underutilized equipment and a growing demand for well-maintained used equipment will keep prices elevated, pushing values higher.

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