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Market overview: Elevator demand in the GCC

As challenges within the Middle East’s wider construction sector persist, Thyssenkrupp and Toshiba are targeting fresh markets in a bid to secure future growth

Kuwait’s Tamdeen Square uses Thyssenkrupp elevators.
Kuwait’s Tamdeen Square uses Thyssenkrupp elevators.

The post-2015 oil price decline has affected the full spectrum of Middle East construction. Nevertheless, certain segments – typically those further down the supply chain – have been impacted more than others.

Vital though elevators are to a project’s ultimate functionality, those supplying vertical transportation systems are particularly beholden to economic externalities. In short, no matter how effective your products and services, if the project pipeline dries up, so will your order book.

Pedro Russo, Thyssenkrupp Elevator’s business process and communication manager, explains: “The construction market in the GCC has suffered from lower oil prices during the past couple of years, with projects being scaled down, delayed and, in some cases, even cancelled.

“The elevator business moves in line with the evolution of the construction market. Uncertainty affects not only the elevator companies and other suppliers, but also developers and contractors. As such, receiving payments and making collections has been a major challenge of late.”

Nevertheless, Thyssenkrupp has succeeded in delivering and securing major orders during the past 12 months, supplementing its core residential client base with retail, hospitality, and transport projects. Currently in the UAE, the manufacturer is supplying approximately 150 elevators, in different project packages, for City Walk; and around 50 elevators for W Hotel & Residences. Both contracts are to be finalised this year. Thyssenkrupp’s recent project awards include a 500-plus elevator and escalator deal for Doha Metro, a 30-elevator order for Doha Oasis, and a 30-elevator contract for Tamdeen Square in Kuwait.

“The main market drivers in the UAE and Qatar are Expo 2020 Dubai and the 2022 FIFA World Cup, respectively. Both are driving infrastructure and hospitality projects. At the same time, residential projects remain the largest segment for elevator firms operating in the GCC region.”

Recognising the need to supplement its traditional revenue channels, Toshiba Elevator and Building Systems has also been working to increase its footprint in burgeoning markets. Renowned for its work in the ultra-high speed elevator segment – supplying 1,010m-per-minute units for Taiwan’s Taipei 101 – the manufacturer has taken the decision to remove itself from the race to produce the world’s fastest elevator.

Kazunori Matsubara, chief executive officer of Toshiba Elevator and Building Systems, says the company is no longer aiming to develop elevators with speeds of 1,300m to 1,400m per second. “Toshiba will focus on mass transit rather than high-speed [models],” he explains.

“High-capacity elevators are the need of the hour,” Matsubara continues. “Toshiba has installed and put into operation 90-person capacity elevators that travel at speeds of 300m per minute. High-capacity elevators usually travel at speeds of around 60m per minute, so this is a real breakthrough.”

Toshiba is now working to develop high-speed models capable of carrying up to 100 people at a time, also targeted at clients within the mass transit segment. Its reasons for doing so are clear to see.

Large-scale infrastructure projects have come to represent big business for elevator suppliers operating in the Middle East. Thyssenkrupp in particular has secured several large-scale orders within this segment during the past year, and not exclusively for elevators.

In addition to the 500-unit Doha Metro contract, the manufacturer sealed a 641-unit deal for Riyadh Metro and a contract to supply 143 passenger boarding bridges (PBBs) for Istanbul New Airport in 2016. The latter, a deal reported to be worth a “double-digit million euro amount” is the largest in the company’s history.

Challenges aside, Russo is optimistic about Thyssenkrupp’s future in the region.

“The [Middle East] remains strategic to our global activity, with interesting growth perspectives in most GCC countries,” he tells Construction Week.

“Thyssenkrupp looks forward to playing a continuous and active role in the development of these markets, with our high-quality and reliable products, as well as innovative technologies,” Russo concludes.

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Construction Week - Issue 751
Oct 13, 2019