With the introduction of the Expo 2020, there has been increased growth in the construction sector in terms of heavy equipment requirements. Further to reduce the cost of buying new equipment, companies have started renting equipment.
Apart from the Expo, in general, the real estate & construction sector in Dubai is forever moving and the requirement for equipment is always in demand. Also, the industrial sector & manufacturing sector in Dubai is sustainable & growing every year, which further boosts the demand.
This activity includes renting & leasing heavy & industrial machinery and equipment used for handling, refrigerators, air purifying, metal cutting and forming, food beverage, and tobacco processing, textile apparel & leather productions, lifts, escalators, boilers, central kitchen, automotive washing equipment, electric generators, water pumping & treatment, it involves also light duty equipment for medical, packaging, transport, construction & occupational safety applications.
Advantages and Disadvantages
A business that solely depends on heavy equipment, requires a huge investment. It can’t be ignored since it’s an essential element to bring your construction business forward on the path of profit.
Also, it takes a while until your business finally starts to pay off the investments you’ve made in it in the form of various expenses like buying heavy construction equipment, business promotion, paying salaries of the staff etc.
As a business owner, you should know that the expenses you estimate before getting into it are always estimated. There are a lot of things which come up in the form of expenses when you start your business and you have to pay for them too.
So, always focus on saving money as much as you can. But that doesn’t mean you have to compromise on quality. Save as much as possible, but not forcibly.
Why should one simply rent used heavy equipment?
To answer that simply, they are “cost-effective”. With no noticeable compromise in functionality, you can save a lot by buying or renting used equipment as compared to buying or renting new ones.
Is the used equipment ‘much’ cheaper than the new one?
YES! Construction equipment resale values follow a similar pattern as an automobile. The moment you spend an hour using a new dozer, wheel loader or excavator, its value drops by 20% to 40%. Yes, that’s a huge price drop especially when you’ve paid hundreds of thousands of dollars. We don’t call it a loss.
Cost for the Issuance of the License
The cost for the issuance of the License is AED 9,000 – 10,000. If in case the License is a Sole Establishment/Civil Company.
In the case of an LLC, the cost of the License will be AED 13,000 – 15,000.
In the case of a Sole/Civil Establishment, the UAE National will become the Local Service Agent and in the case of an LLC License, the UAE National will be a 51% shareholder.
This License can be issued on an Instant License, in the case of an instant license the cost for the license will have additional market fees of AED 3,000 fixed along with the other expenses as above.
In the case of the license being issued on a desk or office 2.5% of rent is considered as the Market fee along with the above expense of license in each of the cases.
This blog is written by Ms Florine, Director (Client Relationship) at Flyingcolour Business Setup, Accounting & Tax Services in Dubai & across UAE. Feel free to call us for more info regarding setting up an equipment rental business in Dubai or anywhere in the UAE. You can also send your inquiry to info[at]flyingcolour[dot]com or call +971 4 4542366.