Dubai CCI survey for renting and leasing services

89 renting and leasing companies have responded to the survey, out of which, 57 per cent are actively involved in automobiles, 16 per cent in engineering equipment, 2 per cent in personal and household goods and 25 per cent in other renting and leasing activities.

With respect to company size, about 57 per cent of the companies involved in this sector are considered to be small sized companies as they employ between 1 to 9 employees, 26 per cent are medium sized companies with 10 to 49 employees and the remaining 17 per cent are considered large in size with 50 or more employees. About 53 per cent of the workers within this sector are skilled with at least a university degree and 36 per cent are low skilled having attained a high school diplomas, the remaining 11 per cent have no school qualifications. Dubai renting and leasing companies are also providing their services at a regional and international level (See figure 1). Over the last 5 years, the majority of services have been tendered within the GCC (44%). It is important to note that other Arab non-GCC and Asian countries also use a significant proportion of Dubai renting and leasing services with 20 per cent and 16 per cent, respectively.

With respect to market performance within this sector, survey results show that about 70 per cent of the companies in the renting and leasing sector have an annual turnover below AED 5 million whereas, 30 per cent of the companies have an annual turnover of AED 5 million and above, thus highlighting the fact that the majority of businesses involved in this sector are small sized businesses.

Survey results further indicate that almost 95 per cent of the renting and leasing services companies are making profits, while only 5 per cent are making losses. Additionally, almost 96 per cent of the businesses within this sector are extremely optimistic about future growth and expansion. Ideally, to acquire assignments within the market the Dubai renting and leasing services companies use a variety of methods, of which, the most successful strategy adopted by 46 per cent of these businesses, is the use of business contacts. Other strategies also commonly used are personal networking (28%), tendering (12%), business associations (11%) and others (4%). Almost 54% of these companies undertake these assignments on a fully in-house basis, whereas 32 percent partly subcontracted their assignments and 10 per cent entirely subcontract them. Over the coming years, the sector is expected to expand. More than 74 per cent of the businesses are planning to penetrate into new markets. A further 9 per cent of the businesses plan to get engaged in mergers and acquisitions and about 11 per cent intend to expand through vertical integration. However, although businesses engaged in this sector show great enthusiasm with regards to future growth expectations, they feel prevalent market limitations are retarding the growth within the sector. Competition seems to be biggest limitation for 31 per cent of the businesses (See figure 2) and about 93.7 per cent of these companies perceive this competition level to be between high to medium.

Issues of high costs associated with day to day business operations, restrictive laws and regulations, poor quality market standards and lack of finance, logistics, and skilled labour are also making it difficult for existing companies and new market entrants to expand their business.

Irrespective of the challenges being faced within this sector, survey results indicate that businesses within this sector are extremely optimistic about their growth potential. It is important to note that some of this optimism can be attributed to the complimentary growth potential of related sectors, such as construction, real estate, logistics, etc. Therefore, in summation, growth within the sector seems to have outstanding potential.