Most specialised plant and machinery in the UAE and broader MENA region is imported, which means an accurate replacement cost valuation must build in landed cost components that a domestically-sourced asset simply wouldn't carry — and getting this build-up wrong is a common source of material valuation error.
The landed cost build-up
- Base equipment cost (FOB or ex-works). Often the only figure readily available from vendor quotations — using it alone significantly understates true replacement cost.
- International freight. Varies substantially by equipment size/weight, origin country, and current freight market conditions — stale assumptions can materially distort a valuation.
- Import duty and customs clearance. UAE import duty rates vary by equipment classification, with certain categories carrying exemptions under free zone or industrial incentive schemes.
- Local transport and handling. Moving equipment from port/airport to final site location — significant for oversized or heavy plant.
- Installation and commissioning. For complex plant this can represent a substantial percentage of total landed cost, not a minor addendum.
- Foreign exchange consideration. The applicable exchange rate at the valuation date, not the original purchase date, should be used.
Common errors
The most frequent understatement occurs when valuers apply only a generic percentage markup to base equipment cost to approximate landed cost, rather than building up actual freight, duty, and installation costs specific to the equipment category and origin. For large or unusual equipment, this generic approach can materially misstate replacement cost in either direction.
Practical recommendation
For material plant valuations, request current freight and duty quotations or recent comparable landed cost data specific to the equipment category, rather than relying on outdated or generic cost build-up percentages — particularly important for equipment sourced from regions where freight and duty conditions have shifted materially in recent periods.