Facilities Management (FM) service is a critical function of real estate management. FM comprises the tools and services that support the functionality, safety, and sustainability of infrastructure real estate. FM services can be categorized into hard and soft FM, based on the type of services required. Hard FM deals with physical assets such as plumbing, wiring, elevators, and heating and cooling, while soft services refer to the FM services delivered to ensure secure, health and pleasant work environment and are directly related to employees of the company. FM services can be performed inhouse by real estate/property owners/management companies or can be outsourced to single or multiple vendors.
In Saudi Arabia, several integrated and bundled facility management service providers operate the FM market. These include:
- In-house providers
- Integrated FM providers
- Bundled FM providers
- Single FM providers
FM service market in KSA is expected to grow by 38% in the next 4 years
In 2021, FM service market in KSA was estimated to be about USD 23,626 million, contributing about 2.8% to the nominal GDP. The market is projected to grow at a CAGR of 8.3% during 2021-2025. In-house facility management practices accounted for about 67% of total market in 2021; however, the demand for outsourcing is increasing in the country, mainly driven by mega trends such as sustainability, and push from economic challenges post COVID.
Demand for integrated facility management services accounted for 26% of total market in 2021 as illustrated in the chart below:
Source: GRC analysis
Hard FM services are expected to grow at a slightly faster rate than soft FM services in KSA
Between years 2021-2025 demand for hard services is expected to grow at a slightly higher rate of 8.4% as compared to soft services, which is expected to grow at a rate of 8.3%, As several ongoing mega construction projects such as Qiddiya, Neom etc. are expected to drive the demand for hard facilities management services in the country. Under hard services, demand of HVAC, lighting and fire is expected to grow at a faster rate than other hard services.
Rapid consolidation of facilities management market, which is supported by the establishment of several new international facilities management companies in Saudi Arabia, is expected to boost demand for soft services in the country.
Source: GRC analysis
FM market is currently dominated by single service providers; however, the demand for IFM is growing at a higher rate as illustrated below
Single FM service providers capture over 45% of total outsource market in 2021; mainly driven by demand in soft services such as pest control, security, waste management etc. Integrated facility management market was relatively smaller in 2021, accounted for about 25% of total market; however, the changing real estate scenario, such as increasing use of technology, sustainability focus and smart buildings are increasing the demand for integrated service provider which can manage all the property aspects and improve efficiency. Therefore, the integrated facility management market is expected to grow at a CAGR of 13.7% during 2021-2025.
Source: GRC analysis
Conclusion
From the above, we can see that the Facilities Management service market in Saudi Arabia is a highly fragmented market with presence of over 100 companies and low market concentration among leading companies. With integrated FM accounted for 26% of total outsourced market in 2021, of which is expected to reach 30% by 2025, growing at a rate of 13.7%, Bundled FM services are the second fastest growing segment with projected growth rate of 13.1%. In summary, eeconomic diversification, maturing real estate sector and Saudi Vision 2030 will drive the growth of this sector going forward. Opportunities galore for new market entrants.
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The Facility Management Services market in Saudi Arabia is experiencing steady growth. The country's government is investing heavily in infrastructure development, which has created a significant demand for facility management services. Here are some factors contributing to the growth of the Facility Management Services market in Saudi Arabia:
- Growing Demand for Outsourcing: Companies in Saudi Arabia are increasingly outsourcing their facility management services to specialized service providers. This trend is driven by the need for cost-effective solutions, access to specialized skills, and the desire to focus on core business activities.
- Increased Construction Activities: Saudi Arabia is experiencing a boom in construction activities, with significant investments being made in real estate, commercial, and industrial infrastructure projects. This has created a significant demand for facility management services to maintain and operate these buildings.
- Adoption of Technology: Facility management companies in Saudi Arabia are adopting new technologies such as IoT, AI, and ML to optimize building performance, reduce energy consumption, and improve operational efficiency.
- Government Initiatives: The Saudi Arabian government is actively promoting the development of the facility management services market by providing incentives to investors and promoting foreign investment in the country's infrastructure sector. This has created a favorable business environment for facility management companies in the country.
Overall, the Facility Management Services market in Saudi Arabia is expected to continue to grow in the coming years, driven by the above factors and the country's ongoing investments in infrastructure development.
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With the expansion of the infrastructure industry, the demand for facility management services is surging in Saudi Arabia.
The country has witnessed the launch of several construction projects in the recent years, and this trend will continue in the coming years, due to strong government support and the huge investments being made in this industry.
For example, the government announced in January 2019 that it intends to invest $426 billion by 2030 for developing industries and infrastructure in the country.Furthermore, the Ministry of Tourism in the country announced in June 2020 that it plans to launch a tourism development fund with an initial investment of $4 billion.
Hence, it is safe to say that the expansion of the construction and tourism industries is fueling the growth of the Saudi Arabian facility management market, with the market revenue expected to grow from $31,264.1 million in 2020 to $87,216.0 million by 2030.Furthermore, the market will progress at a CAGR of 11.1% between 2021 and 2030.
Depending on end user, the market is divided into public administration, business and corporate, industry and manufacturing, healthcare, hospitality, construction, and education categories.
Out of these, the business and corporate category dominated the market in 2020, and the situation will not change in the upcoming years.
