Saudi Arabia Facility Management Market Overview
The Saudi Arabian facility management market is estimated to attain a size of $29,563.2 million in 2018 and is projected to reach $51,616.2 million in 2024, witnessing a CAGR of 9.7% during 2019–2024. The growing application of facility management in commercial buildings, residential construction projects, infrastructure projects, and industrial projects is driving the growth of the market in the country.
The facility management industry in Saudi Arabia is considered as one of the most promising industries in recent times, attributed to the growing infrastructure sector, supported by the increasing government spending on infrastructure projects. The country has around $1.0 trillion worth of projects planned or under construction. These upcoming/ongoing projects are expected to offer immense growth potential to the country’s facility management market. To enter the market and serve it in an efficient manner, global companies are increasingly joining hands with local players.
On the basis of service, the Saudi Arabian facility management market is segmented into property services, cleaning services, security services, catering services, support services, environmental management services, and other services (including reception, staffing, utility management, furniture supplies, and contract management). Property services are further categorised HVAC maintenance, mechanical and electrical maintenance, and others (including sales and leasing, maintaining properties, advertise rental properties, space planning and design, asset management). Property, cleaning, and security are the three most preferred services among end users in Saudi Arabia. Security services are expected to register a significant growth in the facility management market of the country, during the forecast period.
Based on end user, the Saudi Arabian facility management market is categorised into commercial, industrial, and residential. Commercial sector is estimated to account for largest share in the market contributing for more than 40.0% in 2018. Under the Saudi Vision 2030, the country is diversifying its economy by focusing on the expansion of non-petrochemical based industries. As a result, the country is witnessing large-scale expansion of hotels, commercial centers, malls, and several other commercial projects which is expected boost the demand for facility management services in Saudi Arabia.
Based on mode, the Saudi Arabian facility management market is categorised into in-house and outsourced. Outsourced market is further categorised into integrated, bundled, and single. In-house facility management service is estimated to dominate the Saudi Arabian market in 2018 as it accounted for a revenue share of more than 65.0%. The dominance of in-house services is driven by the fact that a large number of companies still operate internal facility management team or professionals which take care of regular maintenance of the property.
Based on type, the Saudi Arabian facility management market is categorised into hard services, soft services, and others (including catering services, vehicle fleet management, environmental management, space management, and utility management). Hard services are estimated to account for the largest share in the Saudi Arabian facility management market 2018 driven by the fact that these services are technical in nature which are considered expensive. Moreover, certain hard services such as HVAC maintenance services, mechanical services, and lift management services are of critical nature which is essentially required by commercial, industrial or residential units.
Saudi Arabia Facility Management Market Dynamics
Economic diversification is the key trend observed in the Saudi Arabian facility management market.
The major trend observed in the Saudi Arabian market is the country’s increased investment in the infrastructure sector to decrease its economic dependency on the oil and gas sector, which was severely affected by the slump in oil prices in 2015 and 2016. The government introduced an economic reform plan known as ‘Saudi Vision 2030’ in 2016, which is a long-term economic roadmap that aims to decrease the country’s dependency on hydrocarbon. It also aims to increase private investments in non-extractive industries such as infrastructure and transportation, which is expected to provide various opportunities for the players in the facility management market.
Increasing construction activities in the country and growing tourism industry are the major drivers which are expected to propel the growth of facility management market in Saudi Arabia.
The construction industry is expected to witness a strong growth in the coming years, owing to the increasing construction activities supported by the Saudi Arabian government. For instance, in 2017, the ‘Smart City’ initiative was launched by the Saudi government for the development of infrastructural projects. Under this plan, five cities in Saudi Arabia were targeted for the application of the concept of smart cameras, smart parking, smart solid waste disposal, smart lighting system, and environment pollution monitoring tools. The increasing awareness about the advantages of facility management is further fueling the market growth.
The legal market place of the country is posing a major restraint for the facility management market, as it works in a very different way. Most of the rules and regulations are governed by the Saudi law, majorly runs on the Shari’ah law and provides limited protection in case of non-payment. Also, there is no statutory entitlement to suspend services in the event of non-payment. Hence, a party working on a project is obligated to provide services even in case of outstanding payment, which makes it difficult for companies to operate in the country.
Saudi Arabia Facility Management Market Competitive Landscape
Some of the major players operating in the facility management industry are EMCOR Group Inc., Khidmah LLC, Interserve plc, Enova Facility Management, Saudi Oger Ltd., Rezayat Group, Musanadah Facilities Management Co. Ltd., Nesma Trading Co. Ltd., Al Borj International, and Petrojana.