With the growth of the construction industry in the kingdom, the Saudi Arabia facility management market is predicted to cross $76,244.9 million by 2030, from $32,480.4 million in 2019, at a 9.3% CAGR between 2020 and 2030. Being touted as the largest FM market in the Gulf region it accounts for more than 55% of the regional FM market.
According to many studies, the FM market in the Kingdom is predominantly dominated by domestic FM companies. And 31% of the facilities services are outsourced compared to the 45% in the UAE. However, the Kingdom of Saudi Arabia’s facilities management market has faced some hurdles in the wake of COVID-19. Most commercial settings, such as malls, hotels, theatres, and recreational centers, were closed. With this, the requirement for FM services was reduced to a large extent. But since the reopening of facilities post the lockdown, the market is slowly picking up again.
Speaking to industry professionals over the past few weeks it was noted that there was a drastic shift in consumer behavior of which was represented in the type and size of Request For Proposals (RFPs) sent by the clients. The majority of the clients are moving toward outsourcing more of their FM services compared to the trend before COVID-19. Therefore, companies are increasingly favouring integrated and bundled services, whereas single services are prevalent mostly to provide soft FM services to customers. This trend is due to the trust that was built during the pandemic as the clients started seeing the service providers as an accountable and competent partner. Experts have also believed that this change is also because of the economic challenges caused by the pandemic. However, this has caused a new challenge for the service providers as they are trying to meet the KPIs and SLAs given by the client.
In sync with Saudi Vision 2030, the country is adhering to sustainable practices and moving towards a greener economy. This trend is bound to create a shift in the FM market, with services such as energy management being increasingly offered. This has also pushed many service providers to implement more technology and innovation into the current FM practices.
However, FM companies in Saudi Arabia still lag in leveraging modern technologies, as there is limited technology penetration in the overall FM market. Given the growing demand for energy management in the form of building automation systems, HVAC solutions, lighting controls, renewable solutions, and security, amongst others, FM providers are bound to invest in advanced technology and offer sustainable solutions to customers going forward.
The Smart City initiative launched by the Saudi government in 2017 has been giving a strong push to its construction sector. Under the initiative, the government plans to install smart parking, smart cameras, smart lighting system, smart solid waste disposal, and environmental pollution monitoring tools in five Saudi cities. Also, an investment of $500 billion in infrastructure development has been planned under Saudi Vision 2030.
Hence the future looks bright for the growth in FM business in Saudi Arabia but a lot depends on the innovative thinking and technology to deliver these services. Provided these quality services are at low costs.
Some of the biggest challenges within the Saudi FM market include:
- Cost-driven customers which result in contracts that are awarded to the lowest-cost contractor or supplier, and clients that are often unaware that quality FM lowers the lifetime cost of an asset.
- Unsophisticated approach to asset management, as there is a lack of basic data i.e. an asset register. Similarly, FM is not well understood and is considered only as “preventive” maintenance under O&M.
- The current workforce lacks training and education are not aligned to fulfill the training requirements of the FM sector. There is currently a real struggle to find qualified staff capable of delivering high-quality FM, as a result of the lack of education. MEFMA is however working to change awareness of facilities management in KSA through training courses, workshops, and networking events in the Kingdom.
- Lack of regulations. There are currently minimal regulations in place, and current contractor certifications provide little assurance of quality.
- Facilities Management is unattractive as a career to Saudi nationals, and FM companies have difficulty meeting the minimum Saudi employment percentage, set by the Saudization program.
(This report has been written with key inputs by Mohammed Mousa, Chief Operating Officer, Initial Saudi Group, a leading FM service provider in the Kingdom)