Market Trends of GCC Facility Management Industry
Government, Infrastructure, and Public Entities End-user Segment is Expected to Hold Significant Market Share
- The government-led construction boom and increasing emphasis on green building practices are increasing the demand for facility management in the CEE region. In addition to transport projects, the government of Qatar aims to rapidly expand tourism, education, and real estate to maintain its competencies under the Qatar National Vision 2030 (QNV 2030).
- According to Qatar's Ministry of Finance, infrastructure projects are allocated QAR 74 billion (USD 20.33 billion), which is approximately 36.0% against the state's interest in accomplishing the major development projects on schedule, especially those related to hosting the FIFA World Cup Qatar 2022. Furthermore, the ministry emphasized a special focus on two key sectors, namely education and healthcare, which is expected to witness the development and expansion of schools and educational institutions and healthcare projects and programs. Nearly QAR 17.8 billion (USD 4.89 billion) has been earmarked for education, while about QAR 20 billion (USD 5.49 billion) has been allocated for the health sector.
- The recent initiative of providing international tourist e-visas in the Kingdom of Saudi Arabia, as part of its Vision 2030 initiatives to boost tourism to stay globally competitive, is set to impact the country's real estate market significantly.
- In efforts to diversify the country's economy away from oil-based income, recently, the government launched tourism giga-projects across Saudi Arabia and new e-visas for 49 countries to drive international visitor arrivals. These impactful initiatives and ongoing reforms have shaped a more diverse hospitality landscape, stimulating real estate development in the country.
- One of the significant demand generators of facility management services is warehousing and inventory hubs. The considerable growth in the country's conventional retail and e-commerce industry is boosting facility services' growth. The country's rising demand for integrated facility management has bolstered market growth in recent years. According to DED (Dubai), In 2022, the forecasted value of e-commerce sales in the United Arab Emirates (UAE) was approximately USD 27 billion. E-commerce sales in the UAE were estimated to grow by an average of 23 percent annually between 2018 and 2022.
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Saudi Arabia is Expected to Hold Significant Market Share
- The facility management services across Riyadh, Jeddah, Makkah, and DMA have become mature and growing markets. With the increase in infrastructure development projects across the Kingdom of Saudi Arabia that contribute to its economic growth, facility management services are also required to a considerable extent.
- Opportunities in the form of a growing number of services under each vendor and a workforce shortage are expected to consolidate and strengthen the landscape, as players may prefer to deliver large-scale projects jointly. The smart city initiative and Vision 2030 continue the construction sector growth and building stock increase from a longer-term perspective. Additionally, a shift of vendors to offer IFM services and increasing involvement of FM players from the designing phase is expected to grow and become mainstream, mainly due to higher margins on such projects and a competitive edge.
- The construction industry in Saudi Arabia benefits from private and public sector players with an increased focus on reforms, supporting the region's Vision 2030. Under this long-term vision, the government planned several economic, educational, and related reforms to innovate and diversify Saudi Arabia's landscape.
- In recent years, healthcare facilities have increased in the country at a significant pace, creating substantial opportunities for facility management companies. Furthermore, several government-driven initiatives are changing the dynamics of the FM market, reshaping the healthcare landscape in Saudi Arabia, and creating a more robust institutional setup and effective regulatory frameworks to promote private sector investment in healthcare.
- Furthermore, according to the Ministry of Finance, the budget allocation for housing, infrastructure, and transportation sectors in FY 2023 was reported to be around SAR 34 billion (USD 9.06 billion). Moreover, in the sector allocation, the government accounts for supporting more than 120,000 families through the national housing scheme Sakani. Such considerable budget allocations from the government would create substantial opportunities for facility management vendors operating in the country.
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