Market Trends of Saudi Arabia Facility Management Industry
In-house Facility Management to be the Fastest-growing Type of FM
- In-house facility management refers to a wide range of tasks and responsibilities related to maintaining and operating a company’s buildings, equipment, and infrastructure by a dedicated team of employees hired directly by the company instead of outsourcing to external vendors.
- Government initiatives such as Saudi Vision 2030 focus on diversifying the economy and infrastructure development, fueling the growth of construction projects requiring facility management services.
- 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). Increasing investments in commercial buildings and mega-projects like NEOM are expected to drive demand for in-house facility management services to maintain and operate buildings, utilities, and other infrastructure needs.
- Government regulations in the healthcare and finance sectors emphasize an increased focus on facility control, making in-house management a strategic consideration for compliance.
- Several factors, such as increased economic activity, consumer spending, and tourism activities in Saudi Arabia, have increased the occupancy of hotels and commercial spaces. This has increased the need for better management of the facilities, thus driving the growth of the segment. In June 2023, the Minister of Tourism stated that the tourism sector’s contribution to Saudia Arabia’s GDP reached 4.45%, and the country would invest over USD 800 million in the upcoming ten years. This growth and plans of investment in the tourism sector are likely to benefit the facility management industry with demand for in-house facility management services.
- The growing number of companies looking to consolidate in the facility management market and rising investments in large-scale infrastructure projects are expected to drive the demand for in-house facility management services in the country. Saudi Arabia is home to many Muslim holy sites, resulting in many visitors and travelers each year and creating opportunities in the hospitality and construction industry.
- Overall, factors such as increased economic activity, consumer spending, and tourism activities have led to an increase in the occupancy of large residential layouts/projects, hotels, and commercial spaces, resulting in an increased need for better facility management.
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Manufacturing and Industrial Industry is Expected to Witness Significant Growth
- The manufacturing and industrial sector covers major applications across the manufacturing industry, such as food and beverage, electronics, automotive, mining, and oil and gas industries.
- The Saudi Arabian manufacturing sector stands out as one of the region's fastest-growing, driven by pivotal government projects, favorable tax rates, and regulations that promote automation and sector advancement. The nation, eyeing a transition from its oil-centric economy, is collaborating with Jordan and Egypt on a monumental venture: a USD 500 billion industrial zone, NEOM, powered entirely by renewable energy. NEOM's strategic focus on energy, water, biotechnology, food, and advanced manufacturing is set to significantly boost the demand for facility management services across the country.
- Several projects are spearheading the integration of advanced control systems and automation in infrastructure development. The manufacturing sector's pivot towards Industry 4.0 underscores a proactive stance in embracing advanced technologies to enhance production efficiency and quality, propelling the country's FM market growth. A case in point, in November 2023, the Vedanta group, via its subsidiary Malco Energy Limited, inaugurated a new copper unit in Saudi Arabia, investing SAR 1 million. In an official filing, the group revealed the new entity's name as Vedanta Copper International (VCI) Business Limited.
- In October 2023, South Korean automaker Hyundai announced that it teamed up with Saudi Arabia's Public Investment Fund (PIF) to establish an automobile manufacturing factory in Saudi Arabia. PIF would own 70% of the company, and Hyundai would own 30%. This facility aims to establish an annual production capacity of roughly 50,000 automobiles. Production at this factory is expected to start by 2025.
- Based on the type of offering, the manufacturing and industrial sector in Saudi Arabia is expected to witness increased demand for soft FM, driven by the need for efficient facility management, workplace safety, and adherence to environmental regulations.
- Thus, the Saudi manufacturing and industrial facility management sector is characterized by a resilient, innovative, and adaptable environment. According to Tophotelprojects.com, in Saudi Arabia 2022, 24 out of 167 planned development of hotel projects were expected to be completed by the year-end. Forty projects, which means 24% of total hotel projects, are due to be completed by 2025 at the earliest. The strategic significance of facility management services in preserving operational effectiveness, safety, and sustainability is expected to become even more apparent within this vital and dynamic industry as the nation continues on its trajectory of industrial growth.
