BrazilSaudi's facility management market to eclipse $30 billion by 2025
Saudi Arabia’s market for facility management services is on the path to eclipse $30 billion by 2025. Economic diversification, a maturing real estate sector and Saudi Vision 2030 are all driving growth in the sector.
Roughly defined, facilities management spans all services that support the functionality and safety of offices and real estate infrastructure, including for the staff working in those offices. Notable segments including catering, cleaning, security, real estate operations & management, workplace safety, and emergency services.
According to a new strategic market outlook by Glasgow Research & Consulting, the outlook for facility management services in Saudi Arabia is bright, on the back of a wave of mega investments set to unfold in the real estate sector, as well as continued professionalisation of existing stock and service levels.
The research predicts that the Saudi facility management market may pass the $30 billion mark in the next two years. This would see the market achieve a compound annual growth rate of 8.3% from its 2021 size, which was around $23.6 billion.
Alongside Vision 2030 plans and private sector investments, the market is being buoyed by a growing appetite for outsourcing of facility services. Traditionally, around two third of facility-related work is delivered in house – but the changing nature of the Kingdom’s social and economic models are inclining an increasing number of organisations to turn to third party providers.
One of the most prominent forces behind this outsourcing shift is expected to be demand for ‘hard services’ – ones which, unlike ‘soft services’, cannot be removed from the premises as they directly relate to the fabric of the building, while ensuring the health, safety and welfare of employees are adhered to.
A functional private sector for Saudi Arabia will require workplace safety requirements to rise significantly, and as firms look to comply with new regulations aimed at achieving this, demand for hard services will rise at a CAGR of 8.4%. Of the hard services rising in demand, heating, ventilation, and air conditioning; and lighting and fire are expected to grow at a faster rate.
At the same time, mega construction projects like the infamous Neom will also drive this demand. Every new building will also need to adhere to the criteria set out for the new Saudi economic model.
The industry’s players
The changing needs of facilities management clients is also reshaping the kinds of companies which dominate the Saudi market, said Glasgow Research & Consulting. In 2021, single-service providers captured over 45% of the total outsourcing market. These specialists succeeded chiefly due to demand for soft services such as pest control, security, or waste management.
With the need for hard services on the rise, however, there is now a growing space for generalists to capitalise on the growing market.
While integrated facility management was a relatively smaller market in 2021, accounting for about 25% of total facility management revenues, the changing real estate scenario, an increasing use of technology, and a growing sustainability focus mean many clients now desire integrated service providers, which can manage all their property aspects and improve efficiency at a holistic level.
Due to this, the integrated facility management market is expected to grow at a CAGR of 13.7% to 2025. “Bundled facility management services are now the second fastest growing segment in the sector,” said the report authors.
