Market Trends of Kuwait Facility Management Industry
Inhouse Facility Management Segment is Expected to Drive the Market Share
- In-house facility management refers to services provided by a dedicated resource directly employed by the client organization. In this type of facility management, monitoring and control of the performance are usually conducted under the terms of a conventional employee/employer relationship.
- In-house facility management majorly deals with recruiting specialized personnel to maintain and manage various functional attributes of a facility or area. These days most of the generic services are outsourced to third-party service providers. However, some services, such as security services or cybersecurity assistance, are still operated and monitored in-house to ensure the safety and integrity of the facilities.
- Currently, a sizeable portion is still maintained in-house to maintain tight control over the quality of the services. Industry sectors, like retail and hospitality, have partially supported in-house personnel for un-specialized services. However, organizations and industrialists in developing nations still turn to contractors for specialist work, such as lift, HVAC, and specialized MEP work.
- With a growing need arising across these sectors, skill development in such activities had to be adhered to, further leading to the development of unique delivery models. These aim to gain certified expertise, leading to the movement from workforce outsourcing to contractual service delivery.
- Factors such as increased economic activity, consumer spending, and tourism activities have increased the occupancy of large residential layouts/projects, hotels, and commercial spaces. This has, in turn, increased the need for better management of the facilities.
- According to Colliers International, the hotel occupancy rate in Kuwait City is predicted to increase by 16 percent every year through the previous year. This was a significant gain from - 5% in the third quarter of early the last year.
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Public/Infrastructure Segment is Expected to hold significant share in the market
- Public/Infrastructure end-user scope covers the FM applications in the office buildings at federal, state, and local levels, justice departments, office buildings for administrative work, and other such projects. The infrastructure comprises facilities covering water and land transportation. Various buildings use services such as fire alarms and safety, energy management solutions, CCTV monitoring services, and other integrated facility management services.
- Moreover, the public sector has started demanding longer-term contracts from FM suppliers. However, lack of certainty over future labor costs and materials makes them riskier propositions, which could be a significant restraint in the players' bidding process for long-term contracts. As government-backed infrastructure projects are planned in Kuwait, there is a strong need for FM services, leading to commoditization. Furthermore, bundled services contracts are poised to benefit from the public spending cuts, as the public sector customers are looking to reduce the suppliers and cut costs. This is in line with the developments in various public sector bodies that continually improve their operations.
- Furthermore, open trade policies across Kuwait are attracting foreign investors and boosting construction activity. The construction industry is the backbone of the country's economy and is expected to develop rapidly during the forecast period. The construction industry contributes significantly to regional economic growth and development. According to MEED, As of the first half of 2022, the value of construction contracts awarded in Kuwait was about USD 24.6 billion. The total value of contracts awarded in the Middle East and North African (MENA) region was USD 62.7 billion.
- Moreover, the Directorate General of Civil Aviation, which operates Kuwait International Airport (KIA), is building a new terminal to make the airport a new regional aviation hub in the Gulf. Multiple phases are involved in building the new terminal. After the first phase, the capacity would increase to between 25 million and 50 million passengers annually, with the second phase adding about 13 million people annually. Additionally, the new terminal would considerably improve the airport's credibility as the entryway to the State of Kuwait. This new terminal is scheduled to be finished by previous year, and its development began before five years.
- Further, the ambitious Shaikh Jaber Al Abdullah Al Jaber Al Sabah International Tennis Complex, which mainly aimed to position the country as a preferred international tennis destination in the region, is now under construction, according to the Tamdeen Group, a prominent mixed-use property developer in Kuwait.
