Market Trends of MEA Facility Management Industry
Outsourced Facility Managment is Driving the Market Growth
- The Middle East and African outsourced facility management sectors are still in the growth stage compared to more established and mature markets. The increasing emphasis on adopting green buildings across developing sectors, such as retail and real estate, is expected to stimulate the growth of outsourced facility management in the region. For instance, EchoStoneannounced has planned to build 182,000 affordable, certified green buildings in Lagos, Nigeria, by 2023.
- The growing application of facility management in commercial buildings, infrastructure, and industrial projects drives the market's growth for outsourced FM, including soft services. One of the major factors driving the facility management market is growing construction activity. For instance, Saudi Arabia is invested heavily in constructing ports, railways, roads, and airports. For large-scale projects, outsourced facility management services will bring new opportunities to the market.
- Outsourced Facility management services across the region are growing owing to several megaprojects currently being undertaken. KSA is working on most development projects in the country's commercial sector. With continuing investment and technological enhancements, Saudi Arabia invests in diverse projects. Saudi plans to invest approximately USD 1 trillion in its non-hydrocarbon sector by 2035. Some key projects include Qiddiya Entertainment City, King Abdullah Financial District, Neom, the Red Sea Project, and Amaala.
- Qatar National Vision (QNV) 2030 is a long-term economic development plan which has included the preparations for the 2022 FIFA World Cup. Qatar invests heavily in infrastructure programs focused on its non-oil and gas sectors. The Ministry of Transport and Communications (MoTC) functions as the main regulator of the transportation sector, overseeing the work of individual transport operators and project owners, and creates an oppertunity for the vendors' out sourced FM services.
- Additionally, in collaboration with its government and private sector, Qatar is working on major rail and expressway projects, the recent opening of the new commercial seaport and significant capacity upgrades at Hamad International Airport(HIA), logistics flows, and multimodal transportation networks are being developed at a remarkable pace. To support these construction projects, facility management services need to be outsourced. This will drive new growth opportunities in the facility management market.
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Commercial Segment to Dominate The Market
- The Middle-East and Africa facility management services market is fragmented as significant local players enter the commercial sector. For instance, the market is dominated by local players such as EFS Facilities Services Group, Emrill Services LLC, Farnek Services LLC, Sodexo, Inc., etc. And the local players are offering competitive pricing in the market, which reduces the suppliers' bargaining power and thus gives the buyers an option to quickly switch their facility management vendors with minimal switching costs. Local players with fewer international relationships are leading to less adoption of technically advanced FMS services such as robotics used for cleaning practices which will be a major threat with a long-term effect.
- The inflow of investments from foreign companies in different sectors has positively attributed to the growing need for offices boosting the commercial real estate sector. Furthermore, the demand for the commercial real estate sector in the region translates to a higher requirement for facility management services for maintenance and cleaning, among others. As regional companies recover from the pandemic and instruct employees to return to the office, the vacancy rate is expected to decline in commercial spaces. With a special focus on cleaning services to disinfect office spaces and maintain hygiene protocols, the region's demand for soft FM services has witnessed a large spike.
- Moreover, the increase in office buildings also demands facilities management. For instance, Reem Mall in Abu Dhabi marks one of the megaprojects to boost the commercial retail sector by facilitating more than 450 stores for retail, a hypermarket, a multiplex cinema, and two food courts, supporting the commercial food outlets, too. Several such projects are under construction in the GCC and Northern African countries.
- Kuwait is a fast-emerging IT hub within the Middle East and Africa region. With the country's 2035 Vision, the nation is poised to become a financial and commercial center within the region. The rapid development of IT hubs in the country is directly influencing the demand for FM services in the country.
- Cairo continues to be the center of primary activity in terms of the development of the commercial real estate sector in Egypt. The lift of lockdown restrictions had added to the mobility of the people and organizations, allowing them to re-convene work from the office, which is also set to increase the occupancy rate in the country. Furthermore, the entry of several foreign organizations into the Greater Cairo region has boosted the office space demand. It is expected to hold a strong positive impact on the facility management services.
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