Market Trends of South Africa Facility Management Industry
Outsourced FM is Expected to Hold a Significant Market Share
- The outsourced facility management sector in South Africa is supported by integrated contracts from major international suppliers and small local businesses that concentrate on single contracts and single-service solutions. The main factors influencing the overall market growth include rising demand for outsourced facility management, infrastructure improvements, and private sector investments.
- The demand for contracts, single, bundled, and integrated FM services is growing in South Africa. The South African government is developing new construction plans to increase demand for outsourced facility management services.
- The growing application of facility management in commercial buildings, infrastructure, and industrial projects drives the market's growth. One of the major factors driving the facility management market is growing construction activity. For Instance, South Africa invested heavily in constructing ports, railways, roads, and airports. For large-scale projects, outsourced facility management services will bring new opportunities to the market studied.
- Moreover, the recent launch of FM Solutions Technical, a new specialized division dedicated to providing technical maintenance services that cater to their client's needs, has allowed FM Solutions to increase its range of services. The key strategy is ensuring the service offering is more value-based and aligned to operational efficiency. This strategy is especially applied in client environments and the company's business for both sides' betterment of the services.
- Further, according to Statistics South Africa, in Gauteng, there were 333,000 South Africans engaged in the construction sector as of Q3 2022, a 26,000-person increase from the previous year. There is an abundance of people working in the industry in the states of KwaZulu-Natal and Western Cape, with 243,000 and 176,000 people employed there, respectively. Such substantial employment in the construction industry could indicate potential growth opportunities for facility management companies. As construction projects are completed and facilities become operational, there will be a growing demand for outsourced FM services to effectively manage these buildings and infrastructure.
- Furthermore, as more businesses adopt digital technologies into new workplace cultures, there is an increase in the demand for technology-enabled FM solutions, particularly from the banking, financial services, insurance, and healthcare sectors.
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Public/Infrastructure Segment is Expected to Hold Significant Market Share
- According to the Construction Review Online, the government of South Africa recently gazetted details of 51 top-priority infrastructure projects in South Africa that have been declared strategically important and will be fast-tracked to secure the necessary approvals before August 2022. The projects are expected to start upon the issuance of the relevant tenders.
- Some of the approved projects under waste & sanitation, energy, and transport sectors include the Vaal River System Phase 2 of the Lesotho Highlands Water Project: Gauteng, Phase 2A of the Mokolo Crocodile River (West) Augmentation Project: Limpopo, Emergency/Risk Mitigation Power Purchase Procurement Programme (after installation, these sustainable energy producers should deliver 2000 MW in power), etc.
- Moreover, the South African government has a portfolio of more than 93,000 buildings, and its traditional approach to property management has been to steer funds towards upgrading derelict buildings at huge capital costs instead of directing enough funds towards the preservation of assets.
- According to the International Monetary Fund, the GDP of South Africa took a hit in 2020 amounting to USD 337.52 billion but quickly bounced back to USD 405.70 billion in 2022. IMF also forecasts that the country's GDP is expected to cross USD 468.56 billion by 2028. As the country's GDP is expected to cross USD 468.56 billion by 2028, it indicates a positive economic outlook that can drive further investments in infrastructure, leading to an increased demand for facility management services.
- Infrastructure segment is one of the prominent segments that contributes a good share in facility management of South Africa. This segment is owing to the rapid infrastructure development and rising demand from hotels, retail outlets, malls, and office buildings in the country.
- Moreover, in March 2023, the world's tallest skyscraper built of industrial hemp announced plans to open in South Africa, with 12 stories, a stunning view of the towering Table Mountain in Cape Town, and a small ecological imprint.
- Further, the Boardwalk Mall is a new shopping centre being constructed within the Boardwalk precinct in Port Elizabeth, South Africa. The new shopping mall is being developed in two phases with an investment of USD 36.2 million. The mall's official opening is scheduled for September 2022, marking the completion of the second phase. Such developments are boosting the country's economy and providing new opportunities for the domestic facility management companies.
